Unchained - Why Bitcoin Has Fallen Behind Gold & What Could Come Next

Episode Date: January 17, 2026

Thank you to our sponsor, Figure! As tensions between the Trump administration and the Federal Reserve rise, gold and silver have surged to record highs. Bitcoin, meanwhile, has struggled to keep pace, raising uncomfortable questions about its “digital gold” narrative. In this back-to-back Unchained episode, Vinny Lingham, cofounder of Xash, and Eric Fine, portfolio manager at VanEck, offer two distinct but complementary perspectives on what’s happening beneath the surface of global markets. Vinny explains why gold’s liquidity, trust, and central-bank adoption still dwarf Bitcoin’s, and why that gap led him to design a gold-backed, reward-bearing stablecoin, USDX. Eric walks through VanEck’s provocative analysis showing gold could reach $39,000 or even $184,000 if the dollar were to lose its reserve-currency dominance and gold had to back the money supply. He also dives into why some developed markets may be more fragile than investors assume. Guests: Vinny Lingham, Co-founder, and President of Xash Eric Fine, Portfolio Manager, Active Emerging Markets Debt at VanEck Links: Why Gold and Bitcoin Work Best Together Why Bitcoin Is Tanking Despite Gold Reaching High After High How Venezuela Shows Why Bitcoin, Crypto and Stablecoins Help Everyday People Bitcoin Rallies to $93,000 After U.S. Attack on Venezuela Learn more about your ad choices. Visit megaphone.fm/adchoices

If I say to you, I'm going to build the world's biggest stable coin, and it's going to be $200 billion, which is bigger than Tether. If it was Bitcoin backed, I cannot hedge that Bitcoin. You can't hedge $200 billion in Bitcoin right now without a ridiculous amount of counterparty risk. That's 10% of the market cap of Bitcoin. There's no counterparty that's going to take that risk off. Currances can go to zero, right? So it's often not the thing you think is going up. It's the floor you're standing on going down.

I have two kids and when they were growing up, I would tell them, whenever we got in an elevator, hey, how do you know the building's not going down? Right, you can't, other than the feeling in your muscles. Hey, everyone. Welcome to Unchained. You're no hype resource for all things, crypto. I'm your host, Laura Shin. Thanks for joining this live stream.

Before we get started, a quick reminder, nothing you hear on Unchained is investment advice. This show is for informational and entertainment purposes only. And my guest and I may hold assets discussed on the show. For more disclosures, visit Unchained Cryptofer. We have a double header for you all today, and our first guest is Vinnie Lingam, co-founder and president of Zash. Welcome, Vinnie. Hey, Laura. Good via. Thanks to having me again. Yeah, excited to chat with you. So over the weekend, it was revealed that the Department of

Justice launched an investigation into Federal Reserve chair, Jerome Powell. And in a surprisingly blunt video, Powell shot back saying, quote, the threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president. Bitcoin initially jumped on the news, but then it dumped, then it rose again and dumped. Meanwhile, gold and silver hit new all-time highs. And Vinnie, you have been beating the drum about gold for a while. Why do you think it's been on such a tear this year? And why do you think it jumped even further on this turn of events? So I think that the rest of all is losing faith in the U.S. economy's ability to sort of maintain some amount of like moderated spending, right?

And I think that, you know, if you look what happened last week, obviously Trump announced that they want to spend more money in military as well. We have a massive, massive federal deficit over $2 trillion a year. my guess is probably close to like three, you know, in this year, but when all soon and done. And I think that the rest of the world is doing is they're realizing that the U.S. is dropping rates in some places they're experiencing inflation. Like in Japan, they have to raise rates, the differentials coming about. And, you know, people have, as far as having to sell U.S. assets to pay their debts. And so, you know, you look at the central banks of the world right now, U.S. U.S.

Treasuries are now the second largest reserve asset in the world after Dock. Gold has soared so much

that it's now the number one reserve asset for simple banks. And so I don't think that the trend dissipates.

I think gold always keeps going to look at $10,000 gold in two years.

There's only eight I think it's like eight billion ounces of gold in the world,

so one ounce per person. It's a scarcity thing. I mean, just put it in context,

there's about 8,000 oil tankers in the world, all the gold in the world fits on less than 10% of the largest old tanker in the world. So, like, just like, imagine how much gold there is there. It's not that much, right? So gold has been a store of value for centuries and millennia. And I think people just, you know, inherently trusted. And also, like, you know, the, it's a very liquid market, right? It's a $33 trillion dollar market. And so that's what I'm coming from,

I think that gold is effectively the neutral reserve asset of the world. And we can discuss the coin or anything else. But gold is it. And I think we're heading for a reckoning at some point. And I think markets are sending a warning. And you are such an OG bitcoiner. So I'm curious why you think that this is happening with gold and not Bitcoin and why you in particular, you know, in a moment we're going to announce your new company. But why you know, are you in particular focused on gold more than Bitcoin considering how early you were in Bitcoin?

