A (2:43)

So, let's start at the beginning. Just answer for me the basic question. What on earth is going on? What started this massive bull rally, and why is it going so far, so fast?

B (2:56)

Well, it's interesting because gold's been running pretty strongly now for over three years, but the reasons why it's been going up have been changing. I mean, I think it started off by central banks dramatically increasing the amount of gold that they were purchasing following the Russian invasion of Ukraine. And the reason for that, I think, was the sanctions that were placed upon the central bank of Russia. It really made many central banks around the world think, hmm, am I really happy having such a large proportion of our foreign exchange reserves invested in the Western financial system, which could be sanctioned at the stroke of a pen? That was the first trigger, I think, for this move. We then saw tremendous investment buying in gold coming from emerging markets and even from time to time, strong jewelry demand as well. So emerging market economic strength was the second wave, I think, behind the move higher in gold. And then from. Well, last year was. Was about Western investors getting onto the bandwagon a bit late, to be honest, but joining the bandwagon and buying gold largely in reaction to what's been coming out of the United States, whether it's economic policy, whether it's interest rate cuts, or whether it's pronouncements from President Trump and his administration.

A (4:13)

Okay, so three constantly moving reasons. And the central banks are still buying. Right. So that. That demand is still. Still.

B (4:19)

They're still coming, they're still buying. And they, you know, they bought just a little bit less last year than they have done for the previous three years. So they're still an important component of the move higher in gold. But they're not the only story in town. And that's something I like to say up front because the number of people that say to me, oh, well, central banks are buying gold, we should buy gold, too. It's like. Yes, but it's not as simple as that. There are other factors, too.

A (4:42)

Yeah, I mean, it's a bit of a backstop to the price.

B (4:45)

Very much so. And probably one of the reasons why the gold price doesn't go down very much when it does. Correct. Because, you know, when it, like this year for Example, the gold price has gone up very rapidly. I don't know, but I doubt central banks have been driving the price higher. But I'm sure that they're sitting below the market waiting to step in on any correction and that prevents the price from falling like it usually would have done when people take profits.

A (5:10)

And if it is true, as many people say, that the Chinese central bank continues to build its gold reserves in the anticipation of conceivably launching a gold backed currency, at some point there will be a way to go.

B (5:23)

Look, that's one of the theories about why China has stepped up its gold purchases. It's a gold backed currency. I see the arguments about backing a currency is sometimes misunderstood. The only reason you back a currency out of weakness, not out of strength. If you think about all the countries in the world that have backed their currency and Zimbabwe is a great example, they back it with a dollar every now and again, then the peg fails. They've even tried to back it with gold and then that peg fails. It's always done because you're in a weak position. And China's many things, but I don't think it's in a particularly weak position where I think the logic of a gold backed currency could come in is something that might be used for trade within countries that don't want to depend upon the dollar. And look, China is a massive current account surplus country. So that would mean China would get more gold through settling this cross border trade. So again, it's not clear that China is buying gold for this purpose. It is one of the potential reasons it could be, I suppose.

A (6:30)

Okay, so let's leave central banks then. We accept that they're buying for a variety of reasons, but particularly geopolitical instability, independence from the dollar, all these things and that they will continue, continue to buy to a certain level, emerging markets. I mean that demand continues. As long as there is good GDP growth in emerging markets, you will see demand for gold as a savings product.

B (6:49)

Effectively that's true, but also sometimes when other savings and investment choices are less attractive. And I think the story in China has been the weakness in the property market, which I'm sure you've spoken about many times over the last few years. Traditionally, Chinese savers and investors buy real estate, they buy apartments, that's their saving and investment vehicle of choice. But property prices have been going down now for what, two, three years. So that's taken away the, you know, the backstop of where a Chinese saver would put their money. Now there are other alternatives of course, but Gold is benefiting, I think, enormously from this. And that's been very much a story of the last few years.

