The Canadian Investor - Breaking Down the Quantum Stock Mania

Episode Date: October 20, 2025

We open on the quantum bubble—why euphoric pricing, SPAC lineage, tiny revenues, and heavy short interest make this corner of the market feel like a digital casino. Then we break down shorting in plain English (and why timing risk blows up otherwise “correct” theses). Simon pivots to gold’s surge, drawing parallels to the post-1971 fiat shift, sticky core inflation, and chronic deficits—plus what the Bank of Canada’s changing language might be signaling. We wrap with how gold and Bitcoin can coexist in a portfolio and a quick life update from the hosts. Not investment advice. Tickers of ETFs discussed:  IONQ, RGTI, QBTS, IBM, MSFT, GOOGL, FNV, AEM Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own cyclicals, don't be surprised when. there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Canadian investor podcast. My name is Simone Ben-Age. I'm back here with Dan Kent. We are back for a regular episode where we'll talk a bit more about concepts or different things that we're looking at right now in the markets. Before we get

started, obviously, for those on Joint TCI with the video, I am recovering from an injection in my back. Shout out to beam radiology for pain management. They did a fantastic job, but it is a painful procedure, so I had to record in a different location because I'm getting some foundation work, and so I'm a bit less comfortable than usual to begin with, and then I have to stand the whole recording. So we'll try to make it a slightly shorter recording with that housekeeping out of the way, so probably keep it to around 35 minutes so I don't start grimacing too much towards the end. So do you want to get started, Dan, with the segment you worked on? I'm going to be listening because I wasn't aware about all the euphoria surrounding this space.

Yeah, so I had heard about it a bit. I don't really know much about it all that much either. I mean, we're probably both going to be talking here from, you know, kind of a stance of, I really don't know, but the one thing you can tell is there is a ton of euphoria. in this side of the market. And I'm sure a lot of listeners, I don't know, some people might even own these stocks. Some people might be looking at these stocks right now

because of the returns. It's probably one of the craziest areas of the market I've seen in my entire, I mean, investing career. You could argue cannabis. Well, actually, no, I don't even think cannabis got this crazy. But that is, it would be pretty close, but it's quantum stocks. So, I mean, I think this is kind of, you know,

there's a lot of comments. So you're talking here, like quantum computing. Quantum computing, but it even like, I got, I got some stories. It should be a good segment. So kind of hidden behind like, you know, obviously a lot of people are debating whether AI is in a bubble like artificial intelligence. I mean, it, you would be hard pressed to find anybody who actually thinks that quantum stocks are not a massive bubble at this point in time. And I mean, I guess, again, I don't really know much about it, but one of the most popular quotes I've seen about quantum computing is kind of that a quantum computer is more advanced

than a regular computer than a regular computer is to an abacus, which is like, so you're kind of like comparing, you know, PCs are pretty advanced. Yeah, it's like, you know, an abacus, like very simple, you know, yeah, whereas, you know, that compared to a computer, a quantum computer is more advanced than that. So from what I have read, quantum computing kind of uses quantum physics to process information that today's computers cannot do. So, you know, a standard computer can only process bits that are either in one state or the next while quantum bits or qubits. I think they call them can be in multiple states at once. So in theory, they can process information significantly faster than standard computers. I mean, J.P. Morgan had mentioned some early

testing of the technology highlighted that the time taken to perform things like portfolio optimization tasks can be reduced by like 80, 90% by using quantum over, you know, regular systems. So last year, the market was around $4 billion. And by 2035, many experts have the market growing to $72 billion. So this would be a 30% compound annual growth rate, which, you know, you would think that this is kind of an area that you want to get into, Obviously, a 30% compound annual growth rate is massive, but when I get into the individual companies, you'll probably figure out why it might not be. Governments are getting involved as well. They're dumping billions of dollars into the tech.

I mean, there's a lot of large-scale players in this space, Alphabet, Microsoft. IBM would probably be the most notable one. However, IBM has only signed around $1 billion in contracts dating back to 2017, and much of that is still, like, future projected work. IBM has developed more quantum systems itself than any of the other companies combined. Like all of the companies on the globe combined, IBM has developed more systems than all of them. And out of IBM's $150 billion investment plans over the next five years in the U.S., around 30 billion of that will be in quantum computing. But where it gets really interesting is in the pure quantum place, many of which generate, I don't want to say no revenue, but very little revenue relative to valuation. and most of all of them are in like prototype stages.