So Bitcoin has not reached the levels of liquidity that is required for it to be a global reserve asset. $2 trillion is just not big enough. It's smaller than Nvidia, it's smaller than a whole bunch of companies in the world. It is not big enough. And we can go through the reasons why we haven't gotten there. But I think that it's, you know,

what I'm going to, Bitcoin, it was per to period in the electronic cash. It was supposed to be highly liquid, also transactions. And then it became like, well, less transactions because it's gold should be more expensive to move, et cetera. And so we went from a world where Bitcoin was being used, even Expedia had Bitcoin at one point, right? And it was being used the payment mechanism, my company gift in 2014, 2013, we had a Bitcoin.

We did like 5% of all blockchain transactions back then, and it worked great, right? But then there were a bunch of changes made to Bitcoin. So it ceased to function as an electronic cash cap currency. And the narrative was changed from digital cash to restore a value and digital gold. So then the narrative was, let's go compete with gold and create this asset that people can trust. But Bitcoin is very volatile, right? And gold isn't. And so maybe when Bitcoin or if Bitcoin gets to some high-level number, it can be used as a reserve asset or currency.

But right now, central banks around the world are not allowed to buy gold. They're just, they can't. So when you're running a population of billions and billions of people and the central banks that run these economies cannot buy Bitcoin in times of crisis, they buy gold. Guess what's going to go up? It's going to go, not Bitcoin. And so, yeah, I mean, I have a lot of thoughts on the whole Bitcoin thing.

We've spoken about it over the years. I think Bitcoin, in some ways, failed to live up to the promise of what digital gold was supposed to be eight, nine years ago, is right now. Like nine years ago when Bitcoin hit 20,000, if you said, hey, Bitcoin will still be under 100K in nine years' time, no one would have believed you. We're like, no, no, no, Bitcoin's going to be over a million dollars by then. And it's just sold, right? The growth has sold in Bitcoin. Now, again, it's done, it's not okay, but it hasn't been the top performing asset in the past, you know, four or five years. Gold has. How are you personally

allocated? Like, what percent? So of the pot that you've allocated to both Bitcoin and gold, what percent is in Bitcoin and what percent is in gold? I'm very, very light on Bitcoin. And just because I mention I'm heavier on property personally. So I've moved out of the crypto world for the most part. So it's more fixed property, equity investments, companies, cash flow generating, businesses, that sort of thing. And then gold within the portfolio is just good to have. So when it comes to crypto, I've really felt that, especially with the cost a couple of years,

there's, again, a lot of reasons for it. But I think that if you, it depends what you want. But if you want, crypto is really great for certain things. And people have made a lot of money. And I've made a lot of money in crypto. But like there's a couple of things I'm concerned about in terms of like longevity for crypto. and the margins you can make and the investment sizes you can make and the liquidity. And we saw what happened on October 10th where the rug was effectively pulled and the

bids were taken out how baddie the alt market fell. It's kind of scary. So I'm not getting like I'm attacking crypto in any way and I do have a crypto portfolio. I'm excited about a bunch of crypto assets. But I think that for large scale investing, I think that, you know, are you looking for yield in particular. So I became more someone interested in more in yield. Like, you know, investing in restaurants and steakhouses and that's the thing, right? Because I want to get cash for.

Crypto is really great if you want to spend a ton of time researching and you have small amounts of money to play. But when you put in large amounts of money into crypto, it's kind of dangerous. Okay. Okay. Well, let's talk about your new company, which you're announcing today. This is Zash spelled X-A-S-H for everyone. And it has both a stable coin component and a gold component is described as the world's first goldbacked stable coin that rewards your activity. So explain what Zash is. So fast forward my thinking. When I thought about, when I think about crypto and digital cash and Bitcoin, I think one of the best use cases for crypto is actually being able to settle payments outside the banking system and deal with just send USDC or Tether or whatever you want to use from one person to another, anywhere in the world, no banking hours.

like that's one of the best use places for crypto. Unfortunately, people don't get to participate in the value of these companies. You can buy Circle shares for sure, but you can't really buy Tether shares easily. It's not available. And Tether issues a token. And then they take that money they invested in companies and Bitcoin and treasuries and whatever else. Circle does many treasuries, U.S. treasuries. But, you know, it's kind of like the risks on the system are being sort of privatized,

but potential losses will be socialized. And we saw it happen with Luna and whatever else in the past, right? So not to knock any of the stable coins, I think that it's all interesting, but you're still reliant on a reserve asset being treasuries or whatever. And I think the reserve asset for the world is going to be gold. And so what we're doing is we're basically saying, we'll issue a stable coin backed by gold, hedged in the system. So there's a way of hedging.

