We Study Billionaires - The Investor’s Podcast Network - TIP638: Gold w/ Lyn Alden

Starting point is 00:00:00 You're listening to TIP. With the gold price and an all-time high, it seems timely to explore what is happening. As you will learn in this episode with the always thought for Lynn Alden, one thing to look out for is that central banks outside of the more developed nations are loading up on the yellow metal at a record pace. And then at the same time, the World Central Bank's claim that dealersization is certainly not the plan. Now, in this episode, Lynn and I discuss whether it would make sense for Central Banks to print money and buy gold, which mild conditions

Starting point is 00:00:30 are advantageous to gold, and much more. If you're a stock investor worried about the macro landscape, this is an episode you don't want to miss out on. Celebrating 10 years and more than 150 million downloads. You are listening to the Investors Podcast Network. Since 2014, we studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

Starting point is 00:00:58 Now, for your host, Stig Broderson. Welcome to The Investors Podcast. I'm your host, Dick Broterson, and today I'm here with Lynn Alden. Lynn, how are you? Pretty good. Thanks for having me back. So, Lynn, today's topic is gold, and let's just get right into it. Your goal has been hitting all-time highs, you know, one after the other here recently. So let's just start with that. What has been the reason for the recent rally? Well, any sort of price movement has multiple reasons. I mean, the end of the day, there's more buyers and sellers.

Starting point is 00:01:37 So what we can do is we can kind of determine where that buying is coming from. It's not coming from ETFs, for example, in the Western world. Their tonnage is actually down from all-time highs, and it's not doing very good on that front. Instead, a lot of the buying is coming from foreign central banks, as well as from foreign private sector, notably in Asia. That's where the bulk of the buying is. And then, at least in the West, you don't seem to have a lot of selling. Retail numbers are improving in the U.S. So, for example, with Costco introducing gold, there are more access points for it.

Starting point is 00:02:11 Some of the bullion dealer numbers seem to be decent. So it is fairly broad, but it is more sovereign and more eastern focused. And I guess one of the things that it's remarkable about it is that the price is doing pretty well despite the fact that nominal interest rates and even real interest rates are fairly high, which is normally a pretty significant headwind. And also the dollar index is strong. And so the fact that gold is doing this well despite headwinds, I think has a lot of information in it. So there's a lot to unpack there, everything from Costco to central banks.

Starting point is 00:02:45 And I hope we can cover as much as possible. But let's start with the central banks that you just mentioned there. So 2022, that was a record year. And 2023, there was also, well, that was the second consecutive years where central banks bought more than a thousand tons. And so what's a thousand tons of gold? How can we put that in relation to anything? So this is compared to an estimated $2,500 to 3,000 tons of gold being mined annually. We also have a gold stock around $200,000, perhaps a bit more that's ever been mined.

Starting point is 00:03:15 Now, let's start with. If we look at the aggregated central bank balance sheets, how much of that is allocated to gold? And how do you expect that to change all the next five to 10 years? So they have an amount that's like 30 some thousand tons, all central banks combined. And the history of that is that during the 80s, 90s, 2000s, that overall tonnage was generally on a gradual decline in the world. And it bottomed in 2009 and then started gradually going back up from there. It's kind of the history of central bank gold holdings in absolute tonnage. We're also seeing that back around 2013, 2014 is about a decade ago now.

Starting point is 00:03:58 foreign central banks in aggregate kind of stopped loading up on U.S. treasuries. And there's a number of reasons for that. Generally speaking, whenever the dollar index is strong, somewhat intuitively, central banks are not really buying treasuries much when the dollar index is strong. And that happened around 2014. And so, you know, we've kind of been in this like stronger dollar environment to varying degrees since then. And there's been less treasury buying in large because of it.

Starting point is 00:04:25 There's a couple different reasons. One is that about a decade ago, China announced that accumulating treasuries is no longer in their interest. And so we've seen a shift from them toward diversifying of their portfolio strategy and including more illiquid investments, things like lending to other markets for commodity deposits or infrastructure, basically the Belt and Road initiative type of activities. That's kind of been one of the areas as well as increasing their gold holdings. And so there's been some strategic aspect to it, but there's also just a strong dollar aspect, which is that, Whenever the dollars in one of its big weakening cycles, like it was in the 70s or like it was in the late 80s, or like it was in the 2000s, generally, you know, other currencies are therefore doing pretty good. And sometimes they even want to weaken their currency a little bit. And one thing they can do is increase their reserves.

Starting point is 00:05:13 They can create more of their currency and buy foreign assets. It could be treasuries, could be gold, whatever. So generally, they tend to accumulate assets, including treasuries on a weaker dollar trend. but when the dollar is strengthening or it's kind of holding at a strong level, they're generally more in currency defense mode. And so they're usually not increasing their reserves by very much. Now, that's as a group. You can still have individual countries that are acting out of, you know, the average.

Starting point is 00:05:38 But as a group, their debt's, they're like dollar debts are generally harder because the dollar is stronger now. Their currencies are a little bit under pressure. And so if anything, they might be selling some reserves to buy back their own currency, but at the very least, they're often just not really. really accumulating reserves aggressively when they're trying to keep their currency propped up to a significant degree. That's the environment we've been in. But around the margins, they are pointing more toward gold than treasuries over the past 10 years or so. And I think there's a number

Starting point is 00:06:07 of reasons for it. I mean, basically, you know, during the entire kind of post-GFC decade, Treasury, you know, short-term rates were held at near zero. You also had this increasing kind of, I would argue a multipolar tenets in the world. So any sort of U.S. security, treasury security, stock security, corporate bond security, whatever the case may be, those are freezable assets. They can be unilaterally frozen by the U.S. government. And so there's a number of entities that are either frenemies or competitors or just for their own, even if they don't see it as a high possibility that their reserves be frozen, they say, look, I mean, we might be pressured at some time in the future. We don't know who's going to be president for election cycles from now.

Starting point is 00:06:50 So let's diversify into a little bit of other currencies. Let's diversify into gold. These are kind of the options that they have available to them. And I think those are some of the trends that we're seeing in that kind of central bank world. We're talking about 5% of central bank's balance sheets that's allocated to gold. It's a 10%. Last I checked, it's over 10%. I don't have the numbers in front of me.

Starting point is 00:07:13 And it depends on the central bank. I mean, Russia, for example, even before, or their reserve freezing, they had a very high percentage of gold. Canada's like, I think they, they have like no gold anymore. A lot of the European ones are fairly high, you know, Italy, Germany, they have a fairly high gold percentage. The United States, because they're the axiom of the current system, they have very minimal foreign currency reserves.