A (7:31)

And that's interesting. And we often talk about demographics on this program. And one of the reasons why the Chinese property market can continually in a state of gradual decline is because of the rapidly falling household formation numbers. And we saw recently these very low number of births in China. So there's a strong suggestion that household formation will continue to fall in China and therefore the property market will continue to languish. And therefore it seems likely that savings will continue to shift into other products, not the goals of products. But do you know what I mean? It will continue to be a savings product of choice in China and possibly other parts of the emerging world where of course, populations are also static or falling.

B (8:06)

Yeah, and look, that's a really interesting point as well because we've, I've spoken about investment for gold in China, but historically jewelry demand has been a bigger component. And if I think about demographics, demographics worry me in the long term for jewelry demand in China, yes, for the reasons that you pointed out in India. But much later, India is in the middle of a demographic dividend at the moment that lasts until about 2040. If you look at the structure, the pyramid of the population in India, it's very young, much, much younger than China. It's now, I think, the largest country in the world in terms of population. It's the second largest gold consumer. They love gold. And if I look at all the marriages coming down the line, I'm very confident about medium and long term jewelry demand out of India, irrespective of the price in China. As I say, it's really important that investment demand continues to grow and continues to gain market share there because of the demographic challenges.

A (8:59)

Okay, right, let's move on then to the third and the thing that's really been pushing the price recently, which is Western investors sudden in on the game. What did they notice? Did Western investors suddenly start listening to this podcast or did they notice the price going up and suddenly get fomo? Or is it a genuine reaction to geopolitical change?

B (9:17)

I think all of the above and I think your podcast has been highly influential. But seriously, I think about the drivers behind Western investment demand. It's been very much concerns about the US Dollar, about what's happening with monetary policy in the States as interest rates get cut, and then what's going to happen with Fed independence in the medium term if we get to a situation where the US Economy runs hot so we get strong economic Growth, but inflation, interest rates too low, that can get nasty really quickly. And I think that that's one of the things that's attracted Western investors towards gold. And I think the second thing is fomo, as you say, this is to a large extent a momentum trade at the moment. I mean, we advocate that investors have a sensible allocation to gold in their portfolio as a strategic asset for the long term. We don't do that because we expect gold prices to go up 65% in one year or 20% in one month. There's no doubt that investors have jumped on the bandwagon to a degree, although not to the degree that they have in silver, which is, to be frank, quite crazy what's going on there. But yes, there's an element of short term speculation in the gold market as well. And that's, that's been, Western investors could deploy an awful lot of capital at a very short space of time. We've seen that to a degree over the last nine months.

A (10:41)

I'd say, well, we'll come back to silver later because that's, that's ridiculous and kind of exciting and also fascinating and definitely a momentum trade for now. But let's talk about where gold might go. So you're at, we're at the point in this cycle where everyone who didn't think gold was going to do this is suddenly trying to catch up. And you've got the strategists and investment banks or raising their targets for this year. Oh, it's going to go to 5,000. Oh, whoops, missed that. 6,000. Oh, I don't know, maybe 7,000. And then you've got the people saying, well, we'll hit 10,000 before you know it, etc. And of course this, even if that were to happen, it's not going to be a smooth pass. We know there's always, always fairly significant drawdowns in momentum markets like this. But what, how do you figure out what the right price is or where it should be? And there's so many different methods of attempting to value gold, something without a cash flow and therefore impossible to value. You can look at it as a percentage of the value of the US stock market, for example. So we now see it running at about 50% of the value of the US stock market is the total market capitalization of the gold above ground. So you can look at it like that. And at the moment 50%, it's been way higher in the past. But on the other hand, the U.S. market is, you could argue, significantly overvalued at the moment. So that changes the way that ratio works. And then I was very taken by George Cooper at Equity, who has got this gold dinner, a gold dinner at the Savoy Grill ratio, right? And back in 1971, he says you could get, hang on, I think three dinners at the Savoy for an ounce of gold. Now you can get 14 dinners at the Savoy for an ounce of gold. Maybe gold is cheap. You see what I mean? There are so many different ways of trying to value gold, but basically it's impossible, right?

