The Chris Voss Show - The Chris Voss Show Podcast – Investing in a Recession – Time to Think about Gold by Simon Popple

Episode Date: March 25, 2023

Investing in a Recession - Time to Think about Gold by Simon Popple Brookvillecapital.com

You wanted the best. You've got the best podcast, the hottest podcast in the world. The Chris Voss Show, the preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready, get ready, strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times because you're about to go on a monster education roller coaster with your brain. Now, here's your host, Chris Voss. Hi, folks. This is Voss here from the chrisvossshow.com, The Chris Voss Show. Welcome to the big show, my family and friends. We certainly appreciate it. Remember, The Chris Voss Show is the family that loves you, but doesn't judge you, at least not as

harshly as your mother-in-law. There you go. So welcome to the show, my friends. We're going to be talking about some interesting things today. Yesterday, the Federal Reserve for the United States took its, I believe it's its fifth or seventh, one, two, three, four, five, its seventh increase in the federal funds rates. And the reason, or I'm sorry, two, three, four, five. It's seventh increase in the federal funds rates. And the reason, or I'm sorry, it's fifth. But it feels like seven because in two or three of the basis points they've done, they've made extra jumps. So that's why it kind of seems a little much to me. I used to own a mortgage company back in the day, and I can remember doing mortgages for 9%.

So this is familiar territory for me with seeing the federal funds rate go through the roof. We're going to talk about gold, where to invest, where some places to put your money in safe havens, which are historically smart places to put your money during recessions or coming recessions or in times like this where the stock market may turn kind of bullish and things get better. We have an amazing money manager on this show today, and he's going to be talking to us about his book that you can check out as well called Investing in a Recession, Time to Think About Gold. He's recently updated it.

Simon J. Popel is on the show with us today, and he's going to be talking about his work at Brookville Capital and his book that you should probably check out. I'd highly recommend it considering what's going on in the market because these are times, about his work at Brookville Capital and his book that you should probably check out. I'd highly recommend it considering what's going on in the market because these are times, historically I trained as a stockbroker when I was I think about 20 and learned stockbroking, day-to-day trading, things of that nature. Gold has always been a bulwark, a full place to go when things go interesting in the recession. Simon is considered by many to be an expert at investing in the gold market. He's recently written the Investing in Recession

book we'll talk about today. It's a beginner's guide in investing in the sector of gold. It covers not only traditional routes, such as buying physical gold, but also his bridge, that's a B-R-I-D-G-E system, for looking at the gold miners. He's helping people who've never invested in the sector before get a better understanding of how he, as a professional investor, goes about it. Welcome to the show, Simon. How are you? I'm very good. Thanks for having me. Great to be here. Thanks for coming, Simon. And this is very topical, considering the Fed, you know,

yesterday just jacked up the rate again. And it feels like I said, they've done quite a few large jumps. I think half points to three quarter points, if you know, take a look at BrookvilleCapital.com. That's my website. That's where I kind of, that's where the journey starts. If you think that gold could be for you, then, as you mentioned earlier, you know, I've got a book out. But even if you don't buy the book, I'd really suggest you kind of dig a bit deeper and find out more about the gold market. There you go. Give us an overview of what you do at Brookfield Capital. Well, I mean, the business, funnily enough, started off way back in 2008.

I used to, I was the youngest director of one of the world's largest private property companies. And prior to that, I was head of investment management at another property business. And prior to that, I was head of investment management at another property business. And prior to that, I worked in the city. But initially, I kind of set it up as a capital raising business. But I invested some of my money and I caught the eye of Money Week, which is a UK publication. And then Agora Financial, which is one of the world's largest newsletter businesses. I caught their eye, and they basically both wanted me to write newsletters for them and tell them about what I'm investing in.

