Gold's Boom is Just Starting! Trey Reik's Masterclass on Gold
Summary
Gold's Unique Investment Cues: Gold is viewed as both an inflation and deflation hedge, a risk-on and risk-off asset, and a safe harbor, making it a complex investment with diverse motivations for buyers.
Gold's Performance vs. Traditional Assets: Over the past 25 years, gold has significantly outperformed traditional assets like the S&P 500, with a 1,238% increase compared to the S&P's 692% with income.
Recent Gold Market Trends: In 2024, gold rose 27% and continued to climb in 2025, outperforming traditional assets and indicating a strong bull market for precious metals.
Long-term Gold Price Drivers: Key factors driving gold prices include the unsustainability of the US fiscal situation, growing anti-dollar sentiment, and eroding Fed credibility, which are expected to persist and support gold's value.
Gold as a Portfolio Diversifier: Historically, a 2-4% allocation to gold has improved portfolio returns, but current market conditions suggest a higher allocation may be warranted.
Gold vs. Inflation: Contrary to popular belief, gold is not a direct hedge against CPI inflation but performs well in environments of monetary inflation, as seen since 2000.
Gold Equities and Market Dynamics: Gold equities have shown significant returns, with the GDX up 127% over two years, and are expected to benefit from rising gold prices and improved profit margins.
Investment Strategy: Investors are advised to establish a core bullion position before venturing into gold equities, with a focus on larger, well-managed mining companies to mitigate risks.
Transcript
Hello everyone and welcome to Wealthon's gold webinar. I'm Mario Rodriguez, the channel's executive producer and today I'm joined by my esteemed colleague, Trey Reich. Trey has decades of experience understanding and investing in the gold market. He's one of the sharpest voices on how precious metals fit into an investor's portfolio. Trey, how's it going? It's great to join you today for this special gold webinar. How are you doing, sir? Excellent, Mario, and thanks for having me. It's always fun to talk to you. So, uh, let's get started. Tra first I wanted you to give the audience an understanding of how gold and other precious metals have done compared with you know traditional investing assets like stocks, bonds and that sort of thing. Terrific. Well, thanks again for having me. And I uh I started gold back in like 2001. So I've been doing this for about a quarter century and I've given a lot of talks and uh you know in public rooms and in private meetings and along the way and those hundreds and hundreds of presentations I've learned three things sort of three rules and the first is that gold itself has more investment cues than any other investment asset. So some people think gold's an inflation hedge. Others think it's a deflation hedge. Some people look at gold as a risk on trade. Others as a riskoff asset. Some see gold as a safe harbor. Uh and probably still more view the US dollar as the ultimate safe harbor which puts reflexive pressure on gold when the dollar goes up. So my point is there are people buying gold every day for a vast array of reasons and I'm not aware of any other asset uh which has more counterveailing investment cues. That's number one. Number two, most people who have an opinion about gold hold it with very strong conviction whether or not they're really familiar with the underlying fundamentals. So, uh, gold is an emotional asset and most people have a strong opinion whether they know what they're talking about or not. And the third, uh, is that over this 25 years, the combination of the first two, uh, I've given hundreds of talks about gold. And I don't think I've ever once convinced somebody to buy gold. And my point there is it's a decision that has to come from within. It's a very personal decision. Um there's no right or wrong, you know, timing wise, uh amount of investment wise, uh reasons, investment cues. It's all very personal and it really has to come as a personal conclusion that the way you view the world makes sense to have a little gold. So everything that I'm going to say today is not to convince anyone about anything. I just want to offer a framework for how I think you can look at gold and in involve all the different variables that are involved. So again, I'm not trying to convince anybody of anything. I'm just trying to prevent a bit of a framework on how to think about gold and what it represents. In that regard, you asked about performance uh in the recent years and uh we'll get to that, but I do want to also I have a slide I traditionally use, but it's got every year since 2001 through 2025 and it has the price of gold in nine different currencies. And the reason I use the slide, we wouldn't be able to see the numbers on this podcast, is there's not a lot of red on it. So, for the past 25 years, gold's been going up, you know, most years in every currency. Uh, and as of last Friday, uh, September 12th, the return of the S&P 500 without income since December 31, 2000, so the beginning of 2001 through last Friday, the S&P was up 398% without income. And with income demonstrating the importance of dividends, the S&P was up 692%. And over the same time frame, gold was up 1,238%. From 