Gold Must Hit $8,000 as The '$370 Trillion Great Rebalance' Begins | Brett Heath
Summary
Gold Bull Market: The guest argues gold is in an early-to-mid bull market driven by central bank accumulation and a shift away from U.S. Treasuries, with potential long-term targets of $6,000–$8,000/oz.
Royalty & Streaming: Royalty models are highlighted as superior, capturing margin expansion without capex or operating risk, and benefiting from elevated gold prices and sector consolidation.
Crypto Capital: Tether’s aggressive moves into royalties, including stakes in Metalla (MTA), Gold Royalty (GROY), and Elemental Altus, introduce a new, large-scale capital source that could reshape M&A and valuations.
Asset Tokenization: The guest sees mining royalties as prime candidates for tokenization, enabling fractional, yield-bearing exposure and bridging crypto investors with hard-asset cash flows.
Generalist Inflows: Rising generalist and family office interest is evident, with notable inflows into the GDX ETF during the correction, suggesting shallow pullbacks and growing participation.
Tangible Assets: A broader “great rebalance” from financial to tangible assets is expected, benefiting gold and other commodities like copper amid ongoing monetary debasement.
Key Companies: Royalty majors such as Franco-Nevada (FNV), Wheaton Precious Metals (WPM), Royal Gold (RGLD), and Sandstorm (SAND) are cited alongside operators Agnico Eagle (AEM), Barrick (GOLD), and Newmont (NEM) as core ecosystem players.
Metalla Strategy: Metalla (MTA) emphasizes long-duration, high-quality royalties (top assets ~20-year reserve lives) and disciplined deal-making after deploying $39M across 100 assets pre-$2,000 gold.
Transcript
Welcome back to KCO News. Now, the gold market is trying to find its footing, consolidating just under $4,000 an ounce on the spot side, just above $4,000 at the time of this taping. Now, that was after a historic run was met with that brutal correction, the worst single day drop for the metal since 2013. But while traders debate the short-term direction, a much more profound shift is happening in the capital markets. Now, we know that central banks have been the driving force here, reportedly stockpiling over a thousand tons of gold this year alone. But now, there's a new kind of completely new disruptive source of capital is targeting the producers directly. Now, it's coming from the crypto world. And our guest today is at the absolute epicenter of that collision. Let's welcome back our friend, CEO, and president of Mattella Royalty and Streaming, Brett Heath. Uh, good to see you. A very pivotal moment for the industry here. Thanks for making the time. >> Yeah, thanks for having me, Jeremy. I got to ask you about that uh you know the landscape here for royalty and the streaming sector itself because in a world with $4,000 gold I mean the business model is a cash flow machine you and I have talked about this before the majors Frank Nevada you know wheaten uh are reporting spectacular all-time record quarters from the perspective of a of a mid-tier CEO I mean what was that flood of cash what's it done for the M&A market has it kind of created a paradox where high gold prices actually make it harder for growth companies to find value accreditive deals because you're now competing with giants who have more cash. >> Well, it makes things more competitive just from a from a a cost of capital perspective for most of the mining companies that are out there. Obviously, the we went through a period where equity was a very expensive way for them to uh advance the assets and put them in production and and working cap and so forth. And so uh royalties made a lot of sense during that period of time. Uh you know as as we kind of look forward what's happened you know generally with the royalty sector in itself I mean we we saw the royalty sector um as a whole uh add 30 plus billion dollars in market cap over the last kind of 18 20 months or so. So significant increase in market cap, significant increase in in free cash generation for the sector. Uh but the opportunity the opportunity set did not double in size along with it. So uh it did make things a bit more um competitive uh from that perspective and and I think that's driving a lot of the consolidation. you you you've seen that uh over the last couple years on kind of the smaller end part of the sector, but you know, we just started to see that within uh the mid tiers and the majors with the Royal Sandstorm transaction and I think that uh that that probably that trend is going to continue. >> Yeah. Yeah. I mean it sounds like as you mentioned that that race to either scale up or get acquired um that consolidation between Royal Gold and Sandstorm. I mean, for a company in your position looking to grow, where was that capital supposed to come from? Was it was it the traditional financial market, you know, equity raises, bank debt becoming too difficult or too dilutive to kind of compete in this new high stakes environment? Well, co cost of capital for for royalty companies usually is relatively competitive and and I I would say that uh you know where the sector has gone is is is for mining companies specifically looking to take on uh capital uh via royalty or stream. It's become pretty competitive I would say even with these elevated equity valuations kind of across the sector uh just given the competitive nature of that. Now I I say that you know in regards to kind of high quality operators, good jurisdictions, great assets. Obviously as you kind of go further down the risk curve um things become more attractively priced obviously to price that that higher level of risk. >> We've been chatting about it a little bit but of course it's almost stunned the mining world. I mean Tether of course the issuer of the world's largest stable coin has made a series of aggressive moves into the royalty space including taking a significant stake in your company. I mean it's not a passive investment. They've also taken an 8.1% stake in Gold Royalty Corp, a controlling stake in Elemental Altus. Traditional mining world is famously conservative, uh, Brett, and you know, I'm I'm wondering here what this partnership looks like and and how exciting it is. >> Well, I think it's always great to see disruptive capital come into the mining sector. Uh, you know, however it shows up really. I think that it it creates kind of a a bit of more of a competitive environment for for the traditional businesses and and also sources of capital. Uh and I and I don't think that they are the last ones to enter this sector. I think that they're the first they're obviously being very very aggressive um already kind of consolidating two of of uh of my peer companies and also taking you know a position. I can't comment on on obviously what their intent is but uh you know I think that they see the value in these royalty assets. I mean these royalty assets can allow uh really the reserve of the ounces in the ground while having that yield. It's it's kind of the US treasury of the gold market and I think that's what's drawing um to them to uh to this sector. >> Yeah. Let's talk about the sheer scale of this because I mean I don't really think that the market fully grasps it because