So if gold crashes 20%, no one would. loses. But if gold goes up 20% or 30%, how do you reward people for that? Because part of the new stable coin bill and the cardiac genius size is you can't give interest. But that's great, but you can actually give rewards. And back in 2018, when I was thinking about this problem, I filed a package. And that pattern was granted about just over a year ago. So it took a six years. So we have a granted patent as the first, effectively the first stable coin that can have a reserve. and a reward system built into it. And so this is what we're building it around,

the ability to reward people for using a stable coin. So when you're a stable coin sitting in your wallet and you're not using it, you could do things with it and you could earn rewards and get some of the upside and gold. But the good thing here is if for some reason government bonds crashed worldwide or something went wrong or there was a run of the bank or the stable coins, you at least know that we will have on our website where the gold, is, how much gold we have, what's backing each coin. And it's always going to be over-collateralized,

so you know that at least there's gold back into dollars versus with other stable coins. In some cases, they're either algorithmic or the delta-neutral, delta-hinged stable coins. There's a whole bunch of these off there. This is gold-backed stable coin. So we'll be the first gold-backed stable coin with a rewards program for users. Okay. And for the types of activity, it's literally like something like, you know, spending a certain amount of time within a certain time period. And then based on, you know, whatever the points are, if the gold that is in reserve to back the stable coin, then like the users, their points would translate into some percentage of the increase in value of the gold.

Yeah. So something about that. So let's say the example, we had $10 billion in deposits and stable coins issue. and we took that $10 billion and we bought gold. And gold went up 25% in a year. It did like 60 last year, right? 25% in the year. Now we've made $2.5 billion in gains.

Those gains would be paid up to the rewards holders. Okay, got it. And if the price of gold goes down during that time, then what? Then the hedging that we have, whether it's puts or whatever, would kick in and that goal will be converted to dollars and be put in treasury. So the money will still be there. Okay. And what chain is this built on? It's going to be, you know, for issuing the actual stable coin, it will be chain agnostic.

So we'll be on, you know, obviously Ethereum, Salana, et cetera. And we haven't announced which stable coin the actual, which chain the actual coin will be on. But there's only a few options. Okay. Okay. And so, you know, at this moment in time, like, is your thought process just that you don't see prospects for Bitcoin to rise in value and that you really think that over the next, I don't know, five years, 10 years, that it's really going to be a gold game? So Bitcoin absolutely can rise in value. And let me just point out the issue that we have today. If I say to you, I'm going to build the world's biggest stable coin and it's going to be

$200 billion, which is bigger than Tera. If it was Bitcoin backed, I cannot hedge that Bitcoin. You can't hedge $200 billion in Bitcoin right now without a ridiculous amount of counter-party risk. That's 10% of the market cap of Bitcoin. There's no counterparty that's going to take that risk on. Right? And so the market cap of Bitcoin is too small

to build the world's biggest stable coin issues. Gold is $34 trillion. You can hedge $200 billion in gold. And the counterparty risk, you know, at that point, it's because you can deal with governments and banks and whatever else. So gold is not big enough to become the world, power the world's biggest stable coin.

Well, like, openly that's pretty ambitious. You know, you want to build something bigger than tether. I'm like, yeah, you know,

that's all these projects. Like we want to build something big. And so I think that you can't start with Bitcoin if you want to build the world's biggest, you know, stable coin. Okay. And is this going to be like a genius?

Sack stable coin or is it going to be like non-U.S. Or are you going to have two versions, one for the US and one for outside or like, see, that's that part. As you know, all that's up in the air this week while everyone's really discussing and debating the bills and the amendments and stuff. So, I mean, for the most part, this is stable coin legislation outside the U.S. And if the U.S. makes it difficult for issuers to be in the U.S. or to issue from the U.S., then you'll issue outside the U.S. and it'll be compliant with whatever stable coin laws there are. So this is a debate that's happening, I guess, right now is like, do we push entrepreneurs innovation out of the U.S.? and they can do it elsewhere? Or do we embrace it? And, you know,

buying Armstrong's got some strong views on it, et cetera. But, you know, let's see where it lands. I don't think it's, there's nothing stopping us from issuing this in, you know, out of a number of European countries or other countries in the world and then complying with those laws. Okay. And where are you custodying this gold? That's again, TBD, but it will be with very, very strong tier one. banks and complex. Okay. So I, yeah, like just, so the guest right after you is somebody from Vanek who wrote this report on what the value of gold would be if it were to be used to back, you know, the money

supply. And their projection is like if it were to include the M2 money supply, it would be $184,000 per ounce. So point is that, you know, just watching all this, it does feel like there's some kind of changing world order and there is a scenario, you know, where we could see gold continue to rise. And so in that sense, it does feel like, you know, this venture is kind of well-timed. But, you know, one thing that's interesting is analysts at Bitwise published a research note that argued that gold in Bitcoin actually play complementary roles in portfolios. They noted that gold works as a defense and drawdowns and that Bitcoin works as offense and recoveries. And they stressed tested this. It cost multiple market shocks. And they concluded that

owning both outperformed holding just one. So what do you, what do you make of their findings? I think holding both Bitcoin and gold definitely has different purposes in your portfolio. So you should do both. And I don't think people should be super exposed to gold either. I don't think gold should be, you know, anyone should be like all in on gold. Just like I've always said, being ordered on Bitcoin City, right, like both of these assets, you should have a diversify portfolio that helps you ride the ups and downs of the markets. And so some allocation to Bitcoin, some allocation to gold, and that's the whole point of diversification.