And as part of that, I used to have phone calls with some of my subscribers. And if I'm honest, I wasn't massively impressed with their knowledge about investing. That kind of took me on to writing this book, which is really trying to help people get started investing in the gold sector and realize that the gold sector is actually a very broad sector. It's not just about one gold company. So that's the whole purpose of the book. There you go. Now, do you manage people's money there at the at the uh i i a lot of people have asked me to but i don't i don't want to manage their money you know that the whole idea here is that you um you if you if you're capable about making money you're capable of managing your own money as far as i'm concerned

there you go there you go I've done day trading. I mean, it's not that hard. Buy low, sell high. You know, that's what it is. A lot of common sense. There you go. There you go. And like I said, I was trained as a stockbroker

back around Black Monday days, if anybody remembers the crash of Black Monday. I think that was the 90s. And it was a horrible time to decide to become a stockbroker. So that's probably why I went on to other things. But it actually was a good time in hindsight, considering it was such a bottom that everything was up from there. But gold has always been a safety, a safe haven, a bulwark against receptions, a bulwark against depressions. It's also something people buy when, you know, they're kind of worried about, you know, a lot

of money is based upon, and you may be able to speak to this if you want to take over this, but normally gold is seen as a bulwark against, you know most most money is printed on behalf of the guarantees of a government and you know there's speculation sometimes the governments might fall and uh they're that would make most of their money worthless or they come into some sort of monetary crisis so gold has always been the thing that you know anywhere in the world you could probably get people to accept gold am i correct absolutely. I mean, one of the things I love about gold is you can't print it. And gold is one of the few assets that is viewed as valuable anywhere in the world. You know, you can cut a gold bar in half and, you know, it's still worth the same.

You can't do the same with a diamond. Or a dollar bill. If you cut it in half, I think it loses some of its value. Exactly, exactly. And so, you know, what I love about gold is gold is you know it's currency agnostic as well you know obviously it's pricing in dollars but you know you have a bar of gold and you know there's a problem with pound sterling the u.s dollars or whatever the currency is um you can always um you know you buy it perhaps in that currency but then you you can sell it in whatever currency you want.

And I think that's particularly attractive, especially as a lot of people have got a lot of their money tied up in their property or perhaps they've got other properties as well or other assets that are all denominated in a certain currency. So I think there's not only a bit of commodity exposure, but I think there's also a bit of currency exposure, which I quite like. There you go. And as of, I believe this is today, today alone gold is up.

Let's see. I'm not sure if this is, no, this is an all-time high. So it is going up on a regular basis. It's up $47.80 today. And that's in response to the Federal Reserve yesterday making another increase in rate. But you can see, if you look at the graphs right now, it bottomed out sometime in 2016. We're kind of coming back from the recession of the 2008s, and it was bottomed out in 2016, looks like about 1,056. It's now standing at 2,015.30, and that's live number as of this time. And you can see that in the most recent months since 2020, probably the beginning of the crisis with the COVID, there's been a flight to gold,

and it's now in a resurgence. So people are definitely flooding back into gold with what's going on with the Federal Reserve, the markets and everything else. Your book helps beginners understand what gold is about. Let's give an overview or touch on some of that and why that's important. Yeah, well, I think that a lot of people, when they invest in a new sector, they think I'll just get an ETF or I'll just buy a gold company or get some physical gold, whatever it is. And don't get me wrong, nothing wrong with any of those. But what I like people to do is to have some diversification.

So, you know, what I do in terms of mining stocks i talk about a fancy football team and in terms of soccer um as you know goalkeepers defenders midfielders and forwards you could have a similar concept with american football um but the whole idea is uh for a strategy to work for a team work, you need players in all the positions. And, you know, whilst it's exciting to have, you know, the people who get the touchdowns or the forwards who get the goals, you need other players in your strategy to make it win.

And, you know, basically what you want is a winning investment. You want a winning team. And so, you know, what I try and do is I try and help people do that and try and explain to them differences between gold companies. And I think for a lot of people, that's pretty important because they just think a gold company is a gold company and they don't really understand the nuances of them there you go there you go um you know how

much of a portfolio should people be putting in gold or what percentage of their portfolio should they be putting in gold now well it really depends on you know so many factors your appetite for risk your age um you know how you want to get involved. But, you know, my view is you should have some. And a lot of people have got none. And our goal has been around for thousands of years. And, you know, that's why I've written the book saying you've got to look at it. And I really think people should at least look at it.