according to that analysis in the industry I mean tether generates over $5 billion in annual cash flow. To put that into perspective for our audience I mean that's five times the revenue of Franco Nevada and most valuable company in the sector. I mean what does it mean practically to have a partner with a fire hose of capital like that? Does it fundamentally change the types of deals that the entire mid-tier sector can now kind of consider? Well, I think it I think it changes the way a lot of the companies kind of view M&A, you know, with within the sector because I think that now there's this new player that has a different objective altogether, a different view of value, uh, it seems at least and and they're aggressive. So I I it's it's starting to uh you know really make some of the the existing players within the sector kind of think about um you know the assets that are out there and kind of what's available and and how strategic they are. Um so you know it's again like I think it's always a good thing to have disruptive capital come into a sector and again like I don't think it's it's the only one. Um, you know, I I do I you know, I am a little uh I I do understand why they're being so aggressive because, you know, I think that that they are, you know, the core business is exposed to the front end of the curve and it looks like we are going to see, you know, interest rates substantially lower uh by this time next year. I got to ask you, I mean, Tether CEOs called gold nature's Bitcoin, suggesting that deep, you know, philosophical kind of alignment. I mean, do you see this is the beginning of a great convergence, a bridge being built between those two investor classes, the crypto guys, the hard assets that kind of share that similar anti- fiat, anti- central bank worldview? Could this unlock a whole new investor base for the entire resource industry? >> Uh, Jeremy, I think it's way, way bigger than that. Yeah. >> Uh I mean, you know, a trend that a trend that I've been following here for uh you know, the last couple years is is really this transition of gold becoming the tier one reserve asset uh globally and it's well on its way there like that that trend has continued to to move forward at full speed. I mean, if you look at the Q3 central bank numbers that just came out yesterday, and we saw a record uh amount of tons, I think it was 13 uh 13 tons. Um but in a increased 44% year-over-year in the dollar amount. So significant amount of buying, but what is this? What it's obviously price insensitive buying because, you know, you're getting gold uh going at all-time highs. you're getting this type of physical demand across the sector. Um it's it's a transition away from US treasuries. And so this is happening. It's continued to happen. And and now US treasuries or sorry gold makes up uh a greater amount of of uh total reserves as compared to US treasuries by itself. You know, you still have US uh denominated assets as a whole making up a larger portion of gold. But, you know, I think this is going to continue until gold makes up probably 50 plus% of global reserves. And gold's going to need to go to probably 6 to $8,000 uh an ounce in order for it to do that. And that that's just some simple math. But what's interesting is is now that I've been watching this trend for the last couple years, like you can kind of see it. It is way way bigger than than just the transition of the world's view of US treasuries being a reserve asset. Like what we're seeing and what I believe that we're seeing right now is really the early stages of what I call kind of the great rebalance. Like you've got >> you've got $370 trillion of financial assets and that is that is transitioning to tangible assets. I think that's that's kind of the bigger trend and you know we live in a world today where there are no more bond vigilantes and so you know where is where is this inflation where is this call it uh monetary debasement trend showing up well it's showing up in gold and as as as a as a US citizen like you look at everything in in your own currency and other other countries kind of vice versa but in reality uh when when you look at kind of this broader trend um you know I think that that it's it's showing up with gold now but it's going to be going into all other tangible assets I think copper is another one but commodities in general tangible assets across the board you look at kind of the performance of uh the broad stock exchanges and so forth like you you you kind of see this and you're like okay well this is a much much bigger trend we're at the beginning stages of it and and I think it's going to continue here. >> Yeah. Are you seeing, you know, I mean, you're talking to investors all the time. You're getting some insight from from those institutional level participants, too. Are you seeing fresh participation from family offices, sovereign funds, you know, more retail capital chasing these real assets again? >> Yeah. So, this this is the part that that just absolutely boggles my mind. uh you know the last 30 days I I spoke to some of the largest asset managers on the planet across North America and Europe and when I'm going into these meetings typically I'm talking to the resource PM they are pulling in the general SPMs in all of these meetings and it's the general SPMs that are thinking and asking all the questions about how to get positions how to think about allocating capital to the sector um even starting it in the form of just physical like not even really scraping the surface with mining equities. Um, so, you know, I I can say and I've I've confirmed this with a couple other executives uh at some of the largest gold mining companies in the world and they're seeing kind of the same thing. So, what does that tell me? That tells me that that the generalist uh capital flows have not even started yet. they have been so preoccupied with the AI trade and and and and just in general that that uh they have not even started to think about this. They have been waiting and waiting for this pullback. I think this pullback is really the start of when we start to see the generalist participation. If you look at the fund flows on the GDX, which is call it the largest gold mining uh ETF for for the for the large gold mining companies, uh the week of October 20th, uh was was one of the largest inflow weeks and and and keep in mind this is when uh gold had a 10% correction. So the equities were way off >> and it was I think it was the top two or three largest weeks in the last 5 years of the GDX so far right now October as a whole uh is I think the the the third largest inflow in the in the last 5 years from from a monthly perspective. So what that tells me is that all of that generalist capital been has been waiting on the sidelines. you know, it tells me that that this correction that we're in right now is probably not going to be as deep as I think some people uh are probably hoping for. Um, and it'll probably be a lot quicker as well. >> Yeah. So, you're describing those strong inflows in that new investor stepping in. I mean, did that last selloff that we were talking about stabilized? I mean, $4,2 you know, did it shake out the leverage players and short-term traders kind of clearing