GOLD, Japan & Inflation - MEGA Trends Shaping 2024 | Grant Williams
Summary
TLDRIn this special coverage from the Vancouver Resource Investment Conference, host Kai Hoff interviews Grant Williams, discussing global economic trends, market volatility, and the potential for gold. Williams emphasizes the importance of focusing on macroeconomic factors such as Japan's financial situation, inflation concerns, and the role of gold as a hedge against uncertainty. He suggests that the current environment calls for a strategic approach to investing, with an eye on the shifting dynamics of global markets and the enduring value of gold.
Takeaways
- 🌏 The global economy is experiencing a fragmented situation with some regions like China struggling, the U.S. economy being uncertain, Germany in a difficult position, and the UK facing issues, while some emerging markets like Mexico are doing well.
- 📉 Different economic strategies are needed for different parts of the world due to the varying economic conditions, adding complexity to the global financial landscape.
- 💹 The end of the cycle of dramatic interest rate hikes has led to increased uncertainty in financial markets, which is expected to result in more market volatility in the coming year.
- 🤔 Focusing on a reasonable return on investment, such as 5-10%, is suggested instead of chasing high-risk, high-reward investments, especially with the current ease of earning 5% with minimal risk.
- 💰 Understanding personal investment objectives and portfolio construction is crucial for navigating the complexities of the financial markets.
- 📊 The concept of 'inflation' varies as everyone has their own basket of goods and services that affect their personal inflation rate.
- 📉 Gold mining stocks can be volatile, and investors should have a realistic time horizon for owning them and not be swayed by short-term fluctuations.
- 🏦 Central banks have been buying more gold in the past two years than at any time since 1950, indicating a strategic move away from currency reserves to a more neutral reserve asset.
- 🗾 Japan's economy presents a unique opportunity due to corporate improvements, despite a high debt-to-GDP ratio and demographic challenges.
- 📈 The potential for normalization of interest rates in Japan could have significant global impacts, especially if it leads to repatriation of Japanese capital from overseas.
- 💼 The discussion highlights the importance of understanding macroeconomic trends to make informed microeconomic decisions, especially in the context of investing in gold and other commodities.
Q & A
What is the current state of the global economy according to the interview?
-The global economy is experiencing a patchwork of conditions, with some areas like China's economy struggling, the U.S. economy either booming or on the verge of collapse, Germany in a difficult state, the UK in trouble, and some emerging markets like Mexico doing well. This diversity in economic conditions is making the global economic situation more complex.
Why is the economic situation described as more complicated than before?
-The complexity arises from the fact that different regions are experiencing varied economic conditions, requiring distinct strategies for each part of the world. This is further complicated by the end of a short-lived but dramatic interest rate hike cycle, which has disrupted many people's belief systems about the financial world.
What is the impact of the changing economic conditions on investment strategies?
-Investors are likely to face more volatility and swings in markets and economic data, making the business of investing more difficult. It's suggested that investors should focus on their objectives and portfolio construction rather than trying to understand every factor, which can be overwhelming.
What is the current situation with inflation according to the interviewee?
-Despite some believing that inflation is under control, the interviewee suggests that it's not entirely resolved. Wage inflation, in particular, is a concern due to its stickiness, and there are indications that inflation could rise again, potentially requiring actions by the Federal Reserve.
Why is Japan a significant topic of discussion in the interview?
-Japan is highlighted as a market that has been overlooked but offers significant opportunities. The country has improved its corporate balance sheets and offers value investing opportunities with world-class companies trading at low valuations. Additionally, changes in monetary policy and the potential for capital inflows could significantly impact global markets.
What are the demographic challenges that Japan is facing?
-Japan is dealing with a shrinking population, which has been an issue for the past eight years. This demographic challenge needs to be addressed, although it is not seen as an immediate threat in the next couple of years.
How does the interviewee view the role of gold in the current economic climate?
-Gold is seen as a crucial asset for its liquidity, its role as a hedge against inflation and uncertainty, and its potential to maintain or increase purchasing power even during times of market instability. The interviewee suggests that gold's performance has been strong and expects it to continue outperforming.
What is the significance of central banks' gold purchases mentioned in the interview?