Starting point is 00:07:34 Their gold holdings are still substantial. And so in aggregate, I believe it's low double digit percentage, which makes it one of the larger reserve holdings, but still notably smaller than their collective treasury holdings. Yeah, and just to continue that, whenever you say reserves, like you're referring to treasuries because there are interest bearing. It's not like the actual currency, but you're talking about treasuries and that can be frozen. Is that correct? Yeah, I'm referring to foreign exchange reserves. That's different than bank reserves. So yeah, it's good to bring up that distinction. Bank reserves in any given country are part of their base money along with currency and circulation.

Starting point is 00:08:12 That's a direct liability of their central bank. Whereas foreign exchange reserves, serves is, you know, a country is operating, you know, basically there's 160 currencies in the world. And you kind of think of them like arcade tokens where they're all these kind of, you know, some of them are pegs, some of them are free floating. And when more capital is kind of flowing into that currency, it's generally strengthening. And when more capital is leaving that currency, it's generally weakening, partially dependent on supply and demand of that currency, right? If Argentina's currency is expanding at a very rapid rate, not a lot of people want it. And also, the supply keeps increasing.

Starting point is 00:08:45 So that's going to keep deteriorating, diluting against other currencies, for example. That's a fairly extreme case. But in a more marginal case, generally speaking, if a currency is weakening too much, they want to be able to have something that they can sell and then buy back some of their own currency with. Basically, all these currencies are being bought and sold. Many of them, so something like 90% of FX transactions, and FX is a massive market, something like 90% of them have the dollar on one.

Starting point is 00:09:14 of the transaction. And so there's not a lot of volume between different currency pairs. They're mostly, like, if you want to go from one currency to another currency, it's often your currency to the dollar and then the dollar to that other currency. That is changing a little bit because, you know, say China and Russia are doing more direct, you know, swaps now and things like that. But in general, that's still the case globally. And also, for example, most oil, most international contracts are denominated in dollars. Most global capital, like if an investment company in Germany lends to a corporation in Brazil, for example, even though the dollar is neither of their currencies, that's likely going to be in dollars. The euro is the second biggest, but it's a distant second.

Starting point is 00:09:56 So the dollar is by far the biggest currency used for international lending. So denomination of international contracts, denomination of international lending, and most for oil sales, that'd be part of international contracts. And so the purpose of having reserves is a fewfold. One is that they can defend their own currency. They can sell some of their reserves to buy back some of their currency or inversely if they want to weaken their currency, they can create more currency and use it to accumulate reserves. That's one tool. The second one is that if they have various entities in their country, for example, corporations or banks that are doing dollar financing in one way, they might have dollar debt. That's specifically true for emerging markets. The central bank wants

Starting point is 00:10:35 an option to be able to bail those out if they have a crisis. So they want to build a lend dollars to those corporations so that they don't just nominally default every time there's a recession. And so they kind of maintain stockpiles of that. And of course, central bank swap lines can increase that flexibility, but they don't want to have to rely on those necessarily because they might not be given them by the Federal Reserve. And so they often hold a number of quote unquote kind of hard monies. And the dollars considered hard just because, for example, if Brazil's holding dollars, they can't print dollars. From their perspective, that's a hard asset. And from the international perspective, even though it is diluting over time. But because that's what

Starting point is 00:11:14 a lot of their contracts are denominated in, their debt denominated in, that's a big tool for them. And gold is something that is, you know, over time, it holds up well versus dollars in treasuries, but it can have a decade where it, you know, underperforms. And then also, it is volatile compared to the unit of account of those liabilities and those international contracts. And so from that perspective, it's maybe a little bit less useful as a reserve asset in this existing kind of international system. But it still works as a significant percentage because, you know, the volatility is not huge. And on average, over time, the value holds up well compared to dollars. So if we go back to the central bank's aggregated balance sheets.

Starting point is 00:11:58 And like you mentioned, 2009, there was, you know, bottom in recent time. So it was around 30,000 tons at the time. And now it's close to 36, at least according to the official numbers. We're going to talk a bit more about perhaps there are some unofficial numbers. But now we might be looking at something more than 36,000. And so what am I comparing that to? Am I comparing that to the M2 money supply whenever I'm looking at an increase from 30,000 to say 36,000? It sounds like a lot.

Starting point is 00:12:27 So it's 20%. But what else has grown 20%? Is it even so that you can say that the aggregated, Gold as a percentage of the balance sheets are smaller than it's been a long time. Yeah, so in general, because you've been in a strong dollar environment for the past 10 years, there's not been a lot of net reserve accumulation, even though there still has been money supply growth, broad money supply growth. And so on average, the level of reserves has been decreasing relative to M2 for a lot of countries because most of them are more in currency

Starting point is 00:12:58 defense mode than reserve accumulation mode. Now, if you're, we get a big dollar down cycle, you could see a big multi-year period of reserve accumulation, but that's not the environment we've been in. And so, yeah, a lot of them are going down in terms of reserves compared to broad money supply. There's a couple ways to look at it. You can look at it as a percentage of their GDP. You can look at it as a percentage of their broad money supply. You can look at it as a percentage of their external debt. So, for example, you know, if a country in aggregate has, you know, $100 billion worth of external debt to either its sovereign or its corporation denominated in currencies they can't print, you might want to then compare their reserves to see

Starting point is 00:13:37 if they had to, how much of their reserves would they have to sell to cover most of their debts? That's another metric to look at. So it depends on what exactly they want to do with their reserves. Those are all useful metrics to be familiar with because a less indebted country might need fewer reserves. Also, in general, developed countries tend to have less reserves relative to their GDP than emerging markets, because developed countries tend to have most or all of their liabilities finest in their own currency. And so they're less likely to, you know, kind of need to support their own banks with foreign currency, for example, compared to emerging markets where that's a bigger deal. So reserve practices will vary. And it's not always like

Starting point is 00:14:19 that hires better. I mean, basically, if a country is having a current account surplus and a trade surplus and its currency strengthening, that would otherwise go toward, you know, wage earners in that country. That would go toward savers of, you know, those currencies in those countries. And instead, when a country is accumulating reserves, it's making sure that its currency is not getting stronger, which actually takes away from the wage earners. It takes away from the savers. But of course, you know, down the line, they could use it to defend the currency should it weaken. But in general, a country that's always accumulating reserves is generally running a rather mercantilist policy, which is that it's trying to keep its wages and its kind of citizenry, like not super wealthy, so that they remain very kind of competitive on the global scale in terms of labor costs. And instead, a lot of that capital is flowing up to the top, the policymakers who then have more control over it, rather than kind of letting that flow into the country in a more decentralized way.