And I mean, a lot of these companies will spend insane amounts on R&D and heavy investment into the tech that will never work out, never deem to be profitable. Like if we think of AI as a situation where, you know, it's heavily debatable whether or not it'll be profitable

in the next half decade. Like I think they, they don't expect quantum computing to, to drive any sort of meaningful profits for like a decade plus. So some of the companies, companies involved. Ion Q would be one of them. And this was the first pure play quantum company to go public. So it did so in 2021 as a SPAC. When the company went public. Yeah. Of course it went as a SPAC. You're going to see SPAC a lot in this. So. Okay. When it when it went public, it had around two million in revenue. So fast forward to today, it has trailing 12 month revenue of around 52 million. So I mean, that's it's pretty strong growth. You're talking like four years. They've, yeah, 26x revenue, but the only difficult to hear is the... Was it a SPAC sponsored by Shemoth from the All In Podcast?

That, I don't know. It very well could be, but... For those not aware, he was kind of famous at a few, like, Rugpool on retail investors or, you know, saying that he was holding Tesla at, like, all-time highs, and he was holding for the long time, and then a few months later, back on CNBC, and they're like, oh, do you still own it? It's like, no, I sold it off. I mean, he might be involved in some of these.

I don't know, but pretty much all of them are SPACs. I mean, you would, like I said, you would think like 2 million to 52 million. It's pretty crazy, but the only thing is the company trades at a market cap at $24 billion. So, I mean, you're talking about $24 billion market cap on $52 million in revenue, so you're looking at around $400. Sounds about right. Yes. That's pretty good value right there. 400.

It's going to be a $10 trillion dollar business. So that's nothing. It's absolutely insane, like 461X sales. So the company has gone from $3 a share at the end of 2022 to around 80 per share today. I mean, these stocks move so much on a single daily basis that like I haven't checked it recently. It could have changed, but it was around 80 bucks when I last checked it. Loss is expected to kind of balloon moving forward, but revenue is also expected to grow

to 320 million by the end of 2027. So, I mean, $24 billion for $320 million might sound a little more attractive, but it's still... $5 trillion by 2030, I'm calling you. It's just absolutely insane. I mean, the company has taken advantage of the ballooning share price. So it's issued shares 50%, like it's increased its shares outstanding by about 50% over the last few years. And, I mean, despite the evaluations, which, I mean, in my opinion and probably the opinion of many being completely unsustainable. I mean, this seems like one of the reasonable ones in the space.

I mean, it's kind of secured a bunch of deals with car manufacturers. I believe it does work for the U.S. Air Force. But shares short sit around 24%. And this is actually one of the lowest out of all of these. So around 24, 25% of shares outstanding are sold short. The next one would be Rigetti computing. I have no idea how you pronounce it. That might be it.

That might not be. But this is another one went public via SPAC in 2022. and back in 2013, it was apparently founded as a rival to IBM and Google in terms of quantum tech. And I mean, if you thought of Ion Q's valuation was crazy, it will pretty much seem dirt cheap when you see this one. So, Righetti trades at an $18 billion market cap with trailing 12-month revenues of only $7 million. So you're talking 2,571x trailing 12-month sales. So the company is expected to generate $21 million in revenue. revenue in 2026, so it's pretty much going to triple its base, and then 39 million in

27. Again, on the surface, huge revenue numbers, but I mean, I can't even fathom what investors are thinking paying these types of valuations. Much like IonQ, they've taken advantage of the rising share prices, so they've doubled their shares outstanding. And shares short for this one peaked around 26%, but they now sit around 15%. So when the shares, were like when when shares short were at their peak the price was around 10 bucks so to just give you an idea

how dangerous shorting is if you took a 10K short position back then it would cost you just under $60,000 to close the position today so you'd be yeah you'd be looking at a 60K loss so the third one and the final one I'll go over would be D-Wave Quantum

and this is actually a Canadian-based company but it trades on the New York Stock Exchange so this one has been selling quantum systems for a while. But again, SPAC in mid-2020. And this one is apparently different than companies like IonQ and Righetti because it uses quantum annealing versus gate-based quantum computing. So, I mean, I pretty much had to go to chat GPT for this. And it told me, like, effectively what DVEWave does, it would kind of be like rolling a self-driving car down a hill through a whole bunch of roads. And that car would kind of naturally find the fastest route. And that car would kind of

naturally find the fastest route, whereas a gate-based system like IonQ or Rijetti would kind of be like developing a GPS and the road network itself, the same road network, and kind of mapping out every possible sequence. It's much more complex, but it's also more powerful. So the wave trades at a market cap of $15 billion with $22 million in trailing 12-month revenue. So again, you're looking at, you know, 681x trailing 12-month sales. Estimates are for revenue, to triple in 2026 and then just kind of doubled through the next few years. D-Wave doubled its shares outstanding over the last year again. Short interest is around 20%.