the way for more patient capital to come in? It did. It did. And uh that that's how that's a healthy thing for bull markets. This has been [clears throat] this has been um one of the most ignored bull markets I've ever recognized or seen in in in my career uh so far. To see gold go to uh $4,000 an ounce before kind of the generalist uh asset managers just start to wake up uh is is just mindboggling. But you know they are woken up. We are kind of in the I I would say this awareness phase. If you look at kind of market psychology of bull markets, there's always this kind of awareness phase. Um it seems that we're kind of in the middle of that awareness phase at at some point in time, but we have not even started the mania phase. The mania phase is typically when you get all of those capital flows coming in. You know, we have not seen that. you look at uh the Dow to gold ratio and that's the other thing to kind of keep in mind. You got to put it in perspective because looking at everything on a on a US dollar basis in the midst of of of this great debasement it it can fool you. It can really tell you a different story. So it's important to look at the ratios and when you look at the Dow to gold ratio you know that peaked in the last bull market around six uh meaning that that um you know 6 6 ounces of gold basically equal the Dow that was in 2011. Uh historically that has gone to one one in the past but we're still sitting around 11 right now. um when you look at the the XAU which is one of the longest kind of standing gold indexes uh verse gold. So basically these gold stocks priced in gold like we're just barely off the bottom still today even with these substantial moves. So, I would argue that uh that there still is a long long way um to go in in this bull market and I think that again I think that the corrections are going to be are going to be shallow to the point where a lot of investors are going to miss them all together. >> Yeah, you've been watching obviously some of the miners too on that equity side. We saw gold and silver take that little bit of a haircut and so did some of those stocks but it's been you know a lot of people have been buying the dip here. I mean what are your thoughts? I mean, it feels like these gold prices and revenue is just starting to come to fruition. It doesn't feel like it's going to stop for a while. >> Well, look at the bid underneath gold. And then you look at oil. Uh, you know, oil is is pretty contained. Uh, you know, I think that that will move at some point. You know, we are hearing uh inflation start to creep in uh a bit more on the labor side of the equation. I mean when you look at the mining companies in general like over the last 30 years the margin has always reverted back to the mean it's been like 30 to 35%. That this is a consistent margin that the sector um on average has always migrated back to. Now there obviously there's some there's some great businesses with much higher margins but I'm just saying the average in general the average today is double what the or or even more than double what the average has been over the last 30 years. So when you look at it from a mining uh you know company perspective you know I think that those margins if gold holds and goes higher can remain elevated for for a much much longer period of time but eventually uh you know I do think that the costs creep in and that's why owning royalties is such a great way to play it because you get 100% of that margin expansion without the capex without the dilution without the operating um costs and so forth. for it, then you get to capture all of that all the way up. Uh, and you don't have to pay for it because it's free trade. >> You know, we're also seeing a global trend towards the tokenization of real world assets. I know you've heard about this. I mean, Black Rockck's Larry Frink says all financial assets will eventually be tokenized. Obviously, Tether is a leader in that space. Is the next logical step here to token is the the, you know, the tokenization of mining royalties themselves. Could a crypto investor one day buy a digital token representing a fractional interest of one of your royalties, giving them a direct yieldbearing exposure to a tier one gold project on the blockchain? >> I think that royalties are the best uh call it asset within the entire resource industry to kind of serve that function for sure. um you you can't it's it's very very difficult to collateralize gold in the ground uh without it having the ability to come out. >> Uh and in the royalty business like you you own a 1% claim on on uh whatever is in the ground and if Igno Eagle or Bareric or Newman are operating the mine, well guess what? That gold's going to come out of the ground. It's completely free carried and it's going to be not only delivered to you top line but it compounds. It compounds. So it's it's the ultimate uh kind of uh you know holy grail for uh for for thinking about digitizing an asset in this industry. I think it's it's kind of again I think it's probably from a structure perspective uh the the best fit and I think that that's probably why uh you know uh institutions like Tether are attracted to to the these types of assets. >> How do you manage the two worlds? I mean you know how do you communicate all this because you got two completely different investor audiences. You got that traditional mining investor kind of focused on discounted cash flow, jurisdictional risk, and now you have this cryptonative investor driven by, you know, network effects and macro themes like ddollarization. I mean, how do you as a CEO bridge those worlds? How do you communicate your company's value proposition to two audiences and, you know, attract in those those investors? >> Well, really, we just focus on our business. I mean, we we built this business to play uh or to have our investors have the ability to kind of maximize this trend and and we spent, you know, upwards of nine years deploying $39 million across a 100 assets. Now, we deployed $39 million, all of which under when gold was under $2,000 an ounce. So the amount of leverage that's embedded and the optionality that's embedded in these portfolios um is very very significant and the mining sector hasn't even begun to start thinking about planning or mine planning at at even above $2,000 gold. I mean you're still seeing most mines being planned sub $2,000 gold. And as these mining companies start to get uh or these executives at these mining companies and these boards start to get a little bit more comfortable with gold where it's at and that it's not going to come back down because again if you look at kind of how these mining companies are priced right now like they're priced at a much much much lower gold price >> uh which is reflecting the value. But as they start to think about planning at a at a at a $2,200 gold price, what does that do to ultimately to the reserves and the resources? I mean, it it significantly has an impact on on how they look at that. You're going to see very very large expansions. And the royalties cover all of that. Like the royalty covers all of that that upside. I think we're at the beginning of this cycle right now. I think it's going to take probably I mean I'm hearing