Starting point is 00:15:23 and kind of flow more toward those individual entities. So if we look at the data from the World Gold Council, which is an excellent resource, I should say, if you want to learn more about the gold market. So China is currently the biggest central bank buyer of gold. And if you look at the list, then they have monthly updates and then they also do some aggregates. But you also have countries like Poland, Turkey, Singapore.

Starting point is 00:15:44 They've recently bought up heavily. But whenever you look at the list, you don't see a lot of Western Europe or, say, the states. Why is that? their liabilities are denominator in their own currencies. So most European entities, their liabilities are in euro. You know, North American companies, their liabilities are denominator in dollars. Same thing for Australia. Same thing, you know, Japan's not exactly in the West, but it's kind of Western aligned. Same thing's true for that. Most of their liabilities are in yen. If anything,

Starting point is 00:16:12 yen is actually the third biggest foreign and currency financier after the dollar in the euro. And so they just have general less need of reserves period. And then, you know, Europe, for example, and the United States, a lot of these countries already have fairly large gold reserves as a percentage of their reserves. And so we just don't really see a lot of reserve accumulation. A lot of them are not running big current account surpluses. They would lead them to have a lot of ammo to accumulate reserves. And so a lot of that reserve accumulation will probably have to come out of other holdings. They'd have to like sell treasuries and buy gold, which is somewhat of a political message. And so, yeah, there's kind of not been a lot. The incentives don't really align currently.

Starting point is 00:16:52 for a Western country to kind of step out of the pack and just start rapidly accumulating reserves, let alone gold reserves specifically. So let's say that you're not one of those countries. And you have a central bank and like all central banks, they can print money. And then say that you're also a country with a very unstable currency and you would benefit from having more gold on your balance sheet. Why would a central bank not print a very significant amount of whatever local currency that would be and just buy gold?

Starting point is 00:17:21 So because it risks inflation and devaluing the currency, basically. You mentioned, for example, an unstable currency. If they already have an unstable currency, then they're in a difficult position of accumulating reserves because they ironically might have to make their currency even less stable while they're accumulating reserves. If they're printing a lot of their currency to buy gold, it means more of the supply of their currencies hitting the market. And so if they're already dealing with double-digit CPI, for example, and there's popular unrest, because of that civil unrest.

Starting point is 00:17:53 Last thing they want to do is maybe add another 10% to currency supply and increase their gold by a lot. So some of them do it despite high inflation. They might do it in fairly small amount. So they're saying, look, we got to think longer term. I know inflation's high, but we still want to increase our gold reserves. They might do it anyway. But in general, reserve accumulation tends to happen more from a position of strength.

Starting point is 00:18:15 You know, a country's running a big trade surplus, current account surplus. their currency is holding up well compared to the dollar. And then they say, look, now we're going to use this opportunity to keep our currency from strengthening. So we don't like kind of make our labor too expensive as far as they see it. And we're going to use that to that context to accumulate reserves. Whereas usually when they have currency instability, if anything, they might be selling reserves or they might be trying to hold reserve steady because they're trying to reduce the instability

Starting point is 00:18:43 of their currency in the moment. It's hard to think 10 years in the future when you're worried about. you know, the public unrest about inflation this year. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is.

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Starting point is 00:22:55 That's Shopify.com slash WSB. All right. Back to the show. Perhaps looking away from Zimbabwe, which is we can probably do an entire series just about Zimbabwe, but why wouldn't you have, let's say, a country like Argentina, and then, you know, who has a triple-digit inflation, and then, you know, they talked about dollarization, why not go crazy with the printing press? Some people might say they already done that, but why wouldn't they go crazy then buy a ton of gold and then dollarize or have their own currency backed by

Starting point is 00:23:28 gold? Well, so one, if you do it, if you do it very rapidly, the race is on. I mean, your currency is going to start collapsing and you're going to get reserves. You're probably not, going to make friends in the international community, like the IMF. So there's kind of a hierarchy there or, you know, there's a club there. And if countries find themselves kind of out of the club, things are going to be rougher and different for them going forward. And so there are kind of certain international frameworks. Also, countries can be labeled as part of this club, they can be labeled currency manipulators. If a country is purposely keeping its currency very cheap and is rapidly accumulating reserves to keep its currency cheap,

Starting point is 00:24:06 the United States or other countries might call them out. And that could have political implications. It could have IMF implications, things like that. So there are kind of these dissuading methods to kind of represent, like kind of diminish these more outlier type of activities, at least as a large percentage of their GDP or large percentage of their M2 from happening at a quick basis. Where would central banks buy, let's say, 100 tons of gold? Would they go directly to the producers?

Starting point is 00:24:35 with the buy from other central banks, with they buy, quote, unquote, in the market? And then what is the market whenever you're looking at those type of quantities? It's not like they will go down to the local dealer like the rest of us. So how does the system work? A lot of them are going to do like over the OTC purchases. So you're not going to a defined exchange. They're making a more kind of peer-to-peer private agreement to accumulate it.

Starting point is 00:24:58 For many of these countries, they'll buy it from their internal producers. So for example, Russia, China, Turkey. they have decent gold production. So you'll generally see purchases from them. They also can buy from international producers. They can buy it from international large refiners that are capable of kind of brokering pretty big contracts for these things. And then, yeah, there also are exchanges, for example, London notably, where fairly large amounts of gold could be purchased. So it really kind of depends on whether they have internal production and what size they're buying in. But yeah, a lot of that's going to be off exchanges.