275 to 3,600. So my point there is uh along that 25 year period, nothing has matched the performance of gold. and yet it still doesn't really get the benefit of the doubt in institutional investment circles. So, uh I'm just pointing out gold's been doing its job based on the variables we're going to talk about for two and a half decades already. Uh even though it doesn't get a lot of credit for having done so in the recent past, which is what your question was about, gold is once again outperforming all traditional assets. So, I picked an arbitrary time, the end of 2023. So, we're talking about 2024 and year-to- date in September 2025. And I'm going to list some numbers here, but they're important. So, in 2024, gold was up 27%, S&P was up 25. uh in 2025 so far, gold's up another 38 for a cumulative return of 76%. Over the same time frame, last year, silver was up 21%. This year, it's starting to outperform gold, which is typical for this point in the cycle, up 46% for a combined return of 77%. and the GDX, which includes both gold and silver equities, uh, lagged, which is um, a legitimate expectation. In 2024, was only up 10%, but so far this year, it's up 105. So, the GDX is starting uh to display that beta to bullion that one would expect from gold equities. And over the uh, two-year time frame, it's now up 127. So in the slide that we're going to put up for the viewers uh we take that return from 1231 through September uh and measure it against other traditional asset classes. And you can see that the S&P over that time frame is up 41. Uh the Vanguard real estate ETFs up 11. uh Treasury index 10-year up 5.7 and believe it or not the Bloomberg commodity index is actually down 3%. So gold up 76, silver up 77, GDX up 127, S&P up 41 and by the way this year the S&P is only up 11.3%. So uh over the last 25 years and over the last 22 months, gold has significantly outperformed all traditional asset classes. That's a massive outperformance especially the last two decades and a half where one would think that we've had an ongoing bull market with the exception of the great financial crisis and some make you think that something like precious metal put out so massive all these big companies that etc. So that brings me to this question. Do you expect these this this strength to continue? You expect gold to keep up keep about performing? Is there a possibility of a pullback in the short, medium, long term even? What do you think there? So uh I've always been on the opinion that I like to use technical analysis when it supports my case. Mhm. So, don't we all? Yeah. So, in the chart that we have up uh currently, this is just a price graph of, you know, spot gold uh since 2024. And I think one of the characteristics of gold price moves is always a spurt upwards and then a consolidation. Spurt upwards and then a consolidation. has a tendency to move up pretty quickly in times like this and then it consolidates and as you can see in the recent history in the graph that we have up gold from the beginning of 2025 through April had a 30% spurt and for gold that's a lot you know I tell people all the time there's a lot of gold in the world you know all the gold ever mined is still with us so for gold to go up 30% it's like a giant poker game. Everyone who has gold each 105 $100 has to check and not sell if you know what I mean. So to go up 30% in four months is pretty extraordinary. In fact, I would say that after last year's performance being up 27, even the most strident gold bulls have probably been surprised by the strength of gold in that January to April period. But as the graph demonstrates, the consolidation has been one of the most textbook positive consolidations I've ever seen in my life. You know, it's a rising wedge and that type of thing. And uh we've had almost no selloff. And so that's a demonstration to me that gold is still underowned around the world. So even when you have a 30% move, uh people are still just getting their gold allocation started. uh and very recently gold broke out of that that uh resistance level right around 3,400 and has risen another 8%. Do I think there's a possibility for a pullback? 100%. But my point is that I think this $3,400 range, which was the resistance since April and the very tight support beneath that, I really would find it very surprising for reasons that we're going to discuss that gold would go lower than 3,400. And the way that I would put that to people is given the you know conflration of different fundamentals and the things that are going on now rate cycle being initiated by the Fed etc. you know Trump confusion tariff all of these things I can't think of anyone who would sell their gold you know at this point in the cycle I just don't think there's uh many sellers right and I can't imagine anything in the short run that would change that. So, are we due for a pullback? Yes. Would it be severe? I don't think so. So, let's drive down on the reasons. You kind of touched on them right now and we were talking about this yesterday and you have some really interesting thoughts, theory, ideas as to what's really driving the gold price right now. Um what sort of hidden and not so hidden forces are pushing people or institutions to buy the gold medal which is really driving the price way higher than