And again, if you were to, if you were to have shorted this company back in May 2025, when shorts were at their peak, it would cost you about $50,000 to close out your position. So, I mean, it's really hard to argue that these stocks aren't just, I mean, a digital casino at this point in time. So back in October, J.P. Morgan, I believe this might have been last October. J.P. Morgan announced a major investment into future tech. And all they did was mention quantum computing. They didn't say a dollar amount or they didn't say any of these specific companies. And many of them went up 25% just based off that news.

And as I had mentioned, like, meaningful profits from what I've read are a decade away at minimum. And I mean, this rally is so crazy. They had a company called Quantum Corp, which makes digital storage solutions like flash drives. It has absolutely nothing to do with quantum computing, and the stock went from $3 a share to $70 a share. Just based off people believing it was some sort of quantum stock, obviously the company, you know, fell off a cliff. It's back down to $13 a share, but it still has nearly 50% of its shares outstanding sold short. I mean, this is kind of similar. Well, I don't want to say it's similar because it is.

much, much more absurd than AI. But I mean, obviously it's probably pretty normal to get excited about the tech. But I mean, a lot of these companies, I just can't imagine paying these prices. And I mean, I guess on the flip side, I wanted to mention all the shorts because I mean, this is just a prime example of no matter how bearish I am on a particular stocker industry, I will never go short. I mean, you just never know what the market will do. Like, it's so dangerous. I think that's a great point. Yeah, exactly. Because even Even if you're right that the company will go down, you have to be right on the right time frame, right? So if you're right, but you're three, four years early, it's the same as being wrong.

Yeah. Because you're short, well, I've cost you so much that it won't be a profitable trade. So I think that's real important. And especially when you have unpredictability and volatility like that, it's very dangerous to do a short. Yeah, yeah, because, I mean, obviously your gains are capped. but your losses are unlimited. And I mean, shorting an industry like this, which is just pure speculation, like to one of the craziest levels I've ever seen, I mean, you could realistically, if you would have went

and shorted a few of these stocks with even $20,000, $30,000 between a few of them, you could easily have blown up a half a million dollar portfolio pretty easily. And I mean, it seems like so obvious to do that on stocks that are trading at, you know, 2,500 X are trailing 12-month sales, but I mean, I still wouldn't touch it because, I mean, they could still go up. This could continue for a very long time. And like, these shares are heavily, heavily shorted, like pretty much across the board. And, and a lot of the people who are short right now are just getting wrecked.

And I think that's probably one of the main reasons that they're probably going up is I imagine a lot of people are closing out positions. I mean, this is probably. They're being squeezed. They're being squeezed out. And yeah, I mean, I think the vast majority of activity in these companies right now is retail. I didn't get the exact numbers as to like percentages, but it's mostly retail investors kind of driving this activity. And it's one of the craziest like areas of the market today by a landslide.

In this kind of market, I like having some cash on the sidelines. It gives me the flexibility to jump on opportunities when the right stock goes on sale. But just because the cash is waiting, it doesn't mean it shouldn't be working for me. That's why I use EQBank. They offer some of the best interest rate among Canadian banks, so my money's still earning while I wait. You can even get a boosted rate by setting up direct deposit for your payroll and depositing $2,000 or more per month into your EQBank account.

Your cash stays liquid and ready to go when it's time to invest. And if you're not in a rush to access your funds, EQBanks notice savings accounts and GICs are great ways to grow your returns even more. It's a smarter way to park your cash. Visit EQBank.ca to learn more and keep your money earning even while you wait. Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares, you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses.

Want to put $10 into a stock trading at $100? No problem. Questrade has you covered. They're the first broker in Canada to offer real-time commission-free trading for U.S. fractional shares in ETFs. It's simple, powerful, and finally available in Canada. Head to questrade.com to open and fund an account. use code TCI and you get $50 to get you started.

Calling all DIY, do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends.

And there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Maybe just let's double click quickly on what a short squeeze is because some, you know,

we get a lot of new listeners. So shorting a stock is pretty simple, but people may hear that and not really know how it works. So essentially what you're doing is you're going to say Dan owns a stock and I want to short the stock. So what I'll do is I'll say, hey, Dan, I'll borrow your shares and he'll receive some compensation in exchange. And then I'll take those shares. I'll sell them right away with the intent of buying them at the lower price because I think the company will be at a lower price. So let's say it's a hundred's chair and then they go down $10 lower regardless of what the here, then I'll buy them at 10 bucks lower and I'll give Dan back his shares, the same amount of share, but I'll pocket the difference in between. So that's how you make money by shorting

this stock. You're essentially betting against it. But the other way around is true is if the shares keep going up and up and up, at some point I might say, okay, I got to cut my losses because I borrowed these shares from then and I have to return them. And then if the stock keeps going up sometimes what will happen is the shorts are actually okay they're getting squeezed because they're forced to close the short because if technically if they kept it open they could have unlimited losses if it just kept going up and up and up and that when there's a lot of shorts on a specific stock it can lead to some pretty wild movements on the way up just because you have those shorts that have they're forced to close and take some big losses so we saw that for example