Starting point is 00:25:33 So the question then remains, let's say, and I'm going to put on my tenfold hat, at least to some of our listeners, whenever I say, what if we had a gold standard? What if we, for whatever reason, needed a reset of the system and we went back on a gold standard? Who would proportionally benefit the most compared to the system that we have today? Most countries don't have an incentive to do that right now. So most countries, you know, if you kind of poll political leaders, most of them would not find it in their favor to do that. It's also important to talk about a couple different types of gold standards. So a true gold standard is generally like where, you know, the retail people

Starting point is 00:26:11 using banks and stuff could redeem their currency for gold. So you have a lot of points of conversion to reinforce that gold peg, right? In overtime, as, you know, when you kind of saw the transition from gold standard to Fiat standard, they generally, their gold holdings is a percentage of their monetary base, there's a percentage of their M2 kept decreasing. So they would start to add more frictions for that redemption process. They say, look, you can redeem it, but only if you're going to do a million dollars or more, right? Or they say, you can redeem it, but only if you're a foreign central banks, or actually our own citizens, not really on a gold standard, but we're going to maintain this peg with international markets that kind of maintain the validity

Starting point is 00:26:50 of this peg. There's kind of like different levels that it can go toward. One of the challenges is that when you have a multi-layered banking system, so when you have a central banking system, like you have banks built on a central bank built on gold, the problem is that individual banks don't have any tether to that gold. So they're required to maintain a certain percentage of their reserves, I mean, of their assets and reserves, for example, or they're required to maintain certain capital ratios, which could include reserves. But they can lend quite liberally. And when they lend, they create more M2 money supply. And the central bank is also fraction reserved.

Starting point is 00:27:29 So they might have, you know, back in the old day, they might have 40% of their monetary base backed by gold. So you have M2, which might be, it might be 5 to 1 or 10 to 1 compared to the monetary base. And then the monetary base might only be 40% gold, for example, or less if they're running into a problem. And so that's a, you know, there's multiple entities that when they lend, they're not even thinking about how much gold the sovereign's holding. It's just not their concern. And so you generally see an expansion of the money supply. There's no real kind of method to

Starting point is 00:28:01 contain the money supply relative to the amount of gold when you have that multi-tiered system. And so, I mean, I would argue that's why they all broke, is that they're, they kind of shifted from, you know, back in a free banking environment where each individual bank has gold or gold, you know, assets that could be liquefied into gold. They're making loans. they're trying to monitor their own reserves. But when you have that multi-tiered system, everyone's kind of removed from the problem. And so money supply tends to grow and proliferate, whereas gold reserves don't. So I think that if they were to try a gold standard, it'd be a big reset. But then over decades, you probably would break all those pegs again,

Starting point is 00:28:41 because there's no firm tether between the amount of gold and overall loan creation. Notably, in the United States, there is, for example, if look at the Fed's operating handbook, they have a mechanism for gold revaluation. It's actually initiated by the Treasury, not the Fed, but it involves operations between the Treasury and the Fed. I mean, they could do a reset that doesn't involve going back on a gold standard. They can just reduce the, they can increase the official dollar price of gold. And that's a mechanism where they would be able to get more money in their treasury general accounts without associated increases in debt, and therefore they could spend that into the economy without debt issuance. And so they could technically do a big, say,

Starting point is 00:29:21 dollar devaluation relative to gold and kind of reset a lot of debts. That's kind of one of the kind of the debt jubilee mechanisms that they technically have, although it'd be a huge political lever to pull should they do it. But it's actually there in their handbook. And again, a different thing going back on an actual gold standard, which would be that currencies are redeemable for gold. And how would that work if they would do that revaluation? Would it be them basically saying, Now, a goal is worth, I don't know, $25,000 in ounce. And then that will be a new standard without going on the gold standard. Could you paint a bit more color around what that change would look like for the states, but also for the entire system?

Starting point is 00:30:02 Right. So back, like something like 90 years ago, so it used to be that the Fed held gold. And the Treasury said, look, we're going to hold the gold now. And instead, so the Fed had to give their gold to the Treasury. And in exchange, the Treasury gave the Fed, gold to, certificates as an asset. It's most an accounting gimmick so that they don't have a hole in their balance sheet. But basically, they were non-redeemable gold certificates. So they're kind of saying, look, these don't really mean anything, but they're technically representing your ownership

Starting point is 00:30:31 of gold held at the Treasury. And what the mechanism can work, and that was the official price at the time. And that price is, you know, like $42 now. It was revalued once, but it's $42 now. It's way below the actual market price of gold. So what they could do for, example, is say, well, now the official price of gold is the market price. Or you technically could go above the market price. And if that happens, the value of the Fed's gold certificates increase in dollar terms. So that's an asset for them. And they provide an associated liability for them in dollars in the Treasury's general account, which is an asset for them and a liability for the Fed. That's basically the government's checking account. And then what that allows them to do is they can

Starting point is 00:31:16 then spend money into the economy that they did not issue bonds for because instead they got that through gold revaluation. And that would generally be fairly inflation. They probably would increase the price of gold if they were to do that. And so that's kind of the mechanism. They can also, I mean, they technically have the kind of like how they can do open market operations with treasuries or mortgage back securities. They can do open market operations with gold. They can start creating reserves to buy gold. And so, and of course, that would generally decrease the value of the dollar, increase the value of gold. And so they have these kind of mechanisms that these levers they can pull that would say sharply devalue the dollar-based debts relative to

Starting point is 00:31:57 gold, which means the reserves of central banks increase generally relative to their country's liabilities, which are denominated in dollars. It generally means that you get more inflation, more money supply growth in the U.S., and therefore various debtors would be partially relieved relative to their price of their nominal assets going up. Thank you for paying some color around that. Then it was very interesting to hear. Let's transition into talking about gold as a way of allocating some of your capital in your portfolio. I mean, Redalius famously had this 7.5% gold allocation in this all-weather portfolio he talks

Starting point is 00:32:32 about in his books. And he has talked about the whole grade of investing, 15 uncorrelated bets. I'm curious to hear your take on this. Which place does gold have in your portfolio and why? So mostly in inflationary or stagflationary contexts. And there's a lot of nuance there. So basically, there's been four major inflationary decades in the Western world in, let's call it the modern era, the oil era, for example.

Starting point is 00:33:00 So the 1910s, the 1940s, the 1970s, and then to a lesser extent, the 2000s. These were big energy bull markets. They were elevated inflation compared to the decade before them. Generally just elevated inflation in general. And so you generally had things like oil doing very well, commodities in general doing very well, gold and silver doing very well. And normally, stocks and bonds as a group did not do particularly well in all four of those decades, especially in real terms, but generally even in nominal terms.