When you have a well-balanced portfolio, regardless of what happens, you should actually do okay over the long term. Okay. So one other asset that I have to ask you about is, of course, we saw that silver also spiked up to a new all-time high on this whole DOJ Fed fight. And I wondered what you thought about silver compared to Bitcoin and gold or just generally how you think about it as an investment. So I think silver is definitely overheated right now. It doesn't mean it can't go to 100.

It doesn't mean it can't go higher. I've been trading it up since, you know, 50s and stuff. I've kind of had some, I had some cold expires on Friday at 80 bucks. So I'm kind of pissed at this morning as of 89. But, you know, that's life. I think silver is great, but silver is, you know, again, part of a, if you have a precious metals portfolio, someone actually peered yesterday, really like, what should I do? I've got a million bucks to invest.

I said, put 85% gold, 10% silver, 2% and a half percent platinum, 2% palladium, and just leave it. Like, that's a balanced portfolio. If silver outperforms, you can do it really well. I wouldn't put all of it into solar because silver's highly volatile as well. You can see a big crash. Gold is the stabilizer for, from. portfolio, just like in crypto, right? If you have the crypto portfolio, generally you want to be about 50% Bitcoin in the portfolio and then a whole bunch of alts and, you know, some Ethereum,

Solana, et cetera, et cetera. And maybe like 10% of high results as a balanced portfolio in crypto. That's kind of what it's like in the metals market or doing a metal portfolio. You want to be 85% gold, you know, and then you can balance out the other 15% to get some extra extra beta out of those. Again, everyone is, I like, I don't like, this is not financial advice. I don't give people financial advice without context. Everyone is a different financial situation. You know, some people have, have already made it in life. So their goal is not to lose it. Some people are just like, hey, if I don't do something, I'm not going to make it in life. So I need to take a bit to farm. And that's fine. Like, everyone's in a different phase and has different outcomes

and needs. And so I just think that the, you know, in it comes to crypto, obviously, it's very, very volatile. So unless you've got the same power to stay in for a while, and you've been in for a while, we've seen the ups and bounds. I just don't recommend people, you know, invest money in crypto. Like, crypto is more about speculation, not investing. If you want to invest by some really good stocks to companies,

you know, Apple's in there around, you know, 10 years from now, 20 years from now, you know, Google, et cetera. Like, those are things, that's investing. Crypto is more like Gambi. But, you know, to be gold is actually investing in a way as well because it's hedging your portfolio against things like, you know, global conflicts and currency debasements and those sorts of things. So your portfolio should have a little bit of everything, but the right ratio is what makes you a good investor. I mean, again, it's more about a balanced portfolio. Like, I think you should have a bit of everything, you know.

So you are allocated to stocks, but like what percentage in that horse? Because it said there's private stocks and there's public stocks. I don't have a lot of, in fact, I have virtually no public stocks right now. That's stuff that's going public. But I've got nothing in my public portfolio. And I, most of it's just private companies, private company shares. Okay. Okay.

We just saw equities. I like, right, right, right. I like the illiquidity of it because public stocks is just you get tempted to sell as well. Oh, this is that true. And you sell then you get out. I like the idea to just leave it and, and just, I mean, I like, I mean, I said in private company stocks for 10 years and then they're on a Bitcoin investor for 10 years and they're going public next week, which is great. Yes.

Yes. Yeah. And I see people, I saw Chef Park tweeting he thought this IPO was being mispriced. Okay. I want to ask you a couple of things about Bitcoin before we hop. One is I'm sure you've seen all this stuff about privacy and there was this kind of search and these privacy coins. And Bitcoin at this moment doesn't have a way to adopt. or integrate privacy, at least, you know, currently on its roadmap.

And I was just wondering, you know, what your thoughts are around this interest in privacy and either which assets you think are best poised to take advantage of any interest in it or whether you think Bitcoin kind of will need to integrate that somehow in order to remain top in crypto. I'm still not buying the privacy narrative because what we're witnessing right now is even with the UAE, is government backlash, and I think the U.S. would do the same thing. The whole point of Bitcoin was, you know, Bitcoin developers, Satoshi and the crew, they could have made Bitcoin anonymous, but they made it pseudonymous for, you know,

for a bunch of reasons, I think. And I think adding an anonymity layer to Bitcoin is not healthy and kind of dangerous in the broader sense of like adoption, because all you can have is governments banning it. And so I've always got a fan of pseudonymity, which is, you know, it's a need-to-know basis versus an annulity where nobody knows. And all you need is one transaction to go fund some crazy terrorists. Look, without calling on maimony or certain governments, there's a lot of oppression happening worldwide. And the moment you add a privacy today to Bitcoin, I think you're going to have been

impression Bitcoin as well, I'd rather have a situation where something like Bitcoin is be used and they're, you know, at least comfortable these people are way up to, you know, in some way, you know, giving it, ends out, save whatever versus being banned. And I think the banning, we've seen the banning of privacy coins for a long time now. I don't think it's going to stop. I think it may actually get worse as they rise and become a threat. Yeah, if you want to fight the battle, fight. But I just don't think, you know, I don't think it's going to be one way of privacy coins win necessarily.