B (12:23)

It's, it doesn't fit into conventional valuation frameworks, as you say, it doesn't produce a yield or a dividend. So you can't do a discounted cash flow on it. We've spent a lot of time in the last, probably the last seven or eight years in particular trying to come up with different ways to think about gold valuation, and particularly from a long term perspective. So if you're an asset allocator, you know, you can make assumptions and think, okay, what is my bond portfolio going to give me? I don't know, 3, 4%, what are equities going to give me? Maybe 6, 7% over the long term. And what about gold? And it's like, not sure. So the work that we've done, and it's all available, by the way, on our website, goldhub.com under the Tools section, we've put together something which we call glitter. We're very good at acronyms in our shop. So gold's expected long term return and what that works on is it thinks about the structure of the gold market. So all the gold that's ever been mined, who owns it, who's buying it, who's bought it and what are the drivers of that demand and what the conclusion that we come to is in the long term, you should be expecting gold to deliver US inflation plus about 2 to 3% per annum. So something in line with nominal GDP. Now that's very different from the sort of returns that we've seen over the last few years. So 19%, 26%, 65% and then 20% year to date. So one of the questions that we face a lot internally is like, well, if you think the long term returns are going to be in that order of magnitude of 4 to 5%, assuming US inflation is 2, maybe a bit more, if US inflation's a bit higher, what do you do after gold has gone up as much as this? And what I say to people under those circumstances is, look, gold has had a long track record of benefiting your portfolio through diversification and returns and helping prevent you against bad things happening. It is impossible, like everything else, to forecast where it's going in the short term. I mean, we're at, I think 103 all time highs now in gold since the beginning of 2024. If you'd have bought gold at any time in 2024, 2025, you're up. So in other words, just because gold's at an all time high doesn't mean that it can't go up any higher. But what I do say to people is you shouldn't expect the sort of returns that you've seen over the last three or four years to continue. Don't buy gold expecting it to deliver 50% per annum. It's much more likely to deliver over the long term, 5 or 6%. Now, in terms of 2026, what's the likelihood going forward? Well, we said at the start of the year is that if you look at the drivers of gold last year, if you look at the reasons people were buying gold, and I listed some of them before, looks pretty certain that they're going to continue. We're going to see more policy announcements out of the United States which are likely to rattle the markets from time to time. So why wouldn't people keep buying gold under those circumstances?

A (15:32)

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B (16:03)

Year, new goals, and in this economy, a better money plan is more necessary than ever. I am Matt. And I'm Joel. We are from the how to Money podcast. And every week we help you to spend smarter, save more and make sense of what's going on out there. If you want 2026 to be the year you finally feel in control of your money, we're here to give you the tools and advice to help you make it happen. Listen to how to Money on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

C (16:30)

What if mind control is real?

B (16:33)

If you could control the behavior of anybody around you, what kind of life would you have?

C (16:36)

Can you hypnotically persuade someone to buy a car.

A (16:39)

When you look at your car, you're.

B (16:41)

Going to become overwhelmed with such good feelings.

C (16:43)

Can you hypnotize someone into sleeping with you?

B (16:46)

I gave her some suggestions to be sexually aroused.

C (16:50)

Can you get someone to join your cult? NLP was used on me to access my subconscious. Nlp, AKA Neuro Linguistic Programming, is a blend of hypnosis, linguistic and psychology. Fans say it's like finally getting a user manual for your brain.

B (17:06)

It's about engineering consciousness.

C (17:08)

Mind Games is the story of nlp, its crazy cast of disciples, and the fake doctor who invented it at a New Age commune and sold it to guys in suits. He stood trial for murder and got acquitted. The biggest mind game of all, NLP, might actually work.

A (17:25)

This is wild.

C (17:27)

Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

A (17:34)

Fair enough. I mean, the dollar is weakening. But let me, let me take you back to what you said about US inflation. Surely one of the reasons why the why gold is going up so much is the assumption that US inflation will, at least in the medium term, be very significantly higher than 2% a year.