If for some reason they don't want to do it, you know, that's their own choice. But I think they should look at it. If for some reason they don't want to do it, that's their own choice. But I think they should look at it. Personally, I have a lot, but I don't just have gold. I've got silver, uranium, cobalt, nickel, copper. I've got lots of other commodities as well.

But I view gold as my kind of anchor metal. It definitely is something that's in demand. I mean, this is what countries do. If you ever watched a video on the Federal Reserve and how countries will send all their gold to the Federal Reserve and they put it in the basement. And, you know, it's something that is the bulwark against everything.

And the gold standard, of course, people talk about that when Nixon took us off the gold standard, but they kind of had to the way they were printing money for stuff and vietnam war uh and war since i should add but uh the the inflationary value of of prices and uh money and you know it seems like as the u.s government i mean you can be on either side of it i'm not saying it's good or bad but um you you know, they printed a lot of money, especially over, like, terms of COVID to balance the economy. And there's lots of game playing that the Federal Reserve does to balance, you know, inflation and different things.

And so gold has always been a way to do it. So do you recommend just buying gold itself, or what about gold mining stocks? I heard you mention that. Well, I like to have a bit of everything i mean i going back to my football analogy i i view physical metal as the kind of stadium and then the really large multinational companies as my goalkeepers um and then sort of large producers as defenders and then new to production or about to get into production

would be midfielders and the out-and-out explorers in my forwards. And, you know, as I said earlier, I like to have a bit of everything. And if you've got a low appetite for risk, then you probably want to have more of your kind of stadium goalkeepers, defenders. If you've got a low appetite for risk, then you probably want to have more of your kind of stadium goalkeepers, defenders. If you've got a higher appetite, you probably want a more attacking formation, more forwards. But I think the basic premise is, you know, you've got to have a bit of everything. And what percentages you have is really down to you and any financial advice you get. But I think that this is one of the big misconceptions.

People go, I've got a bit of gold. And that's part of the jigsaw, but it's not the whole jigsaw. There you go. So should you invest in physical gold, have it shipped to your house, or should you invest in a fund that invests in gold? What's the proper way that you recommend well that's one of the big misconceptions about physical gold i mean do i mess with physical gold yes i do do i take delivery of it absolutely not you know um i have

it uh stored and insured by people who know what they're doing and um uh you know so yes you can have exposure to physical gold but you don't have to take delivery. You can have it properly insured. Yes, I've got exposure to mining companies. And, you know, if you get it right, there can be ridiculous returns. I mean, I've got a company called Chalice, which went up over 65 times. Wow. But, you know, that is the exception and so i think you know one of

the things you need to do is to have a diversified portfolio you know bits of money in uh you know different areas and um uh you know that's your strategy for in my case it's not just gold i've got lots of other commodities but but i think that that you could certainly do that for gold if you wanted to. And yeah, there's potential not just to protect your money, but also make a lot of money. Yeah, it's something that, you know, we're going through this trough. Everybody expects a deep recession. There's lots of layoffs going on here in America. I'm not sure. I think you're on the other side of the world across the pond there,

as they say. I don't know if you guys are experiencing the same sort of layoffs we are, but it's- Yeah, we're getting layoffs as well. It's pretty ugly. And it seems like a lot of companies are reading the tea leaves, at least what they think are the tea leaves that we're moving to recession. The Fed, if you understand M1 and M2 money policy and how they operate, it's always interesting to see the amateur commentary on like TikTok and social media. And you're like, have you ever read about monetary policy? Do you understand how it works? But it is designed to slow an economy to cool pricing to cool inflation

unfortunately one of the factors that come out of that is people being laid off and and things going on and and sometimes the trough of the recession can be uh it can be sometimes very short term but usually it's extended for quite some time and uh do you have any predictions that you'd like to make on maybe what the price of gold could go to? I come from a background where it wasn't ever supposed to go over 800, and it's currently riding at 2,000 plus. Well, you know, I think it's 2,000 plus. And if I'm honest, I don't think we've even kind of started the bad times yet i mean wow there's there's uh here in the uk uh we tend to have fixed mortgages um and you two five ten year but i think quite a lot of people on five-year