For example, GMEs was a very, very good example of that back in, what was it, 21 or 2022? It would have been around there, like late 2020, early 2021. Yeah. Yeah, okay, that's right. Yeah. So I just wanted to explain that because I think we're, we know what it is. We're throwing it around. And I'm sure like 95% of the audience knows, but at some point in time, we also didn't know.

So I think it's important to, to explain that. Yeah. Effectively, when you, when you short and you want to close out a short position, you have to buy the shares back. which you know when you're buying obviously you're creating buying pressure and you're pushing the price higher so and then it's kind of like when you get into heavy heavy short positions like you're talking 30 40% as soon as you close out your position you're going to put you know pressure upwards on the stock which could end it end up in somebody else either being forced to close that position due to you know like margin whatever it may be and it just it's a cascading effect like

upwards and they really took advantage of it with GameStop back in those days. I remember they had like Wall Street bets was was pretty much like targeting institutions that had heavily shorted the stock. I think GameStop was had more shares short than shares outstanding. I think at some point it was some sort of so that was that was you know these aren't that elevated but I mean I would not suggest anybody short anything. I mean obviously you're free to do whatever you want but the law yeah i mean obviously there's a reason right where kind of more professionals will do that and um you know short reports like we talked about go easy not too long ago like their goal is to make the stock go down and of course i think they get a bad rap but let's

be honest sometimes you know there's been instances in the past where short reports and shorts have actually exposed fraud yeah i'm not saying that's a case for go easy here do not misinterpret what i'm saying, but I'm just saying that it has happened in the past where there's been cases of fraud or you know, some shady stuff going on. So just to keep in mind, I remember when the Chinese stocks in the early two 2010s were like gangbusters, I think it was, I called Mighty Waters, if I remember correctly, they exposed some of the stuff and the, that was happening in China where basically there was no business, but they were showing these amazing numbers. But in reality, there was just no business, but it was so difficult to validate the information and the auditors there were,

I guess, part for the course as well. So there are instances. I just wanted to play devil's advocate there. But, okay, so anything else? Or we can continue to my segment here. No, let's go on. Okay. So the next segment is one on gold. So I actually did that while I was in Calgary. So I was doing my monthly update for my parents' portfolio. And there wasn't that many changes in their portfolio and they do have some gold in there for the retirement portfolio. And I did kind of a pretty lengthy write-up. And I thought it would be a good idea to share a chunk of it with the listeners here because when I wrote this a few days ago while I was in bed recovering from the back injection that I mentioned here. I mean, I think gold has gone up like 5% since. Like it's that has been

that crazy. And so far this year, I think we're around 60% year to date. Silver is even more than that. And I was looking at historical data and when I did that segment. And it's pretty fascinating. Obviously, these are just things that there are similarities. And I'll be focusing on the 1970s a bit here. So essentially, their portfolio has been doing very well. My parents, like for retirement portfolio, especially considering they have about 23, 24% in cash as a way to minimize volatility here as they would draw into retirement. But they have a decent gold allocation.

And looking back at 1970s, it's really interesting because I think we had talked about that in a recent episode about gold. But the last time gold was up more than 50% in a year. And of course, the year is not done. It could go, you know, it could drop from here and it wouldn't be 50%. But let's just assume that it either stays flat or goes down a bit and still finishes the year 50% or over. Well, the last time it happened was 1979 where gold went up 133%. So that was the last year when it had a 50% plus. But in the 1970s, so it was pretty interesting.

So you saw 1972, 49% increase, 73, 74% increase, 74, 67% increase. And then 75 you saw pull back of 25%, 76, pull back of 4%. So you had two negative view. But of course, you don't need to be a mathematician to say that this. by that already in the 1970 that was having a phenomenal decade, and then 1977, 23%, 78, 36, and then 79, like I mentioned, 133%. Now, for those not familiar, that followed a pretty significant event in the U.S. In 1971, I think it was August of 1971, if my memory serves me well.