And I think Bitcoin should stay away for it. I don't think it was part of the original design. Okay. And the last quick question, I'm sure you've used. saw this whole thing about the quantum threat to Bitcoin and Nick Carter saying that he felt like people weren't treating it with enough urgency because, you know, there is a lot of time that's needed to make any changes that are decided upon and even even just to make the decision on what to do. So what do you make of the quantum computing threat to Bitcoin?

I kind of agree with Nick Commerce as well. I think it's being glossed over. Logic due to the development of changes like tap fruit and say what that happened to Bitcoin. But Bitcoin's theoretically more a threat now because of those things. That's my understanding of it. Maybe I'm wrong. Please tracking. But there is more risk now versus the old incantations and protocol. But I haven't spent enough time looking at it.

That's just my off-the-cuff sort of reaction to it. I do want to comment on the whole Powell thing, by the way. Right. Because I have not been a big fan of Jerome Powell over the past couple of years. I think he's made so many errors and he screwed up on so many levels back in 2021, you know, when he was trying to get himself reelected his Fed chair, all the stuff he's done. I'm not the biggest fan. But I do think that the current sort of administration's attack on power isn't a good thing either.

I think we're like, that's not the way to handle it. He's turned as nearly over. Just letting him, you know, let him get out in May. And inflation's not under control. So I don't think he's being unreasonable in any way. So that's my two chances. I think that we're in a kind of a weird spot are now in markets uploving the tech and Paul.

And, yeah, for good reasons, I think. Okay. All right, Vinnie. Well, it's always such a pleasure to hear your thoughts. Thank you so much for sharing your insights on golds and silver and pink coin. And congrats on, you know, Zash. And thanks so much for coming on Unchained. Thank you.

Greatly, yeah. Good thing you. Today's episode is sponsored by Figures. which is transforming financial services using blockchain. They're the largest non-bank mortgage lender in the U.S. with over $19 billion unlocked on their lending platform. Now they're offering industry low crypto-backed loans at 8.91% interest rates at 50% LTV for BTC, ETH, and Seoul.

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about your gambling or the gambling of someone close to you, please go to conicsonterio.ca. Visit figuremarkets.com slash unchained. So take advantage of their crypto-backed loans today. Welcome back to part two of this episode on gold and bitcoin and apologies for the long delay. So next up is my second guest for today,

Eric Fine, Vanek Portfolio Manager for Active emerging market's debt. Welcome, Eric. Hi, Laura. Thank you. Vannick published a great piece called If the Dollar Loses Reserve Status, could Gold Surpass 39K? It's a very, very interesting title. What is the main thesis of your article? Well, before the thesis, the premise is everyone's asking the question and nobody's answering the question with a precise number

other than, you know, inappropriate normalizations. The goal was to have an actual number to answering the question as opposed to an essay. You can challenge the question, but we don't get into that in there. But that was the spirit of it is to answer this very frequent question and question very precisely. And so you say everybody, you know, is kind of talking about this, but nobody is putting a number on it. So, you know, explain that background. Like, what is it that is happening that inspired you to focus on this question right now? Yeah, that's an important starting point because a lot of words get thrown around. The spirit of this is fiscal dominance, namely that when countries have too much government debt, their central banks lose traction or meaning because hiking interest rates at some point bankrupts the government and bankrupts the financial system. So it's really, it's a non-option. And as a result, you normally should see that, you normally should see the

central banks of those countries, maintaining lower real interest rates than they would otherwise. And that's exactly what's materialized in the developed world. Now, that's, you know, that happens. And it should lead to higher inflation in some countries and lower inflation in others. And if the higher inflation and the higher inflation country should see their currencies depreciate more as a result. That's all totally orthodox. It's simple depreciation. It happens to be the situation that it's the developed markets doing it. So they're seeing the inflation pressure. Their currencies are under more of this pressure.

And therefore, it is more visible via gold. Who really cares if the ties lose confidence, right, and buy gold? In any case, they already have. That's one of the points of the piece. So that's the, you know, that's the context, is that fiscal dominance means, hey, you're supposed to pay attention to the central bank balance sheet. And so you have depreciation pressure, but then this becomes acute. It's more than just the normal, okay, yeah, all governments get out of control and go bankrupt eventually.

It's, hey, I'm at a central bank and I have my country's savings in my central bank reserves, right? These are a lot of these are deposits of individuals and private corporations that they have reserve requirement. They're held at the central bank. So it's not the central bank's money in the sense that, in journalistic sense. And it disappeared, $300 billion of it from the Russian Central Bank accounting, right? They lost access to a third of a trillion dollars. Other central banks have reserves, and that's not supposed to happen. So it became very acute.