mortgages now if interest rates are going up and you're only you know a year two three years into your fixed mortgage you know it doesn't really impact you or the market because interest rates going up you're kind of like shrug your shoulders and go well not happy about that but hopefully they'll come down in the next few years um but those people who've got to refinance you know they could be interest rates could be double travel what they were when they first bought their house and you know if they struggle to buy their house with interest rates as they were then um they're going to really struggle or probably really struggle um to refinance and um i think that you know that all takes time so all these interest rates going up

um i think it's horrible but when people have to refinance it's going to be even worse and um i think there's a there's a lack you know and i i think it could be over the next couple of years that some of the um the real pain of these interest rate rises now um are actually borne out so uh even though there's some stuff happening now if interest rates don't come down and they continue to go up, and we have inflation now today at north of 10% here in the UK. I can't see them coming down anytime soon. Yeah, and they usually won't. Usually there's a length of time into the trough of the recession that the federal reserve will see that it's achieved its its correction and then it will start to slowly unwind that but even then it's a slow unwind

it doesn't just come out and go oh yeah we're taking all that stuff back we did over you know five seven steps or how many basis points they did of a quarter percent um because i know at one point i think one one movement was 0.75. Um, and they, and most people's opinions, uh, that are in the know, uh, they were really behind on starting that, uh, increase to the fed rate. And now they're playing catch up and which means we're going to go through a much deeper trough than what we went through, uh, owning a mortgage company for 20 years. I, you know, I used to live betting on, betting millions of dollars of a portfolio

on what Alan Greenspan had for breakfast every morning. So I've lived through that and seen the reaction. I've sold mortgages at 9% interest rates. There was a time where it got that high. It was crazy in the 90s. We've had at least that in the uk probably double digits and um you know if you can afford double digits you know that's that's fine yeah but i think with house prices going up as much as they have done um double digit mortgages are gonna really really

hurt a lot of people and if you're honest i, I think a lot of people can't afford them. And I bought my first flat in about 1994, and I bought it off someone who was involved in the property crash in 87. And even back then, it took, what, seven years? Oh, actually, no, more than that, eight, nine years for them to get out of negative equity. And I think if we have another crash now, it could take even longer. So yeah, I think there could be some pretty tough days ahead. And people need to have bulwarks for this because number one,

like I said, layoffs, number two, your credit card interest rates. America is big on credit cards. Those are going to go up and through the roof. And, you know, already we've seen wages go up here in the U.S., but even then, you know, the price of stuff has gone through the roof. And, I mean, recently we had this whole thing with eggs, where eggs ran, you know, double, triple, I think we're dribbling in price. And, uh, in fact, they were running out in different, there was like a run on eggs, which is, you know, weird considering what went through with the thing, uh,

with the COVID crisis. And we're, we're still dealing with the fallout of that. We're still in with supply chain issues and everything else. Um, and so you, you don't recommend that people buy gold and take delivery of it and like keep it under their mattress basically no no not at all i mean i think i know some people that are doing that actually no yeah i think you know find a reputable dealer get them to it's a bit like buying fine wine to be honest you know if if you buy it through a reputable dealer and you store and insure it with them it's never left left their premises. So certainly here in the UK, I'm not sure what it's like in the US,

but I can sell my gold back to whoever I bought it from. And you pay a slight premium when you buy it and you sell it at a slight discount. And obviously you've got storage costs and insurance costs as well. But providing it's moved a little bit, you at least wash your face. And I think that's quite an important point because you know i i think on the one hand gold is a as an investment but you can also think of it as a form of insurance as well and you know in in these in these difficult times um you know if you buy some if it goes up in uh in in value um then you're um you know you're in a

much better space and um it may be just hang on to it as a form of insurance you know and if it goes up a lot you know great but if it doesn't go up you're not really that bothered because you know you view it as insurance and um at the end of the day, if the wall of worry disappears, you know, you can just basically sell it back to whoever you got it from. And it's never left their premises. They've got no reason to believe, you know, it's anything but, you know, what you say it is. Yeah. And I think it has less of a crash up and down. You know, right now we're going through this weird banking crisis in America.