-Central banks are buying gold aggressively as a national security imperative, given the risks associated with holding reserves in foreign currencies that can be subject to political whims. This trend is expected to increase gold's status as a geopolitical asset and could be a tailwind for its price.
What are the implications of reshoring or onshoring production for inflation?
-Reshoring or onshoring production can lead to higher wages and costs due to the need for securing supply chains and potential trade policies. This could contribute to a higher inflation environment, which may be something that markets need to adjust to.
How does the interviewee suggest thinking about gold's value?
-The interviewee suggests looking at gold's purchasing power rather than its price. Even if the price of gold falls, if it can be exchanged for more units of other assets, its value as a reserve of capital has increased.
What is the potential impact on the U.S. if confidence in its treasury and central bank is lost?
-If confidence in the U.S. treasury and central bank is lost, it could lead to significant capital shifts away from the U.S., impacting the world economy and benefiting other countries that can absorb that capital.
Outlines
🌏 Global Economy and Market Volatility
The conversation begins with a discussion on the current state of the global economy, highlighting the lack of uniformity in economic directions among different regions. The Chinese economy is mentioned as struggling, while the U.S. economy shows mixed signals, and Germany and the UK face challenges. Emerging markets like Mexico are noted to be performing well. The complexity of having to adopt different strategies for various parts of the world is emphasized. The impact of the recent interest rate hike cycle and its effect on investor sentiment is discussed, with a prediction of increased market volatility in the coming year.
💼 Investment Focus and Strategy Amidst Economic Complexity
The focus shifts to investment strategies, emphasizing the importance of understanding one's investment objectives and portfolio construction. The change in the ease of achieving a 5% return without risk is noted, and the significance of focusing on specific factors rather than getting overwhelmed by global economic noise is underscored. The discussion touches on the importance of having a realistic time horizon for investments and not being swayed by short-term volatility, especially in the context of gold mining stocks.
🗾 Unpacking Japan's Economic Position and Potential
The dialogue delves into Japan's economic situation, discussing its 250% debt to GDP ratio, the strength of the Japanese yen, and the potential for capital inflows from overseas as Japan normalizes interest rates. The improvement in corporate Japan's balance sheets and the opportunities for value investors in the Japanese market are highlighted. Demographic challenges and the potential for capital flight from Japan to the U.S. are noted as areas of concern, yet the overall sentiment is optimistic about Japan's market and economic reforms.
📈 Inflation Concerns and the Fed's Response
Inflation is identified as a key concern, with recent numbers indicating a potential resurgence. Wage inflation is specifically called out as a stubborn issue. The Federal Reserve's actions and the potential for a premature declaration of victory over inflation are critiqued. The risks of ignoring inflation and the implications of higher inflation for the economy and markets are discussed, with a warning against complacency.
🌟 The Role and Future of Gold in the Macro Economy
Gold is presented as a significant asset in the macroeconomic landscape, with a discussion on its role as a hedge against inflation and uncertainty. The historical performance of gold since 2000 and its outperformance relative to major stock indices are noted. The geopolitical motivations behind central banks' gold purchases and the potential for gold to become a more prominent geopolitical asset are explored, with a bullish outlook on gold's future price and role in investment portfolios.
Mindmap
Keywords
💡Resource Investment Conference
💡Macro Economy
💡Volatility
💡Inflation
💡Gold
💡Japan
💡Yen
💡Debt-to-GDP Ratio
💡Central Banks
💡Wage Inflation
💡Stock Pickers
Highlights
Special coverage from the Vancouver resource investment conference sponsored by Victoria Gold Corp.
Discussion on the state of the global economy with a focus on the Chinese, German, UK economies, and emerging markets.
The complexity of the current economic situation due to diverging economic directions and strategies.
The impact of the short-lived interest rate hike cycle on financial markets and investor sentiment.
The importance of focusing on specific investment objectives and portfolio construction amidst market volatility.
The significance of understanding personal inflation baskets and the potential for wage inflation to drive up prices.
The disconnect between gold prices and gold stock performance despite gold reaching new highs.
The role of time horizon and portfolio objectives in responding to asset fluctuations.
Three key macro trends identified: Japan's economic situation, inflation concerns, and the potential of gold.