And central banks have always looked at gold as a currency. And they're the center of money for every country. And so that's the story. Now, there are different gateways into this conversation. I was sold at fiscal dominance, but, you know, you've got to take years. Then I'm further sold at inflation differentials. That's clear, and the market's kind of get that. But this issue of Ken Rogauff called sanctioning central bank reserves,

Russia's central bank treasury reserves, as an act of default, right? It's a major event, and central banks cannot ignore it. and they are buying gold. And all I saw in response to these questions was a whole bunch of words that didn't tell me anything precise. So I was frustrated. All right. So explain, you know, what methodology you use to try to calculate this implied price of

gold if it were to back the global money supply. Yeah. It's incredibly simple. So simple it may seem complicated. And also so simple, it may remind you what you'd weren't. taught or what you forgot in econ. But the principle is M0123 came about as runs. You didn't weren't born on an earth where there was a central bank and there was an M012. Those came about because political actors observed that people ran to things and ran away from things.

And a further background during the global financial crisis, a new M that we have an internal paper on that we're trying to calculate, which we're calling an infinity was created. There was a run on global derivatives. It was met. There are real heroes. Bloomberg News, Bob Ivory and Mark Pittman, Lawrence Kallokoff, Boston University, and then the Levy Institute. But, you know, it might be around 700 trillion, an incomprehensible number. So we put that to the side, right? Just use the old-fashioned things. we have traded countries that had systems like this. Bulgaria did. I was the world's leading Bulgarian economist. Whoopty-do. But, you know, it was a big country for me at the time.

And Argentina had a currency board. And there are simple measurements that have gone back a few hundred years that you can use to measure them. Bottom line, what's the question? What is the price of gold if the dollar loses this reserve status? Okay, I got a balance sheet. I can answer that question. Your reserves. Oh, take treasuries out. Why? Because that's the freaking question. All right? Don't, if you think it's stupid, then don't need to listen. I get it. And the spirit is to get a number. And you divide it by whatever, the M0 on the other side. That's it. And you find the price, you calculate the price that equalizes that number. So now, how do you really do that in a practical, in an economic, economically consistent way. Well, do you do global M-0, the addition of all M-Zero? Well, first of all,

there's no good series for that. There is for M-2. And we showed its history and it spiked after GFC, namely banks, central banks became more levered and then again after Russian sanctions. But a better, more precise, practical, and econometrically consistent way, because the M-ZOs are calculated differently by different countries, right? So that's why there's not a blob called Global M-Zero, is to do it Central Bank by Central Bank. And then to further say, well, yeah, I care more about the U.S. Central Bank than I do about the Malaysian Central Bank. Oh, I love Malaysia and Thailand. I don't mean They're great, important countries. And more precisely use global FX turnover as of mid last year, according to the BIS.

So the U.S. gold equalizing weight counts 50 percent because it's global ethics. That's a practical thing. They're the ones who have the M-Zero to sell. And then on, you know, then UK, Japan, and China. And weight it. And that's how you get the numbers. So if you come up with the gold equalizing price for the individual central banks for M0, and in the paper we show the mean, the median, you know, whatever other numbers you want to get.

But then you wait it towards that answer for U.S., Japan, UK, China, you get $34,000 an ounce as the gold equalizing price. If you use M2, exact same methodology, we didn't show the detail chart. We just showed the output for, you know, the main countries. You get $189,000 an ounce. The real kicker is there was a run on M infinity. So these numbers are, but they're already so big that, you know, but it's an attempt at precision. And the relative differences between them are what's fascinating. The central banks that look the most levered are UK and Japan, which rhymes completely with the original spirit of the question.

So that's why we thought it was interesting. My favorite observation is that Salis, Africa has 60% of its M-Zero RAND money supply backed by gold, and the yields on their bonds are 8%, whereas Japan has under 3% of its yen M-0 backed by gold, and the bonds pay under 2%. The relative differences are really maybe impactful when you get this reset. So it's not just a theoretical thing about gold. It's about yen and sterling relative to the other currencies as well. And so talk a little bit more because, so you mentioned which countries are not necessarily super well positioned.

But I was a little bit surprised by which ones are more well positioned. So explain that. Yeah. You know, it's kind of like the kid that didn't have a trust fund is going to be a little tougher and better. It's not more complicated than the old fables that we all grew up with. And so, you know, I grew up with these kids, you know, as in, you know, as a sell side economist at Morgan Sand. And they had the crap beaten out of them all the time, and they're really tough now. That's my version of the story.

The 97 Asia crisis is a good moment. But these countries had too much debt. And what did we, the cool kids, not me specifically, but I was part of the crew. You know, I was a Morgan Stanley guy and the IMF. I loved their recommendations. Their recommendations were do not guarantee all financial institutions, right? Finance One was the biggest bank in Thailand. They let it go.

Daewu was sold. to General Motors, right? We could barely sell U.S. steel to even a Japanese company. And when we had our GFC, the IMF went to the U.S. and said, hey, what about Fannie and Freddie? What is it? Is it a state-owned bank or is it a private institution? And the U.S. said, go away, right? We're the biggest shareholder of the IMF now. We didn't say, go away. We said, well, we're changing the definition of percentage of state ownership. So endless monetary forbearance. And it was really painful. They had to float their exchange rates and risk inflation. But that stabilized the currency.