I don't know if it's spilt over to your end of the world yet, but likely will. Yeah. It's not good. It's a weird crisis. And, you know, there's people pulling their money out of banks. I don't recommend that you maybe their money out of banks i don't recommend that you maybe pull money out of healthy bank because you'll help it be unhealthy and contribute the

problem but it's your money i mean you do what you want to do i'm not giving investment advice at all uh but you know we've seen people that are pulling their money out of uh regional banks and smaller banks and putting them into the big top banks, which seems a little crazy to me, in my opinion, because, you know, we went through the too big to fail 2008 Lehman Brothers meltdown and Lehman Brothers was seen as a very solid bank. And so there's that, you know, we're kind of going through this banking crisis where, you know, where do you put your money? Do you leave it in the bank? Do you put it into a fund? Do you put it into something else

that's got a guarantee to it? So a lot of questionable things going on right now. And where a bank can turn upside down in a very short time, we saw two or three go bad here within the last week, I think maybe four or five actually,

that have been in trouble. Buying gold is going to be a bulwark and it's not going to have that huge thing where one day it'll just be like yeah we're filing bankruptcy today like ftx or some of these other crazy crypto exchange you've seen that one day they seem to be solid in the billions of value and then all of a sudden they're out of business overnight you can't get your funds out um you know gold is one of those things that isn't going to have a huge crash to it is what i'm trying to say yeah i mean one of the things i like about gold to be honest is you've got an all-in sustainable cost of about um newmont i think are around you know one of the biggest players in the world

if not the biggest player in the world around 1200 and that's give or take 100. It's not a bad average to think about. And so if gold goes below, so let's say 1200 just for the sake of this example, then you'll probably find quite a lot of companies can't produce a profit, so they mothball it. And therefore, your supply goes down significantly. And significantly and therefore logically your price should go up and i think that um you know if let's say the price is 2000 now um and you've got to let's describe it's a soft floor at 1200 um you know there's an 800 loss uh on the price but i think the upside is unlimited so um

and you know personally i don't think it's going to go down anything like that amount but but you know if you want to just follow a bit the idea of, of, you know, some sort of floor and unlimited upside. So, you know, I do like it as an asset class. And I think, you know, the other thing to think about is, you know, commodities in general, the US is very keen to secure its own supply of a lot of different commodities. And so whilst I think gold is very important, it's not all about gold. I think if you've got exposure to some other commodities, especially if, you know, the resources in Canada or the US or South America or Australia, wherever it is, that's not a bad thing to invest in.

So gold sounds like it operates a little bit like oil. When prices of oil fall to a certain point, they slow or stop production, huh? Because the value of producing it isn't quite as much and so that that affects supply and demand and by squinches scrunches supply so it makes it so that the value go back up again is that true i think yeah i mean i think oil on that uh analysis yes i wouldn't disagree with it i mean i think oil is probably you know if the world's doing well uh it needs a lot of power and energy and therefore oil is you know is important

but um in terms of you know cost of production you know people aren't going to make or extract and process oil or extract and process gold unless they're making money doing it and so if they're losing money they may be able to afford to lose money for a relatively short period of time but after a while they're likely to stop and wait for the price to come back and if enough of them stop there's a good chance the price could come back definitely definitely yeah if you look at gold historically over its time, I mean, it holds its value. It does go, you know, we went through a great bull run here,

probably an unprecedented bull run of all time, coming back from, you know, COVID, and then before that, coming back from the 2008 recession, it was a long drive back. But other than that, I mean, it's, you know, this is the, the thing that company or countries build their wealth on a base, their, um, uh, their money on, et cetera, et cetera. And, uh, gold is like you said, it's not, it's, it's not like, uh, you know, if you have a dollar, uh, a dollar bill printed by the U S government,

or maybe something in a, in a country that's maybe more unstable than us, you know, the value of that can drop to zero. You know, you've seen India do things with their monetary system and their money where they've said, you know, this bill is now worthless and here's the new bill that you have to have.