Starting point is 00:33:31 So, for example, the bull market of stocks in the 2000s failed to kind of break out from the dot-com bubble highs, even like 10 years later, for example. The markets in the 70s, the markets in the 40s, the markets in the 10s, 1910s, they were all weak in terms of stock market performance. And bonds also obviously did pretty poorly as well in those inflationary environments, especially if they entered them with fairly low yields, which was usually the case. And so during those decades, where both stocks and bonds do poorly, the 60-40 portfolio is not very good. And instead, having some of those exposures to those commodity, energy, hard money assets, historically would have been the diversifier you need in that decade if you want to have

Starting point is 00:34:17 this kind of passive rebouncing portfolio that is all weather. That's where those types of assets come in. For the commodity portion, commodities in general are not good performers. They tend to have like two bad decades and then one good decade and then two bad decades and one good decade. but that good decade tends to be the one where stocks and bonds have a bad decade. And so it's a useful diversifier in that sense. And among commodities, gold has been one of the best performers. And also, you know, energy producers have been good performers. Those are kind of methods to diversify portfolio.

Starting point is 00:34:52 And the inflation thing's tricky because, you know, if inflation starts to get hot, but then the market says, well, the central banks can get very hawkish then. and they're going to quill the inflation, then in that particular year, gold might not rise. You know, the higher real rates might deter people from buying gold because they're confident that, look, I know CPI's high, but the central bank's on the case. Instead, where gold tends to go up is when money supply is increasing and inflation's building, but the central bank hasn't really acted yet, or they've tried to act and they've not really been able to contain it. Those are the scenarios where gold tends to do well

Starting point is 00:35:30 at inflationary times. Gold can also do well in disinflationary times if you have a rapid fall in real rates. So for example, in 2019, gold had a good year. Official kind of real rates in the US went from positive to negative. We had an economic slowdown. Stocks were kind of chopping along. And gold did fairly well. It was a useful diversifier in that environment. So there's a number of different contexts where gold does well. But the really big picture of view is that gold and similar assets that's tend to do well in decades where neither stocks or bonds do, which is, you know, basically the commodity cap-ex cycle has run its course. There's more scarcity. There's maybe more money printing happening, various kind of inflationary reasons. And that's where gold tends to be

Starting point is 00:36:16 a useful diversifier. So far, we talked about gold as, I'm going to say a concept here. I don't know what the listener are thinking right now if they think in an actual gold bar or how they picture it. So let's actually have a conversation about that. Some people talk about something called paper gold, and some people refer to like taking possession of actual physical gold. How do you think about that for your own portfolio? And perhaps you can start with what is paper gold in the first place? Right. There's a couple different types of paper gold.

Starting point is 00:36:49 A basic one would be any sort of future or other derivative. where one entity is agreeing to be able to buy gold at a future date, but then the vast majority of the contracts are cash settled. So a lot of people are placing bets on gold in that environment, but then few of them were ever taking delivery of the gold. And in that context, you can have a lot more claims. So you can have a lot of the people that are making those features to sell gold might not even have the gold.

Starting point is 00:37:18 They're just knowing that, look, if gold goes up 20%, you know, we'll cash settle this and all have the dollars, to kind of settle that. But if you get a major spike in gold, some of these counterparties might not be able to make good on the actual delivery of gold should it be requested or the dollar price if it kind of breaks and goes nonlinear. And that's happened on other commodities.

Starting point is 00:37:39 And for example, the London Metal Exchange had to kind of step in and do controversial actions because of that where just there's like a short squeeze and entities just don't have what's owed. And so paper cold is basically claims for gold that are not necessarily backed by gold. Another thing that could happen is that some ETS, for example, might hold unallocated gold, which means, you know, they're holding a custodian that says, look, you don't have specific

Starting point is 00:38:04 bars, but yes, you're entitled to this much gold. But then that custodian could potentially lend that gold out to someone else. And so again, they're in a situation where there's more entities that have a claim on gold than the amount of gold that is underlying. And in different eras, that ratio of paper gold to physical gold can vary. It's also, it can be hard to measure. Some of that market will be opaque. And then there's a spectrum of how secure your gold is.

Starting point is 00:38:33 If you're using kind of one of the ones using unallocated gold or derivatives at scale, that might be one of the ones that's a little bit more, you know, less certain if you get a really big gold spike. Whereas other ones might hold, for example, fully allocated gold. They might even be redeemable. Some ETS are actually redeemable for gold if you're doing it at scale. And then physical gold in your own possession, what makes that interesting is it's a bare asset. So most of our investments are permissioned. We have an account in a brokerage.

Starting point is 00:39:04 It could be frozen. It could be hacked. It could be confiscated. I mean, you know, in the U.S. and Europe in modern times, these are generally not concerns we think about. But in a lot of countries, these are concerns to think about. And so all of your assets are held on your behalf by counterparties, which the government could just tell them to do something or the counterpart itself could have a problem. And so there are certain assets like physical cash that you can hold, but of course that is that you get diluted over time.

Starting point is 00:39:34 And so there are assets like physical gold in your possession or coal storage Bitcoin in your possession, these types of assets where you have unilateral control over that asset with no. direct counterparty between you and the asset, and having that appeals to some people. Basically, they say, look, I mean, if I wake up in like my account hacked or the government did some sort of memorandum and just kind of froze all brokerage accounts in my country and said, you can't own this assets or you're being forced to sell this asset and buy this other asset because we have, you know, national currency crisis or something, they hold that asset outside of that system in their own possession. It's outside money. And so that appeals to some people. So it really depends on what exactly you're trying to protect from.

Starting point is 00:40:18 If you're mainly trying to benefit from the fee at price of the asset, then things like ETFs could be useful in a portfolio. And you can always decide, you know, you could pay a little higher fee for one that's kind of fully allocated, for example, or if you want to actually have kind of the full outside money experience where you have assets that are either in your possession or maybe add a custodian that's not a bank, for example, or you could diversify them internationally, you can have international custodians hold some of your assets, which again, sounds kind of like tinfoil hat if you're in the U.S. or Europe in the modern times, but is less

Starting point is 00:40:56 tinfoil hat when you look around at the 200 plus countries that are out there. But then even in those countries, I mean, in the past, when we have wars or when we have kind of big issues happening, you know, like in the United States, gold was banned for like four decades. You could go to jail for holding a benign yellow metal. But ironically, a lot of people held it anyway. The market became very illiquid in black market for a long time, but there are people that is held through the entire four decades because it's a very hard thing to enforce. It's very expensive to go door to door and get people's gold or other kind of bare assets. And so it kind of imposes a cost for enforcement compared to if everybody has their assets in a brokerage account, one stroke of a

Starting point is 00:41:39 pen and can just force everyone to sell this asset, buy this asset, or freeze this asset, give them the current price for it and take it, even if there's some sort of nonlinear price action that maybe happens after the fact. That's where the physical comes in handy for some people. Yeah, I think it's at the 1933 executive order that you can hold five ounces of gold. If you had more, you could give up to, it was a $10,000 fee and 10 years in prison. but it was also, it was a different time, obviously, but it was different in the sense that it was also very much framed like you're doing a service to your country. And so whenever you read gold books, and I'm going to come up with this terrible assumption and people read cold books, but the 1933, sex of order, and it's always, you know, one of the chapters. And then Nixon taking it all in, in 1971, and then, you know, for it sort of like making that.