Dollars started piling into these countries. It's been going on for 30 years. It's why they rallied in response to tariffs this way. They also had to a very high real interest rates. If it created a recession, the answer was too bad, right? Since when is that against economic law? Recessions are a bond guy. Recessions are healthy and they get rates down.

similarly on fiscal. You can't spend. Oh, we have depression. Too bad. Thailand and Indonesia had 50% declines in GDP. I'm not endorsing Indonesia. They got a lot of issues. You know, it's a less...

Yeah, well, actually, I lived through that because my first job out of college was in Indonesia. I was teaching ESL at an international school. And I landed there in August of 1997. So I, when I, arrived, it was $2,500 to $1.00. And within five months on the worst day, it was $17,000 to $1. It eventually kind of stabilized it like $13,000 and then $11,000. I think even like a year later, it was maybe like $8,000 or $10,000. But, you know, I mean, it just draw, I mean, I was lucky I was making money in dollars. But, you know, for the local currency to basically go to one seventh of its value within, within like four months.

months. That was, that was insane. And that was great that you had that experience. That's the main point that a lot of Americans don't know. The dollar goes down 20 percent. I don't even know what that means in America. But your experience is really interesting because it's a reminder. Curtsies can go to zero, right? So it's often not the thing you think is going up. It's the floor you're standing on going down. Like I have two kids and I, when they're growing up, I would tell them whenever we got an elevator, hey, how do you know the building's not going down? Right? You can't, other than the feeling in your muscles, right? And the other thing to mention is in so many of these countries, leveraging the central bank to achieve economic objectives is a non-starter across the political spectrum. Voters are going to say, wait a minute, the last time we tried it, our banks disappeared, our money disappeared. The rich countries don't have that memory, right? It's 86.5 years old, right? They've all died, which is often how things,

It's the only cycle that's worth paying attention to, really. So the EMs had a tougher go of it, and they're our best students. They took lessons from the IMF. They cut fiscal. They created independent central banks that maintained high real rates, and they fixed their structural problems. No state-owned banks, or if they are, call it that and treat it that way. So, no, it's a real vindication for orthodoxy. And so I noticed in your paper you had done this analysis before in 2012.

What did you find then? And, you know, what does the change say to you about kind of the position of the U.S. dollar and gold right now? Yeah. It says that everything's continuing and getting worse for the developed markets. So the worst, the biggest improvers were the emerging markets. But they were already in good shape. In other words, they were not exhibiting this leverage at the central bank level that the rich countries were. And so that continues. A really interesting observation comes on China. For my 30 years in the business for a couple decades of it, China was regularly ambasted for a leverage heavy development model. Their ratios unched. I'm not saying they're targeting it, but it is unched, meaning they've seen no deterioration and they were in pretty good shape from the beginning.

Moreover, like we said in the paper on the econometrics, we excluded state banks because you can't do a version of this paper because there aren't consistent. But if you do, then China's even in much, much better shape. So that's an interesting one. And then the other interesting one is the developed markets that were bad got even worse. UK, Australia, Japan just got worse, which is consistent with my experience of history, right? The lockdowns, we saw the same forbearance as the GFC. see every stage you see forbearance. And it never gets measured precisely because regulations

don't describe leverage the way they used to. It's not like you can say from, it's a wonderful life that you need 10 units of actual cash for, you know, 100 units of, you know, risk or deposits at the bank. You don't, you can't really, we attempted in this internal paper, like said, and the numbers like around 700 trillion, we're just having fun, really. But that's, you know, the bigger system, or that's the bigger challenge. And capital controls will come as a result of this. But this can tell you where they will come first and where the pressure is going to come from and which currencies and countries are going to experience, you know, the most pressure. And it's the DMs. They keep papering things over. We keep hearing you can't do this forever. And, you know,

UK and Japan are active, you know, markets of concern right now. It's not a fringe belief anymore to think that, you know, the prime minister of the UK says in an FT article a couple years ago that the Bank of England perpetrated a coup against her, right, using their power over markets, right? I'm not saying that's true. I'm just saying that this is the kind of, these are the kinds of headlines that I'm observing in the develop markets. So you don't see things like that.

You used to in EM, but they're over that. And so, you know, we're at this moment in time where even just in the last, you know, week and some change, we have seen just so much happen in the geopolitical space, you know, with obviously Venezuela and the U.S., like throw in a little bit of Greenland. And all of that really is subtext for, you know, the China, Russia situation, Iran. your company also is very forward thinking on crypto and Bitcoin and, you know, has like it's on chain economy, ETF and all kinds of things. So when you look at, you know, just all the, this kind of the balance of everything, it seemed like you could play out in your head what you think the future will look like in terms of, you know, the power balance between developed markets and emerging markets, US dollar, you know, gold, Bitcoin, like, whatever. So just if you were to play this out in your how all of these circumstances will continue to, you know, to keep moving going forward, like what does that look like to you? Yeah. So first, just to complete the answer to your early question, you know, the biggest changes that people care about this paper. They didn't care 13 years ago. That's the biggest, you know, no one was thinking this way and now everyone is. And so that I wanted to mention it. Yes, geopolitics is the core of demand. I look at the central banks.