Japan's market potential, corporate balance sheet improvements, and demographic challenges.
The potential for Japan's policy rate normalization to impact global bond funds and currency markets.
The US's unique position in the global economy and the potential for future economic reckoning.
The resurgence of inflation fears and the debate over its sustainability and impact on wage growth.
The trend of onshoring and reshoring production, its implications for cost and wage inflation.
Gold's role as a liquidity reserve, hedge against inflation, and its purchasing power over time.
Central banks' aggressive gold buying as a national security imperative and its potential impact on gold prices.
The outlook for gold as a geopolitical asset and its expected performance in the coming years.
The importance of following financial experts like Grant Williams for insights on market trends.
Transcripts
[Music]
special coverage from the Vancouver
resource investment conference is
brought to you by Victoria gold
Corp welcome back to sore financially
and welcome back to the Vancouver
resource investment conference my name
is Kai Hoff and I'm thejr mining guy on
Twitter and the CEO of the S financially
group really appreciate you joining us
here back in Vancouver and uh I'm joined
by Grant Williams Grant been looking
forward to this interview for a long
long time hey guy been looking forward
to chatting yeah good to see you good to
see you it's uh it's good to be back my
C I love this place absolutely I love it
in July more I love it in January but
hey that's all right I don't mind the
rain I lived here for three and a half
years and I don't mind the rain I have
to admit it you're better Am Me Maybe
week three gets a little boring but I'm
English we know all about the r exact
absolutely um Grant we have to talk
markets we have to talk about what is
happening in the world on a financial
and global scale of course let's start
with since you're the First Time guest
on this show a bit of a macro overie
like what's the state of the economy
right now well which economy I mean
that's that's start globally and then we
can on down a little bit cuz there's a
lot of we discussed off camera a little
bit as well there a lot of interlinking
factors so let let's start off globally
and then we can work us and maybe some
of the other nations that we discussed
earlier well look it's an interesting
question right because for a long time
you could talk about the global economy
and give an answer but for the first
time it's not as simple as that it's not
as though everything's going in the same
direction there's there's pockets of
stress you know Chinese economy is
struggling that hasn't been the case for
a while you economy is either booming or
about to collapse depending on who you
listen to uh Germany's a basket case the
UK is in trouble um some of the emerging
market economies are pretty strong you
know Mexico's doing okay there there are
so sudden you kind of got all these
cross Curren I think that's that's a
source of some of the the problems is
that you've suddenly got to have a
different strategy for different parts
of the world and it's just made the
whole thing a lot more complicated and
that's to be expected you know we we're
we're at the end of a cycle where we've
been through this this uh shortlived but
dramatic interest rate hike cycle which
has upended an awful lot of people's
belief system about the entire Financial
World it predicat upon low rates so
we're in a period now where there's an
awful lot of um uncertainty and that is
going to feed through to markets it's
going to feed through to investor
sentiment and so you right now for the
next year I suspect you are going to see
I think a lot more volatility a lot more
swings in markets and in economic data
and that's going to make the business of
investing that much more difficult what
do you focus on when you try to make
sense of it all like you said there's so
many factors going in but uh what what
kind of filters do you use to sort of
weed out the bqu yeah I mean it
depends what a what you're trying to
achieve with investment and be the kind
of style that you're trying to let's say
generate wealth and a positive return on
the portfolio it doesn't have to be 50
or 100% let's say reasonable return of
like 5 to 10% so let's expect let's
start with the fact that you can get 5%
pretty easily now right without taking
any risk that's a really important
change so if that is your goal you know
you've been handed a way to do that with
minimum stress beating
inflation inflation numbers yeah I mean
that's everyone has their own inflation
right that's that's that's the reality
of it um um away from food and shelter
everybody has a different set of
variables they go into their own
inflation basket but right now you know
for me it's a case of understand what
your objectiv are understand how your
portfolio is constructed to meet those
objectives and then focus on those
things if you try and focus on
everything it gets too complicated it's
going to get way noisier than it is now
and you're liable to get lost in that
noise so you know trying to be an expert
on the US and uranium and China and
natural gas and ESG all these things
that we've all tried to be experts on is
going to be a lot more problematic so I