even uh the most bullish gold uh bugs would have thought just as you mentioned. Can you tell that that's super interesting? I think it's uh really important, again, I've been doing this for long enough that I have these sort of throwaway phrases. I think it's very important with gold to differentiate between shortterm fundamentals and long-term fundamentals. Short-term fundamentals are there's a geopolitical event in the Middle East or something. Uh there's a CPI number that comes out, a GDP number comes out, short-term economic statistics. Those types of shortterm impacts on the gold price usually unwind pretty quickly. Um gold has a reputation for being a great geopolitical hedge. I have always sort of fought that because when you have a geopolitical event, at least a shortterm one or a single event, you get people that run into gold, but they usually trade out just as quickly in a month or two once the event has subsided. So, I almost look at geopolitical blowups as a distraction. It just delays the important progression from underlying fundamentals. Uh but on the long-term side, there are three uh basic fundamentals which we have here up on the screen uh that I think are driving the gold price both over the long term and the acceleration recently. And those three groups of fundamentals are the unsustainability of the US fiscal situation, growing anti-doll sentiment all around the world, and what I refer to as eroding Fed credibility. So, are these fundamentals new or unprecedented? Absolutely not. But I think what's happening in 24 and 25 is that each of these long-term fundamentals which gold bugs myself uh bears you know Austrian economists have tracked for two decades okay and believe me I didn't think we'd get this far with the dollar still in the position that it is but you know the system has a lot of you know propensity to engender itself and we're still where we are today. But I do believe that the acceleration is from the fact that each of these three fundamentals have hit important tipping points where they're starting to matter to large pools of capital around the world and you're starting to see that gravitation that we've expected for years uh to get a little money out of the financial system through the protection that gold offers. And I'm talking about very large pools, sovereign uh wealth, you know, um individual family offices around the world, very high net worth, etc. And we're talk, this is a global phenomenon. It's not a US phenomenon. Gold is a global asset. So I think it's these three fundamentals which we can talk about a little bit more in detail that uh that have that have hit these first are extremely important tipping points. Uh and the first one that I would mention is definitely the US deficit. So we have a chart up there now which is the annual budget deficit of the United States. And it's kind of funny in retrospect, people have been worried about the budget deficit for 20 years, but if you go back to the late 90s, uh, you know, budget deficits were still in the 2003 300 billion dollar range and we thought that was terrible. Yeah. And then we had the Clinton years where we actually went for four years into a surplus, right? And then we went down to sort of 400 and then we had the GFC which was the first you know 2008 um the first time we hit the trillion plus level and in '09 it was4 2010 was 1.3 2011 1.3 then we receded all the way back to that sort of 400 level and then what happened which is I think where this tipping point is coming into play is during co uh all of that fiscal spending took the US budget deficit to 3.1 trillion in 2020 and then the following year 2021 2.8 trillion. Now what should have happened after that is as has always happened in the past receding back to non-emergency levels and we did for one year in 2022 we got down to 1.4 4 trillion. But as you can see on the right side of this chart, we've now normalized emergency levels of spending. Yeah. In non-emergency times. Yeah. So, you know, you always say it's hard to bring the deficit down. I'm actually shocked that we've stabilized around two trillion, which is basically what's happened. Uh and and you know, trillion is a very big number. There's all these, you know, great examples. If you add up a trillion seconds, you get back to BC and, you know, a trillion inches goes around the universe. I mean, the trillion is a very hard number to understand. And I actually think part of this is the numbers have gotten so big, they don't mean anything to people anymore. It's hard to process, you know. So, yeah, the the budget deficit's two trillion. Nobody really understands how big that number is. we don't stop to examine it. And even the CBO and uh you know the administrations past two, they've sort of given up, you know, so now they're just projecting that we're going to have $2 trillion deficits at infinitum. Uh and that's a that's a and I'm sure everyone who's watching has learned that the interest on the outstanding debt is now about 1.2 2 trillion per year, which is significantly larger than the the defense budget allocation this year and next. I think it was 8.95 last year and I think this year it goes up to a trillion. Um but 1.2 trillion is now only behind like social security um as in terms of an expense line for the government. The