Starting point is 00:42:36 legal again, I want to say in 1974. But it's always one of those things where you think, can this happen again? And again, we don't know. I would say that it's such a different world today. So also, to your point, Blaine, it's very difficult to enforce. And I would probably say that the way it was framed at the time about, I think it would be different. And this was also between two world wars. I think it would be very difficult to do the same thing again and have people comply with those rules. And perhaps it's just me who are saying, that we're not going to see gold confiscation again. Who knows? There's this old saying that, you know, gold doesn't matter until it matters, and that's whenever you can't get access to it.

Starting point is 00:43:15 So who knows? I generally agree. I mean, back then, gold was part of the monetary base, and it was a bigger market relative to other assets. And that was generally an era of capital controls. And so capital generally wanted to flee from weaker areas to stronger areas. And, you know, the U.S. was in the position where they were one of the strongest areas. the capital wanted to flow to. And so they didn't really have to worry about their capital flowing to other countries, but they did have to worry about their capital flowing to gold, which is like the one thing stronger than the U.S. system.

Starting point is 00:43:46 And so they basically said, look, gold was outperforming their bonds. And they needed people to own the bonds that were losing purchasing power. And so that was a method they turned to. Now, to your point, that was like a we're all in this together, service your country mindset. Back then, I mean, under FDR, for example, there was a super majority in Congress. One party controlled kind of all the supermajority levers of power. And the country, like, as a group, was very kind of unified around an external threat.

Starting point is 00:44:16 The environment is very different today. It's hard to pass big sweeping draconian things like that. You tend to see it more in emerging markets. I mean, there are some countries where it's legal to own dollars. Because people are turning to dollars to try to protect them, like literally physical dollars. or it can be illegal to, you know, maybe it's not illegal. Sometimes it's not illegal. Sometimes it's instead, they'll crack down on the brokers that are making those dollars available to people so they kind of try to reduce liquidity in the market. Same thing can happen with gold. In a lot of countries now, including the U.S. and much of Europe, there are laws around if a gold dealer sells you gold in any sort of meaningful scale, you know, maybe 2,000 euros, maybe $10,000, depends on the

Starting point is 00:44:57 jurisdiction. They have to then report that to the government. So if you, I mean, if you buy $20,000 of wine, they don't have to report that. But if you buy a fairly small amount of gold, they have to report that because that's a liquid monetary asset that they want to try to track. And so there are kind of around the margins, pressures against liquidity in these markets and trying to surveil these markets. But I would agree with you that wholesale confiscation or illegality of gold is unlikely. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates

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Starting point is 00:48:21 and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. We had some interesting discussions about gold throughout the years. And in some of my research to one of the previous conversation we had, I called up a gold dealer and sort of like to figure it out because I heard about to your point before about know your customer. And it's kind of crazy how much information they need on you

Starting point is 00:49:06 if you want to buy gold. Also one of the things, and I should say I don't buy 400 ounce gold bars, but I couldn't help but ask because I was doing research anyway. So I was asking, so what happens? Like, what happens if I click buy to that 400 ounce gold bar and he completely panicked and he was like, he didn't know. No one never did that. Had never done that before. And he was like, there was like a central bank thing. And he was like a thing that buy from the producers. But it is kind of like an interesting topic, not because I'm by any means an expert, but like the plumbing into the gold system.

Starting point is 00:49:38 It is like, I find it very hard to find good information on. And there are so many rumors, you know, we briefly talked about China before. and, you know, they have like the two biggest producers in the world. That's Russia and China who are, you know, notorious for not providing a lot of information. I would be curious to hear you, Lynn, how much do you, that's going to sound too much like a biased question, but you have public numbers out there of Russia's and China's gold holdings. How much do you think that they are understated? I think that there's generally a consensus. They are understated. So that's why I'm giving you that biased question, but I'm still curious to hear your thoughts on that and how you came up

Starting point is 00:50:12 that information. Well, so I have different thoughts on Russia and China. Russia reports gold reserves that are fairly large relative to their money supply, relative to their GDP, relative to their external debts. And this was even before the invasion. This was something they had already kind of been de-dollarizing and focusing on gold. So I assume their numbers are probably fairly accurate. Chinese numbers are more interesting because they have, it's a pretty large amount in absolute

Starting point is 00:50:37 terms, but it's a small amount relative to the size of their economy. and their amount of total reserves. And yet they're in a position where you'd think that they'd want large amounts of gold because they'd be worried about Western sanctions. We don't know what's going to happen with Taiwan down the line. They want to transact outside of the dollar-based system. If the U.S. sanctions some entity like Iran, for example, China wants to be able to just transact with them anyway.

Starting point is 00:51:02 And so they have a lot of reasons to operate outside the dollar system, to hold reserves that can't be frozen, and things like that. A lot of estimates, when people kind of trace where gold is flowing, like it's going to refiners and where is it's going afterward, a lot of the numbers show that massive amounts of gold have moved from west to east and particularly to China. And so a lot of those estimates show there's something like 20,000 tons of gold in some, you know, call it 20-year period have flown, has moved over to China. Now, I think the big question is how much of that is officially or either in government hands and not being reported or it's maybe close to government hands,

Starting point is 00:51:44 like they might be spreading it out and they say, well, this chunks in the military, this chunks, and this chunk is in this kind of local government. That technically, like, you know, maybe the central government knows where they are and could absorb those if quote unquote needed versus how much of that is in fully private hands. A lot of the big Chinese banks, you know, if you're a retail customer, they will just let you buy gold from the bank. It's kind of how it used to work in the West. And so gold is one of the approved assets in China. There's large private sector ownership of it. And so what's pretty clear is that there's a very large amount of gold in China. And what, at least from my perspective,

Starting point is 00:52:21 it's hard to know is how much of that is in control of or easily identifiable to the government. I would probably say it's over the number they report by some meaningful margin. But I wouldn't go as far as to say all, like, all those 20,000 tons are in their hands because that's the I think some significant percentage of that went to various private sector entities. Yeah, and I think you bring up a good part, and especially considering the capital controls in China, it's a very popular type of investment for the Chinese. And just one quick story, I don't know if anyone has this fascination with gold, but I remember, you know, growing up and watching all these movies and then you had these gold bars.