think focus is the most important thing
to remember thanks for clarify on that
cuz like one of the mantras of our
channel is understanding the macro to
understand the micro yeah macro means
everything that's involving the gold
price and commodity prices more or less
to understand why is it why are the
mining stocks not performing right
that's the ending question right that we
could talk about that later but so that
means like we have whole source of
information we got to funnel it through
to understand okay why didn't the gold
stocks move this week when gold reached
a new old time high well look it's
interesting that that that why question
is an interesting one because of course
we all we all want a reason why because
once we have a reason why we can make
sense of things but there's never a why
didn't gold stocks move there just never
is an answer to that question and
everyone searches for it so if you have
a if you have a realistic time Horizon
for owning your gold stocks if you are
buying them because you think they're
going to double in a week if they don't
double in a week get out it's simple if
you're buying gold mining stes because
you think that the next 10 years are
going to be incredibly bullish for goal
don't sell them because they fall 25% CU
that's what they do they're very
volatile stocks so again it's really
about understanding what's in your
portfolio why it's there and what your
time Horizon is because that will
dictate how you respond to swings in the
in the assets and themselves if you were
to pick three macro Trends right now
which ones would you choose and which
ones you know like also would you like
to discuss further you know which are
really important to you right now uh
Japan is one of them we'll we we'll talk
about that in a minute I think Japan is
going to be something that people are
going to once again get familiarized
with and and there's a lot of money to
be in Japan I think um um I think
inflation is still a very important
subject to have a handle on everyone
thinks it's dead and the FED of hung the
mission accomplished banners up and
everything's gone away I don't think
that's the case I think it's still there
we saw just today um a big strike at one
of the universities in California or the
faculty walking out wanting much bigger
wages I think we're going to see more of
that and wage inflation is the worst
inflation of all in terms of how
entrenched it get you can't you can
lower prices in food if you increase and
it's tough to lower wages once you INE
so I think inflation is still something
that we need to worry about and I come
back to Gold I think I think gold is
it's time for gold I think all the
pieces are in place for gold to become a
much bigger part of the macro
conversation uh I think the reasons for
owning gold have been strong for a while
but they're starting to be strong for a
lot more different groups of people
particularly the centry banks we've seen
them buying more gold the last two years
than they have since 1950 and that's
important because they're you know they
don't care what the price is they just
need to own it and diversify out of out
of their currency reserves into a
neutral Reserve assets so I think this
is a lot of ta wins for gold so for me
Japan gold and inflation are the three
things that I'm kind of keeping an eye
let's start a little deeper on those
topics because Japan like is a topic
nobody really talks about because I
think people don't understand of what
what's going on there like a few
commentators have mentioned of course
the Yen uh dropping crazy and the N
exploding and really generating some
wealth and there's been you know
discussions about the Yen dollar pair
trade meaning you borrow on Yen and then
you buy us bonds cuz uh it just makes
sense can make money on it the over TR
right but Japan is a topic nobody
understands and the 250% debt to GDP
ratio as well everybody's trying to
figure out why that economy hasn't
collapsed entirely as well yeah maybe
you could clarify a few things there
yeah I I'm biased because I began my
career in Japan in the ' 80s when it was
the hottest Market on the face of the
planet you know Japan was where
everybody was going to make and and if
you look at the performance of the Nick
through the 80s it was extraordinary was
like the NASDAQ in the UNS um and you
know that market stopped going up on
December 31st 1989 it started going down
it's been going down for most of the
intervening 30 plus years but you know
things are changing and the Nick is plus
or minus 40,000 now is about to break
out to new highs for the first time say
since 1989 which when you think what's
happening in the US and other major
markets that's extraordinary but more
important than that is the fact that the
um over that time corporate Japan has
really got its balance sheet in much
better shape because it's had to uh the
companies have become much better
stewards of shareholder Capital uh you
know returning Capital to shareholders
BuyBacks dividends all these things that
were really not part of corporate Japan
before they made great progress and you
can go to
Japan uh if you're a stock picker and
you can find world-class companies
trading on single digigit pees Trading
below Book value you can find all the