right now a lot of executives uh in their budget meetings for 2026 their heads are just absolutely spinning because they just don't know what price to use and how to plan uh for these assets going forward just given that the volatility has been so extreme uh over you know over the the last 18 months and and the sector has been burned in the past by getting too aggressive. So I would say generally the sector has been very very conservative but you know there there is there is enormous amounts of optionality and kind of embedded value that just is not even remotely close to kind of surfacing within these markets right now. >> Yeah. I mean to your point now I mean if you got this this you're at the forefront of this convergence between gold and this digital capital. I mean if you get these new investors in what does resource finance look like 5 years from now? I mean, do we see a wave of M&A driven by new liquidity and then the permanent kind of rerating for mid-tier royalty companies willing to embrace it? What are your thoughts? >> Yeah, that that that's a difficult question right [laughter] there. I don't know what it's going to look like uh within 5 years. I mean, when we built Metalla, the royalty sector is all about playing the cycles. And so, uh we focused on very very high quality, long duration type of assets. Now, that wasn't uh always in favor in regards to kind of what the market was delivering or or kind of giving value for in the public markets, but having access to very high quality long-term, I'm talking 20 plus year reserve life assets allow you through these cycles, through these upcycles to basically be able to kind of sit back if you need to uh and and allow, you know, all of that embedded optionality to play out. allow your shareholders uh and investors to to reap all of those gains. But, you know, if you don't have that type of duration within your portfolio, then you're in trouble because you're on this kind of never-ending hamster wheel of of trying to redeploy capital at higher and higher prices typically with with lower and lower quality assets. And so, um you know, our business I feel is in a pretty good position right now. And since we have that duration, like I said, our top 10 assets, average reserve life is is 20 years. And that's that's the highest amongst uh our our peer group and and even the mid tiers as well. And and we have that duration. We have the strong counterparties. We got the good jurisdictions and and owning the gold in the ground, I think, in these jurisdictions is the safest way to do it. >> Yeah. You know, when the capital comes flooding in on this M&A cycle, I have to ask because of course you're inside of this, right? I mean, you see it. I mean, how do you keep how do you keep bidding bidding wars and overpaying from repeating the same mistakes that we've seen in those past cycles? >> It's it's difficult. It's very very difficult because there's always going to be a company that feels like they need to redeploy some of the cash. I mean, like we talked about earlier, like the the the free cash is just completely uh, you know, increased at a rate that >> most of these companies, you know, never even dreamed about. And so, how do they think about reallocating this capital? Well, they're doing the smart thing right now, which is they're they're strengthening their balance sheets, you know, they're they're paying some dividends and and some stock buybacks, but I mean, maybe another 6 to 12 months of that, they're not going to really have much to do. I mean, they're building some very very big cash positions today generally um you know, across the sector. So it's it's a difficult thing because there'll always be uh you know one company that wants to use you know call it a more aggressive gold price in order to kind of justify whatever price they need to play to pay to to clear uh the asset acquisition. So, um, you know, it's it's it's good to be, uh, in businesses that that don't have that pressure. And so, yeah, very very high quality companies with with great pipelines that are already bought and paid for is is kind of the key thing I think to to look out for in this market. >> Yeah, good good advice on that one. I was going to ask cuz for investors watching, I mean, should they focus on the the discipline acquirers who kind of sit out those overheated deals or or on the aggressive players using this window to scale up as fast as they can? >> Well, I think that I think there's times to be aggressive. >> So, over the last eight years, um I mean before gold kind of started this this big move, that was a time to be very very aggressive. And so you saw some big mining companies be aggressive like IO Eagle and and and some others that that made a lot of call it more aggressive acquisitions at the time that that that I think the market looked at. But when you look back on it today, um I mean these these these transactions are um you know are you know the returns are are absolutely phenomenal at today's gold price and and uh you know same same with Metallas but you know we we did 32 different transactions over 8 years and um you know we haven't done one in the last 18 months. So, you know, I think I think we're in a different market now where, you know, it's it's difficult to get aggressive because again, like the volatility, the gold price, kind of the the um the the lack of kind of higher quality assets. I mean there there are a lot there are a lot of different things coming to market because I think the price is driving a lot of sellers to you know call it cash in on on kind of what they feel is is a is a great uh option and and bull market but um but yeah I mean the valuations across the board are kind of a difficult thing to manage. Yeah, fascinating too about the Tether news. I mean, is this uh is this the future? None of this surprise you. Is it just getting started? Are you here? What insight can you give us into that? >> Well, I think that I I think that we're going to see more of it. I think we're going to see this manifest across a number of different type of of institutions around the world. Um there's only so much physical gold out there and physical gold is a massive market. Obviously we we see what's driving that but you know at some point in time the the world is going to say okay how much more physical do we buy at these prices and what are other means to get exposure to this metal um and I think that that is going to bring in a lot more disruptive capital I think uh you know groups like Tether are at the forefront of that and I think they're they're doing a great job trying to maximize that value but I do think that there's more uh to come uh in in probably the the near term as well. >> Yeah, fascinating to watch. All right, it's reshaping the way money flows into mining, that's for sure. Brett, he's CEO of Mattel Royalty and streaming. Fascinating conversation and one we'll be tracking closely as the story continues to develop. I appreciate this, Brett. >> Thanks, Jeremy. Thanks for having me on. >> Thank you so much. All right, I'm Jeremy Saffin. You're watching KitKo News. We're going to have more all week long, so be sure to [music] hit the subscribe button. Stay tuned. We'll be right back. Heat. Heat.