Starting point is 00:53:01 And I would say that because gold is so heavy, they're actually very, very small. So whenever we talk about 400 ounces or 12 and 1⁄2 kilos, like it's remarkably small. And I'm not going to pretend like I'm buying gold in that quantity. I did have a chance in Perth whenever I was traveling one time to go into whatever kind of place and there was like a gazillion cameras around me. And then you could like put on the glove and put it into like a mantra and then somewhat make sure that you didn't run away with it. And you really, really couldn't.

Starting point is 00:53:28 And it's crazy. Like it's such a small bar. It's like so, so heavy. And that has been how we traditionally have been looking at at. gold. Now, today, at least if you read the gold magazines, and because of this increased interest of gold, specifically in Asia, like the standard has gone to one kilo bars away from the traditional 12.5 kilos, which is 400 ounces. And we're talking about like a million dollars is for like one of those bars, the bigger one. So it's significant amount of money. And if I can use that as a segue into

Starting point is 00:54:01 talking about Costco. Costco is known for being a place to buy cheap quality goods. And I have to say, I didn't expect to see gold on the Costco sales. And so they had famously have these one ounce gold bars at a cheaper price, of course. And I would also say at a good price. And what do I mean whenever I say a good price? Well, when you look up the gold price, say online, you get this so-called spot price, but that's not the price that you're paying at Costco or whatnot. So then could we be practical here and say, if you want to buy gold, how much are you supposed to pay above the spot price? Why are we paying about the spot price in the first place?

Starting point is 00:54:42 And how does that relate to whether you buy an ounce, a kilo? And yeah, so I guess I'm throwing all of those questions over to you right now. Well, yeah, it's a good set of questions. You know, the premium you pay over spot will vary based on the situation. For example, people that were trying to buy during the pandemic when refiners were closed and people worry about the world ending or the financial system imploding, the premiums got very large in that environment. It's kind of like buying insurance after you need insurance. If you buy it in normal market environments, it's going to depend on what type of gold you're buying. Costco's probably going to come in near the best, I assume, because they can do things at scale.

Starting point is 00:55:19 They can lose money on some items and make money elsewhere. but at a normal places, generally speaking, if you buy something like a one ounce gold coin, even if you buy like 10 of them, you're probably going to pay something like 3 to 5% above spot, whereas if you buy a larger bar, you might be paying 1 to 2% above spot. And one way to think about that is there is a verification premium, which is to say that if you buy a very large bar, there's some non-zero chance that someone has put tungsten into the gold bar. because tungsten is nearly identically dense to gold and much less valuable. And so one of the common frauds is you put tungsten inside and a thinner layer of gold around it.

Starting point is 00:56:02 So it truly is gold on the surface. It's just not as much gold as you're being sold. And those can be fairly hard to identify. You need fairly sophisticated equipment. And the only way to know for absolute sure that it's gold entirely down to the core is to melt it. That's one of the reasons that they melt 400 ounce gold bars and turn into kilos. It's kind of a verification method to say that this is actually fully gold. You know, when you buy kilo bars, you're probably going to get a little bit higher premium

Starting point is 00:56:27 than the 400 ounce. When you buy one ounce gold coins, the advantage there is that there's quite a lot of surface area relative to mass. It's much harder to put a little tungsten disk inside of a gold coin than inside of a kilo bar or a 40 ounce bar because the work is similar and yet the payoff is much less. It's a much less economic, incentivized thing to do. So the whole kind of invention of coinage, you know, over nearly 3,000 years ago, is at least in the gold and silver variety, is that it's a verification of how much is there.

Starting point is 00:57:03 So you have kind of a surface, like a stamp on the surface, you might have ridges around the edges. It's showing that this gold has not been shaved. It's hard to counterfeit and it's hard to cheat with. And so one ounce gold coins are kind of a sweet spot because they'll be little. liquid and the spot premium is not too high, but it still is pretty high at the end of the day. I mean, at over $2,000 an ounce, you could be paying $100 above spot price for your gold coin. And then when you go down to smaller coins, you know, there's like one tenth of an ounce or even

Starting point is 00:57:35 one gram. If you look at the numbers, they get kind of silly. You might be paying 50% above the spot price. The advantage is that at that scale, there's virtually no way to get tungsten in there, but the expense you're paying relative to the gold is extraordinarily high. And so that's one of the challenges of gold in general is that gold does have a verification and transport cost. If you get it shipped at scale, you're generally going to want insurance. If you buy it with a decent amount of surface area, intricate surface area relative to mass, you're going to pay up compared to, you know,

Starting point is 00:58:08 if you buy it in these bigger forms. And so that's all a cost to the physical owner that wants that extra assurance that gold is in their possession and that it's actually. But yeah, whenever you could find a dealer that's willing to kind of operate at scale and be a loss leader, you know, you could get deals. But those are generally the types of percentages or numbers to be aware of. Yeah. And I should also mention, I hope no one's going to ransack my home. I have somewhere in my home one tenth of an ounce. And the reason why I say that is because it got lost. One tenth of an ounce whenever comes to goal is very small. And we had a gold sponsor on some point in time and they said something along the lines of, we're going to give you

Starting point is 00:58:46 like one tenth of an ounce. And I was like, oh, ship it to me. So I got like this huge package, which probably cost way more than one tenth an ounce in terms of shipping. And like it was sent with whatever kind of curate. And I got like one tenth of an ounce sent to my home. And it's just so small. I've never been able to locate it ever since. And just one more. Whenever we do the math on, we talk about like 400 ounces and what that is in kilo. So one tricky thing that, that I don't know if anyone's sitting there with the calculators like, oh, the math is a little off. Whenever you talk about an ounce and you convert that to grams of kilos, it's not a quote unquote normal ounce. This is a tri ounce, which is different, which is just confusing for everyone. So a normal ounce

Starting point is 00:59:25 is 28 grams and chains. And a try ounce is 31 grams and chains. And so I just want to clarify that. Lynn, I wanted to, there were so many moving parts here whenever we talk about gold and the price of gold. And so I was wondering if we could do this small exercise where we say the everything else equal, which is, you know, a fancy way of coming up with if this happens, what then happens? And of course, in the world of economics, it's always tricky because so many things are happening at the same time. So perhaps if we can start with the spot price of gold and hold that constant. And we have that on one hand. Then on the other hand, we have a CPI, but we also have the overall money supply, respectively.