problem with that is that we've had to issue enormous amounts of debt obviously to cover the deficit. And this next slide uh which is the graph of US public debt or US debt in public hands which is the way the CBO describes this. So uh total US debt right now is 37 trillion but about 7 trillion of it isn't in public bonds. It's bonds that are held by different parts of the government etc. And so the CBO tracks total US debt held by the public. That's currently 30 trillion. And the expectation from the CBO, which is by the way 30 trillion is 100% of GDP, which is 30 trillion. Uh, but the CBO projects that to go to 116% by 34 and then a ridiculous 172% by 2054. And the and that's not even including the off balance. Point is current total debt which is the number we see on the TV all the time is 37.5. So you have to up all those numbers by another uh you know 20%. So the the point here and and by the way that 37.5 today of total US government debt uh is versus GDP of 30. So that's 123%. And this doesn't even get into the unfunded liabilities and the social security and all that stuff gets into truth. So, um, we've hit the point where, um, you know, I've worried about the budget deficit for 20 years, I admit. And it's gotten to the point where everybody says, "Don't worry about it. It doesn't matter." But we're just hitting that point, that interest burden. It brings into the realm of thinking the concept of the doom loop. In other words, the interest is so high, we need to issue more debt, which drives the rates up, which keeps the interest going up. And you hit this doom loop. And the doom loop argument's been around for years. I've never paid, you know, that much attention to it, but it's starting it's starting to get into people's consciousness. And the the second big group of long-term fundamentals is the anti-doll sentiment. Um now once again you know bricks formed 15 years ago 20 years ago uh and I've read hundreds and hundreds of pages about people cons you know that there will be an alternative currency the Gulf cooperation council bricks I mean and I I don't really pay attention to it anymore because nothing ever comes of it the dollar standard is going to be very difficult to displace however I do think very importantly and There there's a million charts on this. People are focused on central bank gold buying. And I put that chart up, but it's not that interesting. It was 400 to 300 tons per year for 15 years, but then it popped up to a,000 tons, more than double the prior decade in 20 uh 22, 23, and 24. So what? And so everyone looks at that central bank chart with the big bars at a thousand tons and they're like, well, what caused that? So I wanted to come up with a couple of charts that I think are are more interesting in describing the same thing. So this first chart uh that we picked is a graph of Chinese gold holdings versus Chinese treasury holdings. And the way we plotted it is the gold line on the top is the number of ounces in the Chinese gold reserves and the black line that receding is the value of total US treasury holdings. So obviously the ounce figure doesn't take into account fluctuations in the gold price and the treasuries does. So it's not a perfect comparison but it's but it's pretty I like it because you have to buy additional ounces. it shows intent. But anyway, we put in a red line here uh at the US freezing of Russian foreign exchange reserves, which was February of 2022. I don't know if you recall specifically, but uh Biden froze, you know, 350 billion FX reserves of Russia's money, basically took it away. So, I really believe that created an acceleration of this anti-dollar sentiment by a factor of 10. Like, who the heck would want to have treasuries if they can be taken away? So, if you look at this graph, the gold line on the top, China has increased its holding of gold ounces 18% since February of 22. and they've reduced their treasury holdings by 26%. From a trillion to 756 billion. So I just use that as an example. China, you know, their FX reserve distribution has dramatically uh changed since this February 22 freing freezing of Russian uh foreign exchange reserves. Another way to look at this, which is the second chart we have up here about anti-dollar sentiment, is a Tavi Costa uh graph from Crescat Capital. Uh, and he's very good. Well, you interviewed him a couple months ago. Yeah. But he's put so people can go on. Yeah. He's a true uh production artist in terms of charting. But uh this chart is a very simple description of all central bank treasury holdings versus all central bank gold holdings. And you can see that the gold line has exceeded the blue line for the first time I think since 1996. Uh so at the end of Q2 the value of gold which I think was about 28% of reserves exceeded the value of treasuries for the first time since 1996. The total value of all dollar denominated uh reserve holdings still exceeds gold but this is a comparison just of gold to treasuries. So um in my you and I should underline why are these things important? Um, you know, the question is why is gold performing so well and we did the deficit, now we're doing the dollar. But I need to remind viewers these are trends that I just don't see reversing anytime soon, right? I mean central banks there was just a survey