Gold Must Hit $8,000 as The '$370 Trillion Great Rebalance' Begins | Brett Heath
Summary
Transcript
Welcome back to KCO News. Now, the gold market is trying to find its footing, consolidating just under $4,000 an ounce on the spot side, just above $4,000 at the time of this taping. Now, that was after a historic run was met with that brutal correction, the worst single day drop for the metal since 2013. But while traders debate the short-term direction, a much more profound shift is happening in the capital markets. Now, we know that central banks have been the driving force here, reportedly stockpiling over a thousand tons of gold this year alone. But now, there's a new kind of completely new disruptive source of capital is targeting the producers directly. Now, it's coming from the crypto world. And our guest today is at the absolute epicenter of that collision. Let's welcome back our friend, CEO, and president of Mattella Royalty and Streaming, Brett Heath. Uh, good to see you. A very pivotal moment for the industry here. Thanks for making the time. >> Yeah, thanks for having me, Jeremy. I got to ask you about that uh you know the landscape here for royalty and the streaming sector itself because in a world with $4,000 gold I mean the business model is a cash flow machine you and I have talked about this before the majors Frank Nevada you know wheaten uh are reporting spectacular all-time record quarters from the perspective of a of a mid-tier CEO I mean what was that flood of cash what's it done for the M&A market has it kind of created a paradox where high gold prices actually make it harder for growth companies to find value accreditive deals because you're now competing with giants who have more cash. >> Well, it makes things more competitive just from a from a a cost of capital perspective for most of the mining companies that are out there. Obviously, the we went through a period where equity was a very expensive way for them to uh advance the assets and put them in production and and working cap and so forth. And so uh royalties made a lot of sense during that period of time. Uh you know as as we kind of look forward what's happened you know generally with the royalty sector in itself I mean we we saw the royalty sector um as a whole uh add 30 plus billion dollars in market cap over the last kind of 18 20 months or so. So significant increase in market cap, significant increase in in free cash generation for the sector. Uh but the opportunity the opportunity set did not double in size along with it. So uh it did make things a bit more um competitive uh from that perspective and and I think that's driving a lot of the consolidation. you you you've seen that uh over the last couple years on kind of the smaller end part of the sector, but you know, we just started to see that within uh the mid tiers and the majors with the Royal Sandstorm transaction and I think that uh that that probably that trend is going to continue. >> Yeah. Yeah. I mean it sounds like as you mentioned that that race to either scale up or get acquired um that consolidation between Royal Gold and Sandstorm. I mean, for a company in your position looking to grow, where was that capital supposed to come from? Was it was it the traditional financial market, you know, equity raises, bank debt becoming too difficult or too dilutive to kind of compete in this new high stakes environment? Well, co cost of capital for for royalty companies usually is relatively competitive and and I I would say that uh you know where the sector has gone is is is for mining companies specifically looking to take on uh capital uh via royalty or stream. It's become pretty competitive I would say even with these elevated equity valuations kind of across the sector uh just given the competitive nature of that. Now I I say that you know in regards to kind of high quality operators, good jurisdictions, great assets. Obviously as you kind of go further down the risk curve um things become more attractively priced obviously to price that that higher level of risk. >> We've been chatting about it a little bit but of course it's almost stunned the mining world. I mean Tether of course the issuer of the world's largest stable coin has made a series of aggressive moves into the royalty space including taking a significant stake in your company. I mean it's not a passive investment. They've also taken an 8.1% stake in Gold Royalty Corp, a controlling stake in Elemental Altus. Traditional mining world is famously conservative, uh, Brett, and you know, I'm I'm wondering here what this partnership looks like and and how exciting it is. >> Well, I think it's always great to see disruptive capital come into the mining sector. Uh, you know, however it shows up really. I think that it it creates kind of a a bit of more of a competitive environment for for the traditional businesses and and also sources of capital. Uh and I and I don't think that they are the last ones to enter this sector. I think that they're the first they're obviously being very very aggressive um already kind of consolidating two of of uh of my peer companies and also taking you know a position. I can't comment on on obviously what their intent is but uh you know I think that they see the value in these royalty assets. I mean these royalty assets can allow uh really the reserve of the ounces in the ground while having that yield. It's it's kind of the US treasury of the gold market and I think that's what's drawing um to them to uh to this sector. >> Yeah. Let's talk about the sheer scale of this because I mean I don't really think that the market fully grasps it because according to that analysis in the industry I mean tether generates over $5 billion in annual cash flow. To put that into perspective for our audience I mean that's five times the revenue of Franco Nevada and most valuable company in the sector. I mean what does it mean practically to have a partner with a fire hose of capital like that? Does it fundamentally change the types of deals that the entire mid-tier sector can now kind of consider? Well, I think it I think it changes the way a lot of the companies kind of view M&A, you know, with within the sector because I think that now there's this new player that has a different objective altogether, a different view of value, uh, it seems at least and and they're aggressive. So I I it's it's starting to uh you know really make some of the the existing players within the sector kind of think about um you know the assets that are out there and kind of what's available and and how strategic they are. Um so you know it's again like I think it's always a good thing to have disruptive capital come into a sector and again like I don't think it's it's the only one. Um, you know, I I do I you know, I am a little uh I I do understand why