That's the core of their demand sanctions, right? That's the core of these developments. The natural endpoint is blocks, regional blocks. Now, I used to say that the world is not de-globalizing. People in the rich world say that because they are de-globalizing, right? We're sanctioning people who lend us money. But that the EM was globalizing, right? India trading with UAE, Brazil, China, and their own currencies, right?

The ultimate definition of globalization. Now with U.S. and Venezuela and a new regional focus, regionalism and blocks seem very, very clearly a result. And there are asset price implications for that. Now, asset price implications, I would write in a book or a paper, not, you know, we trade every day and our goals to outperform every day. but trading blocks that could lead to, in practical sense, convergence, if the Americas are becoming a block. I was sent by Morgan Stanley to London in the 90s to be part of the convergence trade in Europe. Poland had teen interest rates in Zlati, but they were converging on every metric, structural, fiscal, otherwise. They were saying they were going to join the money's union, but they never were.

And what happened? Well, inflation converged. And, you know, it had happened. And this was trillions. Trillions. You're borrowing in boons at really low rates and your long, Zlotti and the Zlottie's rallying and the rates are going down. So it's just tons of money was made permanently for 15 years.

So, you know, why isn't that? Why isn't that a scenario? I'd say another scenario is history does seem to say that humans like one king. So, you know, there are big periods of history where you have the Greek king on an Indian coin. There is that thing. And so, you know, I would say you have to look longer term. Again, if I'm writing a book, not if, and, you know, every few months this is important. But China's rise.

CNY has been incredibly stable. it is clearly going to be appreciating for all sorts of reasons because they want to, but also what does it do to the relationship with the U.S. and the rest of the world? You can't have a tariff negotiation and then devalue your currency. That's what happened last year as people realized these countries are too rich, and they were being told their currencies have to strengthen. So, yeah, China and the development of blocks is a really important one. And for crypto, I think what happens and gold, I think what happens in Europe is really important.

If that suboptimal zone declines, that'll be a real test of the mechanics and desirability of these. I guess people call them alternatives. I don't think they're alternatives. They were never to central banks. And that'll probably be where the big energy comes from in terms of flows. Because money should flow to the U.S. U.S. is not obviously vulnerable from this. Eurozone as a block is not obviously vulnerable, but it's not a block.

Give me their phone number, right? I don't know. What's the bond there, right? You're going to sell France or Italy or Greece or whatever first. And that's a dynamic that's just inconsistent with reserve status. So in addition to the problems we read about in newspapers, social, political, fiscal. Okay. So you actually don't think there's too much risk to the dollar. No. Yeah. I not yet. So I think which dollar? So I posted on, well, dollar euro, dollar yen, dollar BRL. I posted on X. I don't know, in middle of this year, I said, economic historians will not say about 2025 that euro dollar rallied 11.2%. We're going to say the dollar went down 50% against gold, right? So, you know, our day job is, you know, intracurrency.

And UK, Japan, Eurozone have far worse and more fundamental problems than the U.S. So if you define that as the normal world, yes. If you include gold, which we have to, we invest in countries with central bank. They all have central banks. Then you care about that more. But like your experience in Indonesia, it's often about something going down, but you're the kid in the elevator who's convinced that it's the elevator when something you don't know, right? You really can't know other than your legs. Okay. And so then to understand about gold versus Bitcoin or even other cryptos, like how do you kind of position each of those?

Yeah, I don't know. I would ask Matt Siegel and just do whatever he says. So he's fantastic and he's been there for the birth of the industry. I would also observe that the, you know, the calculation we're doing is simple. It's asset. You know, the question tells you what you look at. There's zero here of BTC. Now, you could say the 21 million coins and get like 250 grand or over a million using MZO or M2. It's a reminder that geopolitics are important. And where it ends up is in blocks, currency blocks, particularly with the new U.S. focus on South America. And that can create convergence trades. I mentioned that I would participate in the multi-tralion dollar convergence trade in Europe as Poland was converging to Germany. A German balance sheet in euros at low rates would be longs, lotis at high rates and made.

That's something that that's a reasonable outcome to expect. As is CNY's rise as the reserve currency over 10 years, that's a scenario. Now, our view is the dollar will not lose its status. It'll share its status. That's a good standing view. Over time, humans often don't like that. They like one king's picture as, you know, we had Greek kings on Indian coins and gold. So that's a scenario to keep in mind as well. They want it. And they are a low inflation, very stable country. So that's another scenario to keep your eye on. Okay. Yeah, I don't love that scenario, but that's just my opinion. Not that it matters. Yeah, no, you know, if I was in the business of generating things we love, I wouldn't be in the business, I guess. Yeah, we're just saying what we see. All right, Eric. Well, thank you so much for sharing all your thoughts and your great report. It was such a pleasure chatting with you.

Great, me as well, Laura. Thank you.