of central banks conducted by the world gold council and 95% of respondents this was between February and April of 70 central banks around the world predicted that in the next five years gold reserves will be higher in total and 41% predicted they would increase their gold reserves and zero predicted a decline in every category. So, you know, this when central banks get on this type of a path, it's it doesn't reverse quickly. So, my point there is that this anti-doll sentiment is not going to recede. It's only going to accelerate. The US budget deficit, I don't see how it could possibly get much better in in coming quarters or years. no administration seems willing, you know, to to to to take the efforts to try to bring that um, you know, under control. Uh, and then the third category, and uh, I've spent an awful lot of time studying the Fed, and I've learned over the years criticizing the Fed is is not a great thing to do in public, like with a room full of trustees, etc., because you don't want to upset people. Um I have to tone down my views of the Fed for public consumption but in my view just to give a recent example um PAL's you know 120 billion of monthly QE in 2021 uh you know when we had CPI already at five going to seven uh GDP at six and unemployment had fallen from 14 peak and COVID all the way down to five and yet they were still pumping 120 billion in QE monthly in 2021 all the way to the end of the year. I think that will go down as the worst Fed policy error in history and it caused that whole inflationary outbreak or certainly made it worse exacerbated it. uh and the Fed has still not really taken any bl you know credit blame for that in subsequent you know discussions of the inflationary outbreak. Uh but the you know and most recently you know skipping to today we just had a Fed meeting earlier today and um at that meeting it's almost become like a soap opera of political chicainery on Monday uh the Senate confirms Steven Mirin who's in Trump's council of economic adviserss to be the temporary replacement for Adriana Cougler who Trump sort of ran off the board and Lisa Cook had to have an appeals court overturn Trump's firing of her so she could go to the meeting. So, as I joke, as interesting as the meeting was today, uh I look forward to reading the minutes from this meeting in two weeks because Stephen Marin uh has already said that he's going to introduce a third goal to the Fed's dual mandate. The Fed's dual mandate of of you know maximum employment and stable prices. He wants to introduce a he will say I'm sure we will read that he said today that he wants to introduce a third goal which is stable long-term interest rates which of course would give the Fed a three-part dual mandate that would tie them in knots. But anyway, so what's my point there? the whole the Fed has become it's gone from just making bad decisions uh to just being a the almost a theater of of absurd you know political forces which have really no no place at the Fed to begin with. So I may be one of the only people who think Fed credibility is already pretty low. uh but I would say that those buying gold um agree with me and I you know I think around the world there's a lot of people who would agree with me in that sense. So those are the three big fundamentals and I repeat why are they important why is it important to keep pounding that out because in each case I just don't see a reversal you know in the next three to five years there will be a continuation of these forces and therefore a continuation of the buying pressure of the demand of the shiny metal gold. Very interesting. By the way, for those of you who are watching, we've put together a free gold investment report and because it is it it is gold month and uh we are focusing on gold. You can get that at wealth.com gold. And um now Trey, you have another very interesting perspective because uh when people think about gold, they think about gold as an inflation hedge. But I know that that is not your take. Can you share with viewers uh what do you think about that please? So I'm glad you brought that up. Remember in the first thing I said some people think gold's an inflation hedge and other people see it as a deflation hedge. So in this is my personal opinion is that gold and CPI type inflation don't really have anything to do with each other. Now, why that's an unusual view is the vast majority of people, I would say 90% if you were to do a poll, would say that they're inextricably linked and that gold is a hedge against CPI inflation. So, I'll skip the fact that historically it just never been the case. You know, over long, short, medium periods of time, you can have small periods where gold serves as an inflation edge, but over the long run, it hasn't. And my argument for this, my throwaway phrase in this category is if the price of hadonically adjusted hot dogs, that was alliteration on purpose, goes up and the CPI, why would that make you like why would anybody anybody buy gold if the price of hot dogs went up? Um, and secondly, if you have inflation, CPI type inflation in any society or economy, uh, I don't see any reason why gold should go up any faster than any other price. So, uh, I'm not a big fan of the CPI inflation relationship with gold. However, if you have monetary