B (17:50)

Potentially. In that case, you can expect better, better returns. But if you think of US inflation plus 2 to 3% over the long term, if inflation's 5%, which would be historically very high over the long term, you're still only getting 7 or 8% return in gold.

A (18:05)

Okay, you said earlier that everyone should have a sensible allocation to gold. What does that mean? Is that 5%? Is that 2%? Is that 10%? In this environment, 15%. What is it?

B (18:16)

Sure. I guess the starting point is it depends what else is in your portfolio. If you have a very risky portfolio of all equities, or maybe all NASDAQ equities, or maybe NASDAQ equities plus some crypto. The riskier the portfolio you've got, the higher. The ideal allocation to gold is based on work we've done looking in the uk, the us, Europe, pretty much every major country in the world, looking at historic returns of gold and the assets that are available for people to buy, you get to a port. An ideal or an optimal allocation somewhere between 4 and maybe just over 10%. Now, 4% allocation would be if you had a very heavy bond or fixed income portfolio. And the sort of 10, 12% would be if you're much more riskier than that. Sort of like 60, 40 or 70, 30 in portfolio terms. So that's the sort of allocation that we've suggested is sensible or would have been sensible for people in the past. Now, obviously those sorts of calculations are done on the basis that what's happened in the past will continue in the future. And you know, the risk disclaimer that you get at the bottom of every financial product, you know, just because it's happened in the past doesn't mean it happened in the future. So start to think about where we are now. Equities, as you mentioned, particularly US equities, where most people have most of their equity exposure, are quite expensive. Think about the outlook for government bonds. We've just come out of a 40 year bull market for bonds that started in 1980 and probably ended in 2021. We're probably not going to see the same sort of returns that we've seen in government bonds as we've seen in the past. And that's before you start thinking about government deficits and debts. So Maybe that historic 5 to 10% allocation for gold is looking a bit low. And indeed, I think that's probably where the potential for gold to continue to prosper is going to come from. There was an article produced last year by Morgan Stanley, his chief investment officer, that said the 6040 portfolio is dead. The idea of having 60% of your assets in equities and 40% of your assets in bonds is dead. The new portfolio should be 60, 20, 20, 60% in equities, 20% in government bonds, 20% in gold. And that really excited us because first of all, we'd never suggested such a high potential allocation to gold. But it comes from. But the reason that Morgan Stanley have been highlighting this is something we recognized a few years ago and published on. And that's the breakdown of the negative correlation between equity markets and bond markets. That's what the whole 6040 portfolio was based on. Buy your equities, hedge yourself with bonds. When equities do poorly, bonds will probably do well. But that's not happening as reliably as it used to. Therefore, think about other alternatives that tend to do well when equities do badly. And indeed that's what's been happening in the last few years. And that's why gold is such a good inclusion. So coming back to your argument before about valuation and gold, and we don't look at the US stock market on its own and we certainly don't look at the total stock of gold out there in comparison, we look at the stock of investment gold. In other words, what is the total value of the investment gold out there? People have bought bars and coins and ETFs and everything else. And then we look at the market capitalization of the world, both equities and bonds. Now last time we looked at that number, it was about 1 1/2 percent. Gold's up a lot since then. Other stuff's moved too. It's probably about 2.5% now. So you can see where the potential is for more investment to come into gold. Even if you get up to the lower end of the historical recommended allocation, that's 5%. If you think about the higher end of the historical allocation, that's 10%. And if you listen to Morgan Stanley, maybe it should be closer to 20. So there's a lot more room for investors to diversify into gold, particularly if they don't trust the outlook for government bonds. And I don't know about you, but one of the things that's been frustrating me tremendously in a post pandemic world is the fact that governments are running such large budget deficits in comparatively good economic times and the stock of debt seems to be rising inexorably. Yeah.