Starting point is 01:00:05 So what's the relationship there? So it depends on the country, and it depends on the time period. For much of the past several decades, the biggest inverse correlation with gold has been real rates. So when real rates are positive, generally there's been incentive for people to own treasuries rather than gold. If you can get paid 5% on treasuries while inflation is 3%, you're making a 2% spread, at least over official CPI. And gold, you get no yield, but it's a scarcer asset. And so generally people will flock toward those treasuries. On the other hand, if inflation is at or above the treasury rate, you're saying, I'm getting

Starting point is 01:00:45 a negative real yield on this inflating asset. I might as well just hold something scarce that I earn no yield on, gold. And so you generally see more capital flocking toward things like gold. And so the big kind of peaks of gold, like in 2011, for example, or in, you know, the early 1980s, or even kind of at the, in 2020, after it had a big run up and then kind of went sideways for a while, those kind of big peaks that it hit were kind of bottoms in real rates. And real rates either went up or at least stopped going down for a period of time. And then that, therefore, kind of the excitement of or the panic of getting into gold would decrease. and start to reverse back into typical financial markets. So that has been a very big variable historically, especially when compared to the dollar

Starting point is 01:01:36 in general. When you look at gold price and other currencies, you'll see a similar dynamic where if a currency does not have an attractive real rate, generally speaking, there's a lot of incentive to flow out into either dollars or flow out into gold, depending on what the situation is. In recent years, there's actually been a pretty sharp divergence where real rates went up quite a bit because the Fed's trying to fight inflation. And normally, you would have seen a pretty significant decline in gold, but instead gold held steady and then even recently broke out new all-time highs in dollar terms despite the fact that real rates are fairly high. Now, that, you can

Starting point is 01:02:14 assign a lot of different things to that. One is geopolitics. As we discussed, you know, there might just be more incentive for central banks to buy gold despite real rates because they say, look, we're not caring about 2% real rates for the next five years. We're worried about our reserves getting frozen, right? So we're buying insurance. We want to be able to hold some of our own assets in a sovereign way. That's number one. Number two is that, you know, I would say that the U.S. fiscal situation is fairly acute in the sense that, you know, I described as being in fiscal dominance, which is to say that fiscal policy starts to constrain monetary policy options. or another way of putting it is just the fiscal deficit relative to the size of private sector

Starting point is 01:02:56 money creation. And so annual fiscal deficits in the U.S. are now larger than the sum of corporate bond issuance and new bank loans in a given year. And so overall, you know, as the Fed increases interest rates, it actually blows out the deficit even more because, you know, it's not like the 1970s where we have 30% debt the GDP. We have like 120% debt to GDP. So if you've raised is rates super high or even moderately high, the interest expense starts to become huge. And so I think there's a number of entities kind of looking at this. And I've talked to, there's actually significant investment banks that will have like internal memos about fiscal dominance or fiscal problems in the U.S.

Starting point is 01:03:37 There's a number of entities saying, look, I know real rates look positive now, but the math doesn't check out when you look five, 10, 15 years in the future. It's just very hard for them to ever maintain positive real rates given their debt situation. And therefore, even though real rates seem high now, I'm going to buy gold anyway, right? There's probably some of that happening as well. So we've actually seen a pretty significant change in correlations where gold seems to be tracking things like the size of the deficit more so than just real rates. But yeah, there's multiple factors coming together.

Starting point is 01:04:11 There's geopolitics, there's real rates, there's fiscal dominance. And a way to look at it is that on average in the U.S., money supply goes up about 7% per year over the long run. In developed markets, you'll generally see that 6 to 9% rate. Emerging markets, it's usually double digits over the long term percentage-wise per year. Refined gold increases in supply by about 1.5% per year worldwide, on average, according to credible estimates. It can vary between 1% and 2%.

Starting point is 01:04:41 And so over the next 10 years, the Congressional Budget Office expects about $20 trillion in net new treasuries will be issued. And so someone has to absorb all that. Whereas gold, at current production rates and prices, something like $2.5 trillion in new gold will be produced. And so there's kind of at least the current prices and production rates. There's a decent incentive to own the scarcer thing than the amount of treasuries that are going to be coming to market. And so I think there's a lot of variables here. Like you said, I mean, you know, five years ago, someone said, if real rates were here, what would you expect gold to be?

Starting point is 01:05:17 I would have guessed a little lower than now. But this is kind of an endgame scenario for a highly indebted government, which is to say that even when they raise rates, the market doesn't really believe it. The market says, I'm going to own gold anyway because the math is no longer checking out for you. So on that note, then, I wanted to tell you about a survey I recently read from the World Gold Council and they asked the country's central banks about what the reason was for them accumulating gold. And, you know, at the very top of the list, they had historical reasons, performance during crisis, all that good stuff. Then at the very, very bottom, there was probably like 15 factors, whatever.

Starting point is 01:05:57 It was de-dollarization. And so it made me think of a story. So the story is that there's a father and two-spanors. small sons. And the father asked his sons to choose between a nickel and a dime. And the oldest son, he picks a dime and the youngest the nickel. And then the father continues to play this game with the youngest son. And every time the youngest son, he's going to pick the nickel. And eventually, the older son says to his younger brother, come on. Like, you must learn at some part in time, like a dime is worth more than a nickel. And the youngest son says, I've known that all along.

Starting point is 01:06:33 but as soon as I tell father, he's going to stop playing the game with me. So I'm going to stop the interview on that note and give you a hand off, Lynn, and I just say once again for the 10th time. This book, Broken Money, is just absolutely amazing. So if you're interested in currencies, not just gold, but currencies in general, money, this is the book that you need to pick up. Where can the listeners learn more about Broken Money and you, Len? So I appreciate that. Yeah, people can check out Broken Money on Amazon.

Starting point is 01:07:03 or wherever books are sold, and then go to Linaldon.com to see all my latest research, public and private on markets, including gold, including other assets. Thanks for having me on. Well, thank you for making time. Thank you for listening to TIP. Make sure to follow We Study Billionaires on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts, or courses, go to The Investorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network.

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We Study Billionaires - The Investor’s Podcast Network - TIP638: Gold w/ Lyn Alden

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