they're being so aggressive because, you know, I think that that they are, you know, the core business is exposed to the front end of the curve and it looks like we are going to see, you know, interest rates substantially lower uh by this time next year. I got to ask you, I mean, Tether CEOs called gold nature's Bitcoin, suggesting that deep, you know, philosophical kind of alignment. I mean, do you see this is the beginning of a great convergence, a bridge being built between those two investor classes, the crypto guys, the hard assets that kind of share that similar anti- fiat, anti- central bank worldview? Could this unlock a whole new investor base for the entire resource industry? >> Uh, Jeremy, I think it's way, way bigger than that. Yeah. >> Uh I mean, you know, a trend that a trend that I've been following here for uh you know, the last couple years is is really this transition of gold becoming the tier one reserve asset uh globally and it's well on its way there like that that trend has continued to to move forward at full speed. I mean, if you look at the Q3 central bank numbers that just came out yesterday, and we saw a record uh amount of tons, I think it was 13 uh 13 tons. Um but in a increased 44% year-over-year in the dollar amount. So significant amount of buying, but what is this? What it's obviously price insensitive buying because, you know, you're getting gold uh going at all-time highs. you're getting this type of physical demand across the sector. Um it's it's a transition away from US treasuries. And so this is happening. It's continued to happen. And and now US treasuries or sorry gold makes up uh a greater amount of of uh total reserves as compared to US treasuries by itself. You know, you still have US uh denominated assets as a whole making up a larger portion of gold. But, you know, I think this is going to continue until gold makes up probably 50 plus% of global reserves. And gold's going to need to go to probably 6 to $8,000 uh an ounce in order for it to do that. And that that's just some simple math. But what's interesting is is now that I've been watching this trend for the last couple years, like you can kind of see it. It is way way bigger than than just the transition of the world's view of US treasuries being a reserve asset. Like what we're seeing and what I believe that we're seeing right now is really the early stages of what I call kind of the great rebalance. Like you've got >> you've got $370 trillion of financial assets and that is that is transitioning to tangible assets. I think that's that's kind of the bigger trend and you know we live in a world today where there are no more bond vigilantes and so you know where is where is this inflation where is this call it uh monetary debasement trend showing up well it's showing up in gold and as as as a as a US citizen like you look at everything in in your own currency and other other countries kind of vice versa but in reality uh when when you look at kind of this broader trend um you know I think that that it's it's showing up with gold now but it's going to be going into all other tangible assets I think copper is another one but commodities in general tangible assets across the board you look at kind of the performance of uh the broad stock exchanges and so forth like you you you kind of see this and you're like okay well this is a much much bigger trend we're at the beginning stages of it and and I think it's going to continue here. >> Yeah. Are you seeing, you know, I mean, you're talking to investors all the time. You're getting some insight from from those institutional level participants, too. Are you seeing fresh participation from family offices, sovereign funds, you know, more retail capital chasing these real assets again? >> Yeah. So, this this is the part that that just absolutely boggles my mind. uh you know the last 30 days I I spoke to some of the largest asset managers on the planet across North America and Europe and when I'm going into these meetings typically I'm talking to the resource PM they are pulling in the general SPMs in all of these meetings and it's the general SPMs that are thinking and asking all the questions about how to get positions how to think about allocating capital to the sector um even starting it in the form of just physical like not even really scraping the surface with mining equities. Um, so, you know, I I can say and I've I've confirmed this with a couple other executives uh at some of the largest gold mining companies in the world and they're seeing kind of the same thing. So, what does that tell me? That tells me that that the generalist uh capital flows have not even started yet. they have been so preoccupied with the AI trade and and and and just in general that that uh they have not even started to think about this. They have been waiting and waiting for this pullback. I think this pullback is really the start of when we start to see the generalist participation. If you look at the fund flows on the GDX, which is call it the largest gold mining uh ETF for for the for the large gold mining companies, uh the week of October 20th, uh was was one of the largest inflow weeks and and and keep in mind this is when uh gold had a 10% correction. So the equities were way off >> and it was I think it was the top two or three largest weeks in the last 5 years of the GDX so far right now October as a whole uh is I think the the the third largest inflow in the in the last 5 years from from a monthly perspective. So what that tells me is that all of that generalist capital been has been waiting on the sidelines. you know, it tells me that that this correction that we're in right now is probably not going to be as deep as I think some people uh are probably hoping for. Um, and it'll probably be a lot quicker as well. >> Yeah. So, you're describing those strong inflows in that new investor stepping in. I mean, did that last selloff that we were talking about stabilized? I mean, $4,2 you know, did it shake out the leverage players and short-term traders kind of clearing the way for more patient capital to come in? It did. It did. And uh that that's how that's a healthy thing for bull markets. This has been [clears throat] this has been um one of the most ignored bull markets I've ever recognized or seen in in in my career uh so far. To see gold go to uh $4,000 an ounce before kind of the generalist uh asset managers just start to wake up uh is is just mindboggling. But you know they are woken up. We are kind of in the I I would say this awareness phase. If you look at kind of market psychology of bull markets, there's always this kind of awareness phase. Um it seems that we're kind of in the middle of that awareness phase at at some point in time, but we have not even started the mania phase. The mania phase is typically when