A (22:38)

So effectively gold is becoming the new safe haven asset for a lot of people. So it replaces in the old days your safe haven was Treasuries or other government bonds. You bought these, that was your safe haven. Something went wrong, you knew you had those as your backup. But in this new environment with these incredibly high levels of debt that we get increasingly concerned might not be serviced long term, gold becomes your new safe haven asset.

B (23:00)

And you can see that in the performance as well. Historically, when the US equity market had a really bad down day, the US dollar would tend to strengthen as people were putting money into the dollar. Now because the US equity market, when it does have these corrections, it's often because of something that's coming out of Washington. The dollar tends to weaken as well. So you're getting hit in both ways. So bonds aren't your safe haven, the US Dollar isn't the safe haven that it was. And gold's benefiting at their expense to a degree.

A (23:29)

Interesting. And it's also, it's part of a, of a shift in general away from investors thinking to themselves digital assets are the answer, software assets are the answer. And beginning to think actually physical assets are the answer in this environment. So it's not just about gold as we've about talked discuss and let's talk a little bit more about that. It's about silver, it's about other industrial metals, it's about stuff about manufacturing, about factories, about physical commodities. So it's part of that general Mind shift as well, isn't it?

B (23:59)

I think it is. I'm a little bit cautious about some of these industrial metals by which talking particularly copper, but arguably silver as well. A lot of the gains that we're seeing in, in, in silver are touted on the basis of its industrial uses. But the global economy isn't growing that quickly at the moment. And my experience in covering commodities for many years now is industrial users of metals are very good at reducing the amount that they use when the price goes up a lot. You know, even copper, copper prices have gone up a lot in the last couple of decades. There's a lot less copper used in water piping than there used to be, for example. Now there's a lot of plastic used even in this. Even in some places. They're using it for. They're using aluminium for electrical conductivity, although not in the uk. But the cure for high prices in commodity markets is high prices because substitution comes in.

A (24:54)

Although interestingly. Can I just go pick you up briefly? Is it. In the past when they said the solution to high prices in commodity markets is high prices, part of what they meant was not so much substitute institution, they meant that supply would rise significantly because everyone would say, oh, look, copper's gone up. I'll just go take myself another copper mine. And of course, you can't do that anymore. You can't do that.

B (25:14)

You can, but you can't do that easily.

A (25:16)

Yeah, you've got a very long time frame. Planning is going to take you significantly longer than it used to. So you can't have a new copper mine up and running in 18 months. It's going to take you 10 years, 15 years, whatever it is. It's a very different supply environment. And that has to make a difference, doesn't it?

B (25:31)

It does, and I think it does for metals, where you don't have a pool of potential recycling to come back to the market. And in the case of copper, there's lots of recycling that takes place. If you knock down a building, they take out the copper wires and they send that off and get recycled and it turns up in another building somewhere else in electricity or piping, fine. But there's not a potential flood of copper to come back to the market on the recycling side. There is, however, in silver, and that's something I think, that some of the silver fanatics have been missing, is the fact that pretty much every silver refinery in the Western world is closed to accepting new scrap at the moment because it's full. So we're seeing these, these Announcements coming from the refineries or the scrap collectors saying we're going to close down for a week or two because, you know, we can't get this stuff refined at the moment. There is so much silver coming back to the market. Now I'm not saying that that means the price is going to go down, but it does mean that there's a lot of, a lot of granny silverware which is being sold into these high prices at the moment. A lot of U.S. coins, because, you know, the coinage system in the U.S. prior to the 70s, you know, silver dollars, silver quarters, silver nickels, or at least containing decent quantity quantities of it. So that stuff is coming back at such a speed that the refineries can't cope with at the moment. They will process it, it will come to the market. There is supply being brought to the market by higher prices, as you suggest.

A (26:57)

So do you sell? Feels to me like you're suggesting that silver might be well into the mania phase.