Yeah, August 1971, Nixon ended the gold standard. So what that meant is that back before then, the U.S. dollar was redeemable for gold. So there was a ratio, the U.S. dollar, one dollar was worth a certain amount of gold. And then essentially they ended that, which caused a problem because all the other currencies were pegged to the U.S. dollar. And there's that famous story of, I think, the French government sending boats, Navy boats to the U.S. to grab their gold and basically, the U.S. saying like, well, no, it's not happening. And what ended up happening is we went on to a Fiat standard. So Fiat just means value by government decree. There is no intrinsic backing. So I find it funny when people kind of diss Bitcoin, for example, and they're like, they're

like, oh, it's not worth anything. It's like, well, okay, like, what about your dollar? What's it worth? Neither is important. Yeah, exactly. So it just, it is funny. Essentially, another way to put it, it's worth something because the government tells you it's worth something, it's legal tender. That's essentially what it is. And it really marked the beginning of modern fiat era and really the biggest issue I think that it caused and most economists will agree is that it really unanchored inflation expectations in the 1970s. So in the 1970s, you saw a large loss of purchasing power for the US dollar. One of the, I think it was the largest decade in terms of purchasing power loss in modern history.

The CPI roughly doubled 100% cumulative inflation between this 1970 and 1980. The dollar lost 50% of its real value during the decade. And gold had a massive rise, which was a reflection, I think, of the basement. And if you listen to Ray Dalio, one thing that's really fascinating, he actually mentioned that in a lot of his books, is he was young and, and new to investing at that point in time. And for him, he thought when the U.S. went off the gold standard, he thought that the stock market would just crash.

And little did. He was quite surprised to see it, like, not crash, but actually go up following that announcement. And he was kind of scratching in his head. And I'm paraphrasing here, like, what is, why is that? And so on. And that kind of led him to learn a bit more and kind of start studying history and so on. and of course, you know, be the Ray Dalio with, you know, many more decades of research, education, learning after that.

But that was something that kind of shocked him is he was expecting the opposite. But when you think about it, it does make sense. When you're unanchoring the dollar to something, I mean, the hard or assets end up going up in value. So there was also a rise in spending from governments. So deficits increasingly got bigger in the 1970, and there was loose Fed or central bank policy that amplified inflation. So there was really kind of no constraint on pushing the price of gold higher, which was a hard asset.

In this kind of market, I like having some cash on the sidelines. It gives me the flexibility to jump on opportunities when the right stock goes on sale. But just because the cash is waiting, it doesn't mean it's should. shouldn't be working for me. That's why I use EQBank. They offer some of the best interest rate among Canadian banks, so my money's still earning while I wait. You can even get a boosted rate by setting up direct deposit for your payroll and depositing $2,000 or more per month into your EQBank account. Your cash stays liquid and ready to go when it's time to invest. And if you're not in a rush to access your funds, EQBanks notice savings accounts and GICs are great ways to grow

your returns even more. It's a smarter way to park your cash. Visit EQBank.ca to learn more and keep your money earning even while you wait. Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares, you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses. Want to put $10 into a stock. stock trading at $100, no problem. Questrade has you covered. They're the first broker in Canada to offer real-time commission-free trading for U.S. fractional shares in ETFs. It's simple, powerful, and finally available in Canada. Head to quest trade.com to open and fund an account.

Use code TCI and you get $50 to get you started. all DIY, do it yourself for investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked, And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends. And there's other stuff like learning duolingo style education lessons that are completely free.

You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up, some of the YouTubers and influencers and podcasters that you might know. I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. so go ahead blossom social in the app store and I'll see you there anything you want to add there before I continue well I mean I guess I'll just kind of explain in a way on the on the restrictions and this is just kind of my idea about it you know much more than me on this but and then when you think of the attachment to gold it pretty much had it made them more responsible in a way because if they printed too much money when it was backed by gold it would generally cause a lot of these companies to to redeem reserves for gold. So if the company printed too much money, they, or sorry, if the country, like the

U.S. printed too much money, they kind of face large pressures demanding gold for their dollars. And I mean, obviously the U.S. only had so much gold in their reserves. So if they print a lot of money, more countries would demand that gold, which would ultimately shrink the reserves. And then if they ended up kind of doubting the convertibility of it, because obviously, you know, the gold supply would be limited, they would kind of, convert more rapidly and obviously, you know, if the U.S. printed more money at a faster pace

in gold reserves, realistically, you could run out of gold relative to dollars. Isn't that what happened? Yeah, exactly. And they, yeah, you can, you've, you run out of gold or you so you have really two options. You either devalue the currency. So you change the convertibility towards gold or you completely say, you know what, which is going off the gold standard, which they did. So what you'll typically see governments is just saying, you know, takes $20.00. for an ounce of gold. Well, now, and I believe the U.S. did that in the 1930s, if I remember correctly, that's just on memory.