kind of things that value investors want
in a big economy in a first world
economy that uh has challenges and we'll
talk about those in a second but finally
if you're looking for a big liquid deep
Market that can accept capital and
people say there's no game in town under
us Japan's not as big as the us but it's
certainly a lot bigger than a lot of
other markets and can and can absorb an
awful lot of capital added to which the
Japanese is the big Japanese are the
biggest creditors in the world so
there's an all full of Japanese Capital
overseas that when we start to see a
positive uh yield in Japan is going to
start to come home and when that changes
when those Capital flows out of Japan
and into US stocks and bonds
particularly reverses it's going to
change things dramatically and so you
know Japan's challeng is the demographic
challenge is a clear one and other
country is the population is shrinking
it has been for the last8 years um that
needs to be addressed it probably won't
be in a short order um so it's something
to be aware of I don't think it's a
clear and present danger in the next
couple of years but it's something to be
aware of Deb GDP you talked about that
before we started filming the numbers
are incredibly High the bank of Japan
has a massive bloated balance sheet um
it has cornered the Japanese Sovereign
bond market which is not a good thing um
and and so there are these challenges
that the that the extraordinary monetary
policy has put in front of Japan but
with the change of Governor from kodan
to way last
year they have a chance to Kitchen syn
all this and say that was there this is
now which they're starting to do and
they've talked overtly about normalizing
interest rates and it's really important
to understand what that means you know
the policy rate Japan has been negative
10 basis points for a long time they've
basically had Zer for two
decades um talking about normalizing
policy rates is a big deal in Japan even
if the rate goes from -10 basis point a
positive 10 basis points doesn't really
make a difference but the message it
sends and the fact that the Japanese are
finally going to try and normalize rates
whatever that means but if you got
Japanese rates to 1% if you got the
Japanese policy rate to
1% the shift that that would precipitate
in global bond funds the money that that
would bring home into Japan from
overseas bonds the the effect that would
have on the Y which is the currency as
you said the carry trade everybody's net
short the Y effectively whether they
know it or not um these are profound
changes and so I just think that finally
Japan is started to make the right noise
know it doesn't hurt having someone like
Warren Buffett putting a lot of money to
work in Japan about 18 months ago that
got people sitting up and taking notice
there is value in Japan and it it is a
stock Pickers Market it is a place where
you can go and practice the art of
investment that you can't do many places
anymore because of ETFs and for me I
just think it's a place where there's
going to be some real opportunity this
year to make money just a up on that as
well like higher Bas higher base rate as
well in Japan like can Japan afford it
at the Deb level well this is my point
fromus 10 to to to minus 10 Bas points
to plus 10 basis points it's about the
signal not the number right but if you
get to 100 basis points all of a sudden
a little higher because but again the
Japanese Central Bank has a lot of bonds
on their books which they own you know
zero interest rates once you start
seeing that Capital come home and the
Japanese you know effectively pension
money market accounts have their
negotiations in March when they set the
rate they're talking about that being 75
basis points this year so suddenly at 75
basis points there's an awful lot of
demand for Japanese domestic debt from
domestic Pension funds institutions so
there is a scenario it's unlikely to be
smooth but which the bank of Japan can
actually let all this debt go into the
Pension funds you there are ways they
can get around this there's there's the
famous trillion dollar platinum coin the
zero coupon all that stuff right but you
have to realize that but Japan has been
doing this for 20 years and it hasn't
fallen into the sea the the economy has
gotten better and not worse the
corporate balance sheets have gotten
better not worse and yes it's a massive
problem but is it an insurmountable one
I think it isn't and I think that the
opportunity on offering in the Japanese
stock market is such that you can you
can you look past this with one eye and
and not think that precludes any
investment in Japan I just don't think
it does I like talking about Japan
because I always bring it up also in
conversation because I'm looking for a
way for the US maybe moving forward as
well and I look I'm looking for endgame
scenarios or potential scenarios how
this all could unfold and play out and
Japan of course is where it is right now
do you see the us moving in that
direction as well because it feels like
we're keep kicking down the can down the
road and looking at the depth in GDP R
for as an example we still got a long
way to go in the US to getting to the
Japanese levels but it shouldn't it sh
yeah so sure there that's an interesting