B (27:04)

Look, there's no doubt that we are seeing enormous retail demand for silver in various ways, whether it's via investment products, whether it's by physical silver in China. I was talking to one of my colleagues, Ray J, who's our head of China Research, and he was saying that in Shenzhen, which is one of the centers of the precious metals market in China, they're moving silver around on these trolleys. So much so that the roads are getting destroyed because of the weight of silver that's being shipped around as people are trying to get their hands on physical silver to invest. So, yeah, there's no doubt there's tremendous investment demand for silver at the moment. But if you look at historically at the performance of all precious metals, to be frank, you do get these phases when people buy them with great enthusiasm, expecting the prices to go up forever and then there's a correction. And look, we don't give investment advice, we don't make short term forecasts. But let's put it this way, I'm looking at the silver price with disbelief at the moment and waiting at least for a decent correction. Not saying it's over, but wow. And $110 an ounce.

A (28:11)

Yeah, we got so excited on this podcast and it went through 50.

B (28:15)

Well, 50. 50 was the. Yeah, 50 was the previous all time high, back to 1980.

A (28:20)

Absolutely.

B (28:21)

So it was a big number to go through, but then again, so it's a hundred.

A (28:25)

Well, I mean, I think we kind of stopped being excited after 70 and started just being mildly incredulous and wishing that we held More minor silver, you know, small silver miners and all that. Which brings me back to the thing that we're going to get lots of questions on, which is when you talk about having a 5 to 10% allocation to gold, do we mean actual physical gold or do we mean a mix of gold in your hand, hidden in your basement, gold ETFs and perhaps gold miners as well? Where are we here? What does it mean?

B (28:56)

The work we've done has been on gold, gold in all its different forms, but not gold mining companies or exploration companies. And there are merits to investing in gold miners. Just look at the performance that they delivered last year, massively outperforming the gold price. But there are risks. Think how many mines have been have, think how many mines have been taken away by governments or where taxes have suddenly been increased. So there's lots of additional risks, positive and negative investing in gold miners. So we don't do much studies on that. But you know, as I say, at the right time, and generally speaking, when the gold price is going up faster than their costs, gold mining companies or silver mining companies can increase more than the underlying metal. So that's what's happened last year. So in terms of gold itself, you can buy gold or get exposure to gold in a number of ways. You can go and buy physical gold, you'll have to pay a premium over the spot gold price. That premium, when the market's quite hot, which it is at the moment, could be 5, maybe 10% premium over the gold price. And when you come to sell it back, you might only get the gold price or maybe a slight discount. So there's a big bid ask spread in owning physical gold potentially. So that's something to bear in mind.

A (30:08)

I was just going to say that, you know, a lot of people hold gold for Armageddon reasons, right? I have my gold because everything's going to go horribly wrong. The world's going to collapse, it can be a massive cyber attack and the stock markets will collapse, everything will be gone, etc. And if you are that kind of gold buyer, there's really only one way to hold gold and that is physical, actual physical gold hidden in your house. So I think a lot of people are holding their gold for its insurance for very bad things. But if the very bad things they have in their mind happen, their ETF will be of no use to them in the immediate.

B (30:38)

Exactly. And it's when I worked at an investment bank and we would see the flows coming through and you could see in which way people were buying Gold, you could see the motivations behind them because you didn't have to tell you you could understand what they were doing. Consider the bid, ask, spread, or the premium that you're paying for physical gold as part of the insurance policy you're having to pay for this Armageddon. If, however, you don't think the financial system is going to collapse, if you don't think that there's going to be a huge run on banks, then maybe you're interested in buying gold via a financial product. And you can buy futures, you could buy gold certificates, you could do derivatives with banks, et cetera. Or you could have sort of a halfway house in between the two, which is buying a gold backed ETF, which is listed on the stock market around the world. Different ETFs, different stock markets. And this gives you the financial performance of gold in as close a way as to owning the physical yourself without having to pay that premium, without having to worry about holding it at home and thinking about insurance and theft, et cetera. So there's a number of different ways. And again, it depends why you're buying gold. There's lots of reasons to do so. We generally speak to investors and think about portfolios. And you've got a portfolio, you're probably thinking that the financial system isn't going to collapse. And in that way some sort of exposure via an ETF or another financial product is probably the best way to think about it.