So don't quote me on that. But essentially, governments can say, oh, it's $20 for an ounce of gold. Now it's $40 for an ounce of gold. So they essentially devalue the currency towards what it's pegged to or they go off of it completely and to a fiat standard and the U.S. chose to do that, which gives them more flexibility financially, but then it also erodes a trust in that dollar as well. Yeah, like, I think you effectively had them in the early 70s saying, like, you either tighten up by raising interest rates, cutting spending, or you just scrap this. And then ultimately they

went through like the first decade of, of Fiat currency. And I think they, like, I think their idea back then, I'm pretty sure was that if unemployment was low, inflation could be high. like higher than normal and I think they found out the really hard way that that was not not optimal but yeah it's like that's kind of why when we mentioned that like there was some sort of I guess you could say deterrent from issuing too much money it was primarily from that gold backing and then they just ended up dumping it getting rid of it and then that kind of you know there was a lot of a lot of money supply increases in the 70s because they weren't really restricted by anything yeah and in follow decades. If people know their history, like the war foreign wars, so the Vietnam War was before that. So that's why the deficits were a big issue is they just kept and kept increasing. And at some point, the central banks have to essentially monetize that. And governments globally were running large deficits. And it's not different from what we're seeing right now is the deficit as a percent of GDP since the pandemic.

You can make a case that the 1970s look pretty tough. tame compared to today and governments really they had like Canadian US government like it's one thing to say okay increase spending during the pandemic it's an emergency situation but once the economy economy starts recovering you'd think they would lower the spending but the problem is that that doesn't get you elected and and with the other problem we're seeing right now is I think you can really make a case that the 2% inflation target whether it's in the U.S. or Canada is likely a thing of the past. Sure, headline inflation has been lower, but let's keep in mind, they remove the carbon dax, which has some base effects

year over year, so that's keeping the headline number low. But if you start looking here at the core inflation metrics in Canada, they've been surprisingly sticky around 3%. And that was the preferred way of the bank of Canada. And it's been sticky at 3%. You can make the case that inflation hasn't really been around 2% now for four or five plus years. And that gold is potentially telling us something. Whether it continues or not, it could have some short-term pullback. That's very possible 10, 15, 20%, I'm not saying. But if we think about the Bank of Canada here to kind of make this, obviously, it's a Canadian investor, I mentioned the three core metrics, right? You have the common, you have the median, and you have the trim, right? The Bank of Canada has those

three-core metric. The common, I mean, I always forget exactly what it is. And the one really talks about it anyways. And I've listened to some really smart people who are also confused at times or just forget about it. The medium, though, just think about it, the medium is the middle number. So they'll just take the middle, of all these prices increase, they'll look at the middle number and see what it is.

And then the trim, it removes the extremities of the biggest declines and the biggest increases. So typically it will remove like gas and energy. and stuff like that. Well, the Bank of Canada after several years, so you can go back and look at these press conference

time and time again. You have Tiff, the governor, Tiff MacLam, saying himself that you can watch the actual videos. It's like they're focusing on the preferred measure of core inflation.

They keep looking at that and it's like clockwork. I mean, maybe not every single press conference when they have their monetary press conferences, but it's something they keep focus thing about. And now apparently, it seems like the market is focusing too much on these preferred

measures of the Bank of Canada. And there's been a pretty big shift in language and it's clearly what they're starting to look at because recently one of the Bank of Canada's W.D. Governor actually had a speech saying that the markets were focusing too much on the bank's preferred measure in inflation, despite them constantly hammering that term for the last like three, four, four or five years. And what the reason of why I'm talking about that is this doesn't pass the sniff deaths for me. Like I don't know about you, but to me it's basically the Bank of Canada saying, okay, the economy is not doing well, but core inflation is being sticky. And our mandate is price stability, whatever that means, because in my mind, two percent increase each year is not

price stability, but whatever, that's what they call it. There's still their mandate. And it's not supposed to be employment, but they're clearly seeing the job market struggling. The economy is struggling as well. And it feels like they want to, they want to show that inflation is not an issue. So essentially what they've been saying is something to the effect that, oh, alternate data shows that is 2.5%, not the core inflation. And it's very, you know, it's very interesting because if the data doesn't really support what you're trying to do, especially when your mandate is to have inflation at 2%, an easy way is just to kind of use other kind of data to support what you're trying to do. And people can say all they want that I'm putting a thin foil

ad on, but go look it up. Go look up how often they actually talked about those core inflation, those preferred measure and somehow we were have like we were misinterpreting what they were saying well if we're misinterpreting what they're saying the governor of the Bank of Canada was also misinterpreting what they're saying

because they were just focusing on that so it looks like now they will be coming out what it sounds like like a dashboard of indicators that they're looking at in the new year to show what kind of inflation metrics they're looking at which is pretty interesting