one but but shouldn't the US should
never really be able to get to Japan
levels because the currency is so
important to the rest of the world so it
should matter you know Japan's been able
to do this in relative peace and quiet
because China has kind of taken the
attention of the world as it's as it's
come up Japan's been able to get its
corporate balance sheet in much better
shape kind of quietly without anybody
really paying attention to it the US
doesn't have that luxury you know with
the with the with a congressional budget
office uh estimates of what the deficit
is going to be for the next 5 six seven
8 years
the us is going to face a recking for
sure we don't know when it's going to be
but the numbers don't work they haven't
worked for some time it hasn't mattered
but it will matter I just don't know
when and and when it matters the world
is going to need a home for a lot of
capital that currently sitting in the US
if people lose faith and confidence in
the treasury in the US uh Central Bank
which I'm amazed they haven't already if
the election makes people concerned
which either way it has the clear um
potential to do
um I think the us is going to face
challenges it doesn't mean it's not
still the biggest economy in the world
or the most powerful Market or the home
for the most Capital that the margin
we're starting to see shifts away from
that and that's all it really needs for
for other countries to benefit thanks
thanks recovering Japan like I haven't
talked to anybody really about it so
it's they L spending a lot of time I'm
sure a lot of people think why is he
talking about Japan but for me it's it's
it's interesting again after 25 years oh
it's a new angle for us on the channel
as well cuz we often touch on it we
really never dive in deep this quite H
is a lack of expertise as who cares
you're right who cares so um second
topic you mention is inflation and we've
just got the inflation numbers last week
as well they actually were higher than
expected yeah uh what do you make of
that cuz inflation fears seem to be
coming back a little bit into the
markets true inflation is down below 2%
but all the other inflation indicators
are pointing up you mentioned wage
inflation uh as well what's your opinion
really on inflation how sticky is it do
we see a massive rebound do we see 9%
inflation again no I it's not beyond the
real of possibility and if you think
about that um for the longest time it
was it was almost impossible to conceive
inflation above 2% because they couldn't
get it they what we did so uh could it
get to again absolutely could it would
it would it would take probably actions
by the Federal Reserve in terms of
slashing interest rates to see inflation
get out control but the wage price stuff
does worry me because it's very very
sticky inflation and so yeah I always
worry when they hang the mission
accomplish banners and they did that at
the tail end of the last year um talking
about how they've got it under control
and talking about you know signaling
Cuts because they know that the market
needs that promise of lower cost of
capital in order to function properly
now um and that's the word they've
created with their policy so they have
to try and maintain it um ultimately it
is doomed to failure it just is and the
math just doesn't work after a certain
level but again um everybody is very
happy to play along because it's easy to
make money when interest rates are low
and asset prices are rising so people
tend not to put their fingers in their
ears and Shout la la la but when rates
are going up and when inflation is a
problem we saw what happened in the bond
market through last year we saw what
happened in Silicon Valley and the
Signature Bank back in March um once
these problems become real and they have
to be faced facing them means Banks
going out of business and you know
prices going up and people out on the
streets and all these things that we've
kind of forgotten about since the 70s so
um to say that inflation as a as a
concern is over I think is way too PR
way too well we had Noble laats come out
and say we've beaten the war we won the
war in inflation I was a yeah one
particular Noble
La well quite controversial don't say
his name in case you summon him it's
just you say it three times like Beetle
Juice exactly right we don't want that
happen no let's not like Okay so let's
wrap up that inflation debate because
everybody sees it onshoring is another
Trend as well or reshoring whatever you
want to call it bringing production back
on comes with cost and wage inflation
look it does and the question is is it a
choice or is it is it a policy you know
is it is it something they decide
they're going to do or is it something
they have to do because uh other
countries are forming blocks left and
right that that are antagonistic towards
the US um the US is needs to secure its
Supply chains CO's proven that and the
only way to really do that is to move it
back on Shore or to friendly countries
maybe you move it to Europe Mexico is
obviously a favorite destination right
now but moving it to Europe is expensive
moving it onshore is even more expensive
um the chances are that's going to lead
to higher higher wages and higher cost
so we just have to deal with that and
and I think after so many years of low