A (32:01)

If you got gold buried in your.

B (32:02)

Garden, John couldn't possibly tell you. I do know a story about a hedge fund guy I bumped into again when I worked at UBS. And this was in the early 2000s when gold has started to go up again. He said, I've got 1500 Krugerrands buried in my ranch, but I can't remember where I put them. So every spring I go out there with my metal detector trying to work out where they are. So even burying gold in your garden is not without risks. Either the gophers have got it or maybe a robbers got it, or you could forget where it is.

A (32:32)

Well, that'll be very exciting for future archaeologists, won't it? One day somebody will find that and we'll probably, you know, everyone forgets where they buried their stuff. It's like pretty much everyone has, I can't find my jewelry store story and it ends up, you know, found at the bottom of some. Yeah, everyone has that story. Okay, so I want to ask you about a couple more things. And the first is an idea of my colleague John's. He Wrote a piece the other day about how one of the reasons that gold is rising so fast at the moment, it's a sentiment thing. Of course, there's always a sentiment thing. But gold used to be considered to be a right wing metal and now it's more of a, a left wing metal, more of a, a hedge against Trumpism, a hedge against political change in the U.S. so you know, if you're anti Trump, you can buy gold to hedge the weakness in the dollar that results from his policies. So that John wrote about this. I encourage everyone to go and read his amusing column on it. But there is that sense, isn't there, this sort of sentiment shift that is bringing a wider audience to gold.

B (33:29)

Yeah. And it's interesting if we look at the physical gold demand, so demand for coins and small investment bars, the one market that really hasn't taken off to the same degree as the United States. And it's something that we were anticipating actually because we'd seen it before. You're right that many physical buyers of gold in the United States tend to be Republicans. They tend to buy gold as well as guns and ammunition actually during Democratic presidencies because they're worried that the US Is going to hell and they'll be unable to buy guns and ammunition soon because it'll all be banned. And during a Republican leadership or Republican government, everything's going to be fine. So they don't need to buy guns because they can get them and they don't need to buy gold because everything's wonderful in America. So you're right in a way, I think, and John is right here. Is, is, is that it is a bit of a right wing metal. It's a bit of a male metal as well, certainly in the West. And it's a bit of an older metal. Emerging markets, of course, it's very different if you speak. When I go to India and speak to groups of investors there, I sometimes do presentations only to Indian women, high net worth individuals in their own right and talk to them about why everything they think about gold is wrong. Because they hone it as jewelry and they should be considering it as an investment asset as well.

A (34:49)

But don't they consider jewelry to be an investment asset?

B (34:52)

They should.

A (34:53)

It's how you carry your wealth.

B (34:54)

It is how you carry your wealth. But when it becomes seriously rich, you don't have enough gold. So if you can't physically own enough jewelry to diversify your portfolio effectively. So you should think about financial exposure to gold as well. Always fun talking to Indian women about Gold. They know far more about it than I do.

A (35:10)

Okay, fascinating. I think we have a reasonably high female audience. So, ladies, your bracelets aren't enough.

B (35:17)

Exactly.

A (35:18)

Okay, John, Now, a lot of the listeners to this podcast will have been buying gold. They will have a lot of gold. They may now have too much gold. So let's say you've been holding it a while. It's now probably going to be 30, 35% of your portfolio. If you've been holding a long time, it was going to feel tough to sell, right? You can see that price moving up and up and up. But maybe, you know, in your heart it's time to top slice, at least to diversify some of that away from gold. How do you manage that?