Interesting. But as a roundabout way, it just kind of goes to show that there are a lot of things that are similar between now and what was seen in the 1970s. I'm not saying that we're going to see runaway inflation like we saw in the 1970s. We might. We might not. But there are a lot of things that are eerily similar to back then. Obviously, we were not on a gold standard, but just the sheer amount of spending that we're seeing governments do. And no really will to. get that rained in a little bit. I'm not even saying like balancing the budgets. I'm just saying having like more manageable deficits. That's not even a consideration. I think really Ray Dalio, speaking of them mentioned like 3% would be a more reasonable amount to make sure that you also achieve what he calls a beautiful de-leveraging. So it doesn't hurt the economy too badly, but you also kind of inflate slowly enough that it doesn't, you know, it's kind of the least worst option. We're not really even seeing governments starting to do that.

And worse in the U.S. is kind of exhibit A, whether it's the Democrats or Republican, doesn't seem to really change a whole dot. And gold has just been, I think, responding to some of those macro concerns and concerns about the U.S. dollars. And yeah, I don't think there's too much else to add. I mean, I guess I'll finish it with to say that as much as I also believe in Bitcoin, can you imagine how I gold would be if Bitcoin was an even thing? Well, this is, that's kind of what I was, I don't know, I thought about this this morning,

but could you make a case that gold is somewhat a hedge to Bitcoin volatility? Because like if it, like say just on the off chance that there's some sort of technological or regulatory issues, that brings down the price of Bitcoin, would the money flow to gold? Yeah, I mean, it could very well be. Like, I like to own bold because there are advantages to gold that Bitcoin doesn't have and vice versa. So that is, that's the way I see it. But gold has history on its side, right?

So you can be as bullish as you want on Bitcoin. I mean, gold has been used as money for thousands of years. Bitcoin, it's, you know, not even two decades. So I think gold has a hedge there. And in terms of central banks, which are inelastic buyers, meaning that if they have a certain amount that they want to buy in mind, they want to achieve a certain, you know, they want, I don't know, like several tons of it, they will continue until they achieve that. They will not stop. They're price insensitive. That's what it means.

So it is, yeah, I mean, I think it's fine to have both. I know a lot of bitcoiners are all in on Bitcoin. I know some gold bugs will not consider Bitcoin. Personally, I see some value in having both of them. But it is interesting just to see the parallels and see how gold is reacting now. And the fact that the last time that increased so much in a year was 1979. And it has several instances of that in the 1970s, like I mentioned. I just thought it was interesting.

Again, it could be very different in the next five years or the next decade. But I think it's something worth keeping an eye on at the very least, just because I find it pretty fascinating what we're seeing right now. Yeah. And it's definitely, especially from like a retail perspective, it's a lot more liquid now than it used to be. I mean, you could just buy it in an ETF. It's funny. I made a YouTube video. It was like five years ago on like $3,000 an ounce gold. And I've started to get like I was just looking at like analytics on YouTube and there's actually views going into that video, which is just crazy. Like I haven't, yeah, it's it's half a decade old. I think I go over. The production value is absolutely. absolutely horrendous if you want to check that out. I can't believe out bad my videos used to be, but yeah, it's crazy. Like, it's, there's so little talk on gold, especially in the, in the Canadian side of the market that this video I put out like five years ago is starting to get views now.

And I think it's just starting to get more popular. Obviously, as the asset goes up in price, it's, it's going to be more popular. Obviously, a better opportunity probably would have been a year or two ago. but I don't necessarily think investors are too late looking at it at these prices, but it seems like it's a very unlike asset still. And even though, you know, over the last 25 years, it's outperform the S&P. Now that's like it's, you know, 25 years is a, it's a pretty reasonable. Yeah, if you go further out, the S&P has probably been better than gold,

but it is, it has provided real returns, meaning that it has outpaced inflation. And I think that's why, to me, that's a very strong case. It's not necessarily to outperform stocks. It's just because at the end of the day, it's a neutral asset and it has a lot of history behind it. So that's kind of the reason for people looking to add gold to their portfolio, make sure you do your research. There's nothing wrong with having, you know, starting kind of a core position and then kind of dollar cost averaging like anything else. If you want to lower volatility, if you want to wait till a pull, bank, you can do that. But again, if you're seeing a kind of a shift like I think we may be,