inflation we just have to accept that
we're in a world of higher inflation for
a while and it it's just going to be
that wayas all right last topic I we
need to touch on is your topic of the
conference here as well because we're at
the M resource invest it is gold your
title is called rise and shine gold has
risen is it Shining I I think this year
and the next couple years could be big
years for God and I don't I I'm I'm very
happy to talk about gold often but I
don't normally come out and say I think
this is going to be a good year I've
done it two or three times and my track
record has been pretty decent with those
times um I don't think of it as
something to buy and sell I think of it
as a liquidity Reserve I think of it as
a a hedge against inflation I think of
it as a hedge against uncertainty and I
don't think about the price of gold I
want to own gold uh I want to keep my
savings in gold and then exchange it for
things that uh I want to own more at a
given point in time and the point I was
making in my presentation was you look
at Gold's purchasing power not the price
so um in 2008 for example gold spiked
into the bare Sterns collapse performed
incredibly well and then when be STS
went under it fell and everybody was
saying what the hell's going on why
goals not supposed to fall in times of
Crisis but it was liquidity and people
that had margin calls were selling gold
CU it's liquid is liquid Capital um but
importantly gold fell
30% uh it quickly rebounded the S&P went
on to fall 65% and so even though gold
was down your purchasing power increased
and that's how I try and get people to
think about gold is the price went down
but if you can buy twice as much there
twice as many units the S&P today even
with a reduced pricing go you might want
to own the S&P more now cuz it's
corrected 66% so I just think of it as a
as a liquidity reserve and capital and I
think to exchange for other assets as a
when the relative values alike and if
you think of it in those terms you know
gold has done tremendously well if you
look at headline terms since 2000 when
it bottomed when the uh the Central Bank
stopped selling gold um it's outperform
the S&P it's outperformed the Dow Jones
it's outperform the S&P on a total
return basis and all you've had to do is
sit there with it in a safety deposit
box you haven't had to worry about all
the ups and downs in the market which
stocks to pick it's just outperform and
I I suspect that outperformance will
actually increase if we get some
instability in uh Equity markets in the
US particular which I fully expect to
see before this year's out how do you
political as the GOL press right now uh
it's becoming more so yeah it's a great
question it it it's becoming more so
because we are seeing central banks
aggressively buying gold and there's
only so much of it there's only so much
additional Supply every year and when
you have an increasing number of uh
price insensitive buyers looking to
acquire it that tends to lead to higher
prices but more importantly the reasons
these centes are trying to buy gold is
because it's a national security
imperative you know once once the US
Treasury frows Russian assets when they
went across the border with Ukraine
every single Central Bank in the world
that owns Dollar reserves was on notice
that this could happen to you and while
the majority of them I'm sure think well
we're on the same team as the us we're
not going to upset them they can't take
that chance now because it's been proven
that it can happen and if your um if
your uh reserves are a national security
imperative which they obviously are you
cannot have them at the whim of a
capricious foreign government and gold
is essentially the only neutral Reserve
asset out there and that explains why
central banks are moving to acquire gold
and I think that is going to make gold
more of a geopolitical asset it's going
to be a Tailwind for the price and I
think that's a big part of why we're
going to see a good year for gold this
year and on that note Grant fastic
chatting with you we have to conference
we keep the conference interviews a
little bit shorter you back later in the
year of course as well and see how the
trends are developing how Japan is doing
how we're doing on the inflation cycle
and business cycle as well most of all
any talk where can we find more of your
work uh easy ground- williams.com that's
it that's it nice and simple it's uh
it's all there fantastic awesome thank
you so much Grant really appreciate been
you do this for a long long time and uh
everybody else thank you so much for
tuning in we really I really enjoyed
this conversation with Gran Williams
make sure to go follow him on his
website he's also on Twitter I think yes
I am yeah I am I'm TTM G which is things
to make you go put description catch
that earlier so um really appreciate you
tuning in if you have any questions any
comments put them down below we do want
to hear from you and I know that 85% of
you watching are not subscribe to the
channel let's please change that it
helps us tremendously bringing guests
like Grant on the progress we really
appreciate it and of course we'll be
back with lots more here from Vancouver
thank you so much for joining us
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