And, you know, overnight, you know, printed money can go bad, but gold is something you could sell anywhere in the world, probably in a crisis or situation or wielded. If we have a total, you know, catastrophe, there's lots of people that predict catastrophes of economic markets, governments, and, you know, of course, the zombie apocalypse might have, you know, gold might be helpful in zombie apocalypse, if you believe that sort of thing. But having some fun with it. Anything, what else have we touched on about the senior book you talk about? Yeah, well, I mean, I think that gold, I don't think anything is bulletproof from an inflation perspective or market crash perspective but gold has um uh it's performed better than a lot of asset classes in difficult times and um so you know that's one of the reasons why i'd urge people to look at it because um

i think that uh you know as well as looking at it from an investment perspective, as I said earlier, I think an insurance perspective also makes sense and as you rightly point out, governments are standing behind fiat currencies which is great but if they print too much of it, then there's always a risk the public lose confidence. And if they do, they'll probably look for something which they've got more confidence in. And because you can't print gold and other commodities for that matter, I think commodities could have quite a decent month. Yeah. And this could be a long trough that we're in for.

If you look at the Federal Reserve funds rates, if you look at recession data and taming inflation, everything else, these troughs can go for a very long time. And stock markets can fall. You can go into full bull markets. We're already seeing a lot of corrections. Like I say, I mean, even the banks are struggling now with some of their investments and things they've done. Silicon Valley has slowed down quite a bit.

Anything more you want to touch on before we go out? No, I just I think it's so important people look at it. I really do. And it's one of those things that people could often go, well, you know, I've always looked at bonds and property and equities. I'm not here to say you shouldn't look at those. All I'm saying is you should add gold to that list and really think about having some in your portfolio. Definitely. Definitely. And so they can order the book on your website. And, and I think you put out a newsletter.

It looks like every fortnight or so. Yeah. What it is, it's that, that's really, once people read the book, if they, if they kind of want me to hold their hand after they read the book, then I,

I write a newsletter every fortnight and I've got people signed up to that. And really what I'm trying to do is re-emphasize a lot of the stuff that's in the book, but also keep them more up to date on what's going on in the world, what I think is relevant, and really kind of help them on the journey

to invest in gold. There you go. All right. So give us your.com so people can find you on the interwebs and order the book. Yeah. Well, if you go to brookvillecapital.com, so that's www.brookvillecapital.com, which is B-R-O-O-K-V for Victor, I-L-L-E, capital.com. There's a whole lot of stuff on gold there so you have a

look at that which hopefully you'll find useful and then if you think the book's for you then you can buy the book or the newsletter um personally i'd suggest you you know you start off with the book and then read that and then um if you want to get involved with the newsletter that's great but um the whole idea of the book is is to get you know to get involved with the newsletter, that's great. But the whole idea of the book is to get you started. It's a beginner's guide. So, you know, kick off with that and see how you get on. There you go. There you go.

Order up the book. You can get it off his website and find out more about gold, investing, and, of course, learn more about the thing. You know, there's a lot of speculation as to where we're going, how deep this recession might go. We might bounce back very quickly. It might be a long trough. Usually, you know, the Fed's not going to pull back the Federal Reserve rate and lower it until they see that they're, they're deep into recovery and the prices are coming down. And, you know, after going through the run that we've had with the bull market with crazy housing prices here in America, crazy car prices, I mean rates going up from borrowing from the Fed,

or from the supply and demand. Everything revolves around supply and demand, and I think that's the beauty of gold, is there's not a lot of it. It's a rare item. So there you go. Thank you very much, Simon, for coming on the show and educating our audience today. That was great, and I really enjoyed it. Thank you very much. There you go. Thank you. And thanks, Simon, for tuning in. That was great. And I really enjoyed it. Thank you very much. There you go.

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