I'm not saying for sure because like people know I think in probabilities. But if we're seeing more and more a shift where central banks are shifting away from the US dollar in terms of having reserves and treasuries, for example, and the demand in the US dollar kind of goes down. And the US is still the reserve currency. Don't get me wrong. But if you're starting to see that a little bit as a shift there and investor demand starts increasing and continues to increase because right now it's still not really like you said not talked about all that much I think now they're just starting to see kind of inflows going into gold DTF and we can probably look at that in an upcoming episode just to see how inflows have been trending maybe at the end of I guess Q3 is done

maybe we can start getting Q3 data to see if there is a shift but I think at the very least Q3 four will probably start seeing a bit more movement on that front, but just goes to show that it required a lot of momentum for people to start getting interested for investors. And a lot of most investors still don't have a lot or any gold in their portfolio. Yeah. I mean, pretty much like if I wanted to guarantee that a piece or a video I put out gets a very low viewership, I put something out on gold, which is just crazy because of how well it's done over the last year or so but I think a lot of people will kind of catch on now and yeah I mean I was late I was way late I bought franco at the start of the year I did own agniko and sold it way too early

like very early but I mean I hold a small piece of it through a producer or a streamer in this case at at all times yeah most of the people I deal with do own like a small chunk doesn't have to be gold outright but they own a producer or a streamer or or something like that No, exactly. So I think that's a good point to call it an episode here before my back starts breaking. So I think I power through. Hopefully it was a fun episode. There's some topics that we wanted to talk about. Again, it was something from Joint TCI that I thought would be fun to talk into parallels. Because sometimes I will do updates like that where I just started doing a deep dive on historical data. And because the update went out a couple days ago when you hear it, or actually I'm not sure when we'll release this, but anyways, it went out earlier in October when you hear this. I thought it would be a good thing to just share it with a wider audience and then people can join. Go on join TCI if they want deeper kind of look at the portfolio and so on. But I do that sometimes. I'll just kind of get into the rabbit hole of data. I know I think you do as well just with your smile there too. So

you kind of start looking something up and an hour and a half later you're still digging into this stuff. So I've been guilty of doing that. Yeah, that was pretty much that. quantum area and I barely scratched the surface. I mean, I didn't need to dig too far to realize how crazy it was, but yeah. Well, thanks again, everyone for listening to the podcast. We appreciate all the support. We will be back for an episode next Monday or Thursday, depending on when this is released. So bear with us. We've been recording a lot of extra content. I'll be, I'm not sure if this will already be released or it's coming up, but I did an interview with Ben Felix. Those of you may be familiar with him. He has a podcast, but also a large YouTube channel does

some great videos. So did an interview that kind of centered, mostly uncovered call ETFs, but a few other things. So it was really fun to have been on the podcast. So have some guests coming up here. Dan and I also recorded some evergreen content if you'd like, just to make sure that we still have some fresh new content for you guys while Dan is, you know, being a pop-off for the first time, doubled dad for the first time. So trying to get him a couple of weeks at least because that's a reality with a podcast

and kind of running your own business is you don't really have parental leave. So you have to kind of work around it. But hopefully that'll be helpful on that. And your wife will be happy for that little break on your end. Yeah, I'm sure she will. I mean, I'm glad I work from home. It makes it a bit more flexible.

But, I mean, if I had still worked up in Fort McMurray, it would probably be very difficult but yeah I'm glad I'm excited it's going to be interesting this might be my last recording like for net for a few weeks it could be yeah it could be just get the coffee ready and just get ready to it gets better yeah I can tell you I say that with just one so that is the one thing and talk to your wife I don't know if anyone else is in this boat but I'll share a nice little story my back's doing okay so can go on for two minutes we're done talking investing so just you can uh turn off the podcast if you don't want to hear that. But the one thing I would say is I'll always remember like two weeks in,

I was like, oh my God, what did I get myself into? Because I love my daughter, but she was crying. I don't know if she qualified as colloquy, but very close to it. And, you know, sleeping like three, four hours a night, non-consecutive. And it gets, it adds up. And it's not easy. And I'll just say that it gets better. It does get better. And if you ever feel like that, just talk to your wife because she probably feels the same way because I remember like four or five months later telling that to my wife and she's like yeah I felt the same way oh you never talk to her about us oh yeah well no in the moment you're just like you know you're like man like how do people do this like am I you know I don't know you're lacking sleep and you're just like

wow like really what did I get myself into type of deal because you're just you're running on fumes right so yeah that's probably the one thing is just let her know because sometimes you're like oh, like, she's probably handling it better than I am. Maybe she is, but there's a chance she isn't. Yeah, and that's with one. I got two coming. I mean, you know, it's just, you know, at least you're not outnumbered. I'll just say that.

But anyway, so I think that let's call it an episode here. Thanks everyone for listening, and we'll be back next Monday or Thursday for another episode. The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.