you get all of those capital flows coming in. You know, we have not seen that. you look at uh the Dow to gold ratio and that's the other thing to kind of keep in mind. You got to put it in perspective because looking at everything on a on a US dollar basis in the midst of of of this great debasement it it can fool you. It can really tell you a different story. So it's important to look at the ratios and when you look at the Dow to gold ratio you know that peaked in the last bull market around six uh meaning that that um you know 6 6 ounces of gold basically equal the Dow that was in 2011. Uh historically that has gone to one one in the past but we're still sitting around 11 right now. um when you look at the the XAU which is one of the longest kind of standing gold indexes uh verse gold. So basically these gold stocks priced in gold like we're just barely off the bottom still today even with these substantial moves. So, I would argue that uh that there still is a long long way um to go in in this bull market and I think that again I think that the corrections are going to be are going to be shallow to the point where a lot of investors are going to miss them all together. >> Yeah, you've been watching obviously some of the miners too on that equity side. We saw gold and silver take that little bit of a haircut and so did some of those stocks but it's been you know a lot of people have been buying the dip here. I mean what are your thoughts? I mean, it feels like these gold prices and revenue is just starting to come to fruition. It doesn't feel like it's going to stop for a while. >> Well, look at the bid underneath gold. And then you look at oil. Uh, you know, oil is is pretty contained. Uh, you know, I think that that will move at some point. You know, we are hearing uh inflation start to creep in uh a bit more on the labor side of the equation. I mean when you look at the mining companies in general like over the last 30 years the margin has always reverted back to the mean it's been like 30 to 35%. That this is a consistent margin that the sector um on average has always migrated back to. Now there obviously there's some there's some great businesses with much higher margins but I'm just saying the average in general the average today is double what the or or even more than double what the average has been over the last 30 years. So when you look at it from a mining uh you know company perspective you know I think that those margins if gold holds and goes higher can remain elevated for for a much much longer period of time but eventually uh you know I do think that the costs creep in and that's why owning royalties is such a great way to play it because you get 100% of that margin expansion without the capex without the dilution without the operating um costs and so forth. for it, then you get to capture all of that all the way up. Uh, and you don't have to pay for it because it's free trade. >> You know, we're also seeing a global trend towards the tokenization of real world assets. I know you've heard about this. I mean, Black Rockck's Larry Frink says all financial assets will eventually be tokenized. Obviously, Tether is a leader in that space. Is the next logical step here to token is the the, you know, the tokenization of mining royalties themselves. Could a crypto investor one day buy a digital token representing a fractional interest of one of your royalties, giving them a direct yieldbearing exposure to a tier one gold project on the blockchain? >> I think that royalties are the best uh call it asset within the entire resource industry to kind of serve that function for sure. um you you can't it's it's very very difficult to collateralize gold in the ground uh without it having the ability to come out. >> Uh and in the royalty business like you you own a 1% claim on on uh whatever is in the ground and if Igno Eagle or Bareric or Newman are operating the mine, well guess what? That gold's going to come out of the ground. It's completely free carried and it's going to be not only delivered to you top line but it compounds. It compounds. So it's it's the ultimate uh kind of uh you know holy grail for uh for for thinking about digitizing an asset in this industry. I think it's it's kind of again I think it's probably from a structure perspective uh the the best fit and I think that that's probably why uh you know uh institutions like Tether are attracted to to the these types of assets. >> How do you manage the two worlds? I mean you know how do you communicate all this because you got two completely different investor audiences. You got that traditional mining investor kind of focused on discounted cash flow, jurisdictional risk, and now you have this cryptonative investor driven by, you know, network effects and macro themes like ddollarization. I mean, how do you as a CEO bridge those worlds? How do you communicate your company's value proposition to two audiences and, you know, attract in those those investors? >> Well, really, we just focus on our business. I mean, we we built this business to play uh or to have our investors have the ability to kind of maximize this trend and and we spent, you know, upwards of nine years deploying $39 million across a 100 assets. Now, we deployed $39 million, all of which under when gold was under $2,000 an ounce. So the amount of leverage that's embedded and the optionality that's embedded in these portfolios um is very very significant and the mining sector hasn't even begun to start thinking about planning or mine planning at at even above $2,000 gold. I mean you're still seeing most mines being planned sub $2,000 gold. And as these mining companies start to get uh or these executives at these mining companies and these boards start to get a little bit more comfortable with gold where it's at and that it's not going to come back down because again if you look at kind of how these mining companies are priced right now like they're priced at a much much much lower gold price >> uh which is reflecting the value. But as they start to think about planning at a at a at a $2,200 gold price, what does that do to ultimately to the reserves and the resources? I mean, it it significantly has an impact on on how they look at that. You're going to see very very large expansions. And the royalties cover all of that. Like the royalty covers all of that that upside. I think we're at the beginning of this cycle right now. I think it's going to take probably I mean I'm hearing right now a lot of executives uh in their budget meetings for 2026 their heads are just absolutely spinning because they just don't know what price to use and how to plan uh for these assets going forward just given that the volatility has been so extreme uh over you know over the the last 18 months and and the sector has been burned in the