B (35:45)

Well, what I say to people is, and this question's come up a lot, and 20, 30% is actually low compared to some of the questions that I get. I bumped into one guy at a reception the other week. He said, you know, put lots of my pension into gold and silver a few years ago, and it's done really well. And I said to him, well, look, think about the reasons why you own gold. Think about it from the perspective as a diversifier, as a strategic asset. You always want to hold a certain proportion of it. And if you thought maybe you wanted to put in 10 or 15% of it and it's now worth 45%, then, you know, think about reducing that, perhaps think about other better reasons to own gold than there were when I put in 15% of it back in the day. And maybe there are, but there's probably not 45 or 50% allocation. And he said to me, oh, I've got 80%. I said, well, to be frank, yeah, quite. By the way, this was. If you had 80%, it's probably more like 90 now, because this was a few months ago. And I think the point there is that gold has a role in a portfolio. It shouldn't be your entire portfolio. Then you are just basically betting your farm on one asset class. And you know that as we all do, the best way to invest is to have an appropriately diversified portfolio. And then you, you know, you flex those weights a bit. But with the performance that gold has had, and particularly the outperformance that gold and silver have had of other assets in the last 18 months or so, there's nothing wrong with, with reducing exposure a bit.

A (37:15)

But if you have no gold at all, you should buy some.

B (37:19)

We believe every portfolio will benefit in the long term from having an appropriate amount of gold in your Portfolio. That doesn't mean to say that you buy gold at $5,250 an ounce, and it's guaranteed to go up, because it's not. But every portfolio that we've looked at would have benefited, past tense, from having gold in that portfolio over the last five, 10, 20, or since 1971, when we came off the gold standard.

A (37:43)

John, listen. Okay, here comes a difficult question. You ready? How does bitcoin fit into all this? I mean, you will remember not that long ago, we had to put up on this podcast with endless people telling us that bitcoin was digital gold. And then, of course, we got our kicks by calling gold physical Bitcoin. You have to get your laugh somewhere right now. Bitcoin and gold are clearly not the same thing. It is clearly not digital gold. It is not moving in the same way. These are different things.

B (38:13)

Things.

A (38:13)

What's going on?

B (38:14)

Absolutely. So, first of all, I work for the World Gold Council, so I'm not going to say anything. Whether I think you should own bitcoin or not, Fine. That's not my job. But what I would say is they are different. And as you've pointed out, they move in different ways. So I got really irritated with bitcoin being described as Gold 2.0 because it isn't. Bitcoin and other digital assets are, as one of my friends, Charlie Morris would say, they are tech stocks effectively, or at least they perform like tech stocks. If you've added bitcoin to your portfolio, you've increased your effective equity exposure. And in fact, what you've really done is you've increased your effective tech exposure more. That's fine. That could be a great decision. Bitcoin's done very well over the last 10 years, but it doesn't behave in the same way as gold. It won't diversify your portfolio. It will increase the risk of that portfolio. Now, again, no reason why you shouldn't own it, but do recognize that you've added risk to your portfolio. If you've added risk to your portfolio, what should you do? Diversify more. What should you consider as a potential diversifier? Gold.

A (39:19)

Have bitcoin buy gold. I suppose that the other problem with bitcoin, I suppose with all cryptocurrencies, one way or another, is that there are so many substitutes. I mean, and with silver, as you say, there may substitutes. Gold really doesn't have a substitute substitute. It's just gold. And bitcoin can be substituted in many, many ways.

B (39:38)

Sure, there may be finite numbers of bitcoins but there are not finite number of cryptocurrencies. And yes, silver is a bit of a substitute for gold. It's a bit of a substitute for gold in jewelry. It's a bit of a substitute for gold in investment, particularly when the silver price is moving like it is. But in the end, gold is a much, much bigger market than silver and always will be in my opinion.

A (40:00)

Amazing. John, thank you so much.

B (40:03)

Thank you very much. Marin. Great conversation.

A (40:07)

Thanks for listening to this week's Marin Talks Money. If you like our show, rate, review and subscribe wherever you listen to, podcast and keep sending questions or comments to marinmoneyloomburg.net you can also follow me and John on Twitter or x. I'm at marioneshw and John is johnstapek. This episode was hosted by me, Mary Zomzet Web it was produced by some of the Sadi and Moses Andam sound designed by Blake Maples. And special thanks to John Reed.

B (40:33)

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