past by getting too aggressive. So I would say generally the sector has been very very conservative but you know there there is there is enormous amounts of optionality and kind of embedded value that just is not even remotely close to kind of surfacing within these markets right now. >> Yeah. I mean to your point now I mean if you got this this you're at the forefront of this convergence between gold and this digital capital. I mean if you get these new investors in what does resource finance look like 5 years from now? I mean, do we see a wave of M&A driven by new liquidity and then the permanent kind of rerating for mid-tier royalty companies willing to embrace it? What are your thoughts? >> Yeah, that that that's a difficult question right [laughter] there. I don't know what it's going to look like uh within 5 years. I mean, when we built Metalla, the royalty sector is all about playing the cycles. And so, uh we focused on very very high quality, long duration type of assets. Now, that wasn't uh always in favor in regards to kind of what the market was delivering or or kind of giving value for in the public markets, but having access to very high quality long-term, I'm talking 20 plus year reserve life assets allow you through these cycles, through these upcycles to basically be able to kind of sit back if you need to uh and and allow, you know, all of that embedded optionality to play out. allow your shareholders uh and investors to to reap all of those gains. But, you know, if you don't have that type of duration within your portfolio, then you're in trouble because you're on this kind of never-ending hamster wheel of of trying to redeploy capital at higher and higher prices typically with with lower and lower quality assets. And so, um you know, our business I feel is in a pretty good position right now. And since we have that duration, like I said, our top 10 assets, average reserve life is is 20 years. And that's that's the highest amongst uh our our peer group and and even the mid tiers as well. And and we have that duration. We have the strong counterparties. We got the good jurisdictions and and owning the gold in the ground, I think, in these jurisdictions is the safest way to do it. >> Yeah. You know, when the capital comes flooding in on this M&A cycle, I have to ask because of course you're inside of this, right? I mean, you see it. I mean, how do you keep how do you keep bidding bidding wars and overpaying from repeating the same mistakes that we've seen in those past cycles? >> It's it's difficult. It's very very difficult because there's always going to be a company that feels like they need to redeploy some of the cash. I mean, like we talked about earlier, like the the the free cash is just completely uh, you know, increased at a rate that >> most of these companies, you know, never even dreamed about. And so, how do they think about reallocating this capital? Well, they're doing the smart thing right now, which is they're they're strengthening their balance sheets, you know, they're they're paying some dividends and and some stock buybacks, but I mean, maybe another 6 to 12 months of that, they're not going to really have much to do. I mean, they're building some very very big cash positions today generally um you know, across the sector. So it's it's a difficult thing because there'll always be uh you know one company that wants to use you know call it a more aggressive gold price in order to kind of justify whatever price they need to play to pay to to clear uh the asset acquisition. So, um, you know, it's it's it's good to be, uh, in businesses that that don't have that pressure. And so, yeah, very very high quality companies with with great pipelines that are already bought and paid for is is kind of the key thing I think to to look out for in this market. >> Yeah, good good advice on that one. I was going to ask cuz for investors watching, I mean, should they focus on the the discipline acquirers who kind of sit out those overheated deals or or on the aggressive players using this window to scale up as fast as they can? >> Well, I think that I think there's times to be aggressive. >> So, over the last eight years, um I mean before gold kind of started this this big move, that was a time to be very very aggressive. And so you saw some big mining companies be aggressive like IO Eagle and and and some others that that made a lot of call it more aggressive acquisitions at the time that that that I think the market looked at. But when you look back on it today, um I mean these these these transactions are um you know are you know the returns are are absolutely phenomenal at today's gold price and and uh you know same same with Metallas but you know we we did 32 different transactions over 8 years and um you know we haven't done one in the last 18 months. So, you know, I think I think we're in a different market now where, you know, it's it's difficult to get aggressive because again, like the volatility, the gold price, kind of the the um the the lack of kind of higher quality assets. I mean there there are a lot there are a lot of different things coming to market because I think the price is driving a lot of sellers to you know call it cash in on on kind of what they feel is is a is a great uh option and and bull market but um but yeah I mean the valuations across the board are kind of a difficult thing to manage. Yeah, fascinating too about the Tether news. I mean, is this uh is this the future? None of this surprise you. Is it just getting started? Are you here? What insight can you give us into that? >> Well, I think that I I think that we're going to see more of it. I think we're going to see this manifest across a number of different type of of institutions around the world. Um there's only so much physical gold out there and physical gold is a massive market. Obviously we we see what's driving that but you know at some point in time the the world is going to say okay how much more physical do we buy at these prices and what are other means to get exposure to this metal um and I think that that is going to bring in a lot more disruptive capital I think uh you know groups like Tether are at the forefront of that and I think they're they're doing a great job trying to maximize that value but I do think that there's more uh to come uh in in probably the the near term as well. >> Yeah, fascinating to watch. All right, it's reshaping the way money flows into mining, that's for sure. Brett, he's CEO of Mattel Royalty and streaming. Fascinating conversation and one we'll be tracking closely as the story continues to develop. I appreciate this, Brett. >> Thanks, Jeremy. Thanks for having me on. >> Thank you so much. All right, I'm Jeremy Saffin. You're watching KitKo News. 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