inflation, which is what we've been experiencing since 2000 and an accelerated basis since 2009 and what I refer affectionately to as the modern era of unconventional central banking um you know with trillions and trillions of QE and the Fed's balance sheet hitting 9 trillion effect to velocity speed with the Greenspan Fed and it it correlates really well with these 25 years of outperformance by gold. So in a monetary inflation environment, uh, gold should and has and will continue to outperform. Now, um, Trey, how should investors, and this is a little bit similar to a question we asked previously, but how should investors judge how much longer this gold bull market might run? You might have already answered because of what you're saying, right? These forces are happening and will continue to happen, right? Anti- dollar sentiment, Fed credibility and uh the very big deficits and huge debt load that the US carries now. But um how do you think how how should we or as an investor what perspective should I have for this gold market? What outlook should I have? Well, one of the ways I phrase this is is gold a permanent investment and you know at at some level uh as a diversifier and uh you know we'll talk a little bit about percentages in in a minute but you know gold is a permanent portfolio holding on some level. However, I think we're in a position where uh allocations to gold could easily be sort of 10 or 20 times that average. And we'll get to the numbers in a minute. And the question is how long uh should gold be such an overweight position, which is I think the the position we're in today. Um, and I think the answer to that, another way to phrase it was will be what can I look for uh as a sign, you know, that it's time to reduce my my gold position and perhaps even increase my position in stocks or something like that. So, I like to make things simple. So the chart that I chose uh you know on this topic which we have up is a very simple chart which I have always said is the best I can do to reduce the gold thesis to a single graph. Uh and this graph measures a simple ratio total US credit market debt to GDP. So uh you might ask why is that ratio important? Well, if you have debt in any economy, uh, which are paper claims, the underlying productive output, which is the GDP, has to support the debt. They have to pay the interest. You know, there's times when we had 0% mortgages and stuff where that ratio breaks down. But even when we had 0% mortgages, you know, and and and you had these in elevated house prices, somebody has to pay, you know, the burden of that debt at some point. So there's a ratio of debt to GDP, you know, that is uh optimal for any economy. And as this graph shows in the US, you know, from 1916 to 1980, that number was around 150 to 170%. Um, and except for the depression, which was a denominator event, the GDP fell by 50%. The ratio of debt to GDP shot up, FDR had to devalue the dollar, etc., etc. The only other time this sort of relationship, historic relationship in the US has broken down has been, as you pointed out, the post Greenspan era. And this has all been a numerator event. We've been adding trillions and trillions of unproductive debt on top of relatively stable GDP. Uh, and that's poked this debt to GDP ratio up to its current level today, 344%. So I believe very strongly by the way this is a very I think this is unquestionably the most important consideration in looking at gold as an investment until the debt load in the US comes back to some serviceable ratio to the underlying productive output uh gold will be a mandatory portfolio investment because it's this is what QE is all about when the economy can't support the debt load the Fed has to step in. So that $9 trillion balance sheet, everybody has their own specific explanation for why they think the Fed needs a $9 trillion balance sheet. Uh but I'm saying I'm pretty certain it's because without that excess liquidity, the debt load would have started to deflate and you would have gotten, you know, some sort of recession or god forbid a debt deflation, rationalization, something like that. And that's going to be very painful when it eventually happens. So, we just got our most recent update on this. The Fed puts out a quarterly report. It's called the Z1. Used to be called the flow of funds, but it's essentially the aggregate economic um textbook for the for US finances. And uh the second quarter Z1 was just published last week on 911. uh and the total outstanding US credit is now 104 trillion and GDP is 30.3. So the ratio is 344. And I guess what I'm saying is until that gets down to maybe 200% or 250 which would imply an enormous amount of debt default. Like it's not going to be easy, right? So the only way to get that ratio down, there's only two paths. default or debasement, right? Either we're gonna default on the debt to bring the debt load down or we're gonna debase the currency to get the ratio back in line. And that's clearly what the Fed and other central banks around the world continue to choose. So what about gold? Well, it can neither default nor be debased, right? So there's very few I'm not sure that I know another asset that's similar to gold in that regards. Nobody else's liability can't default can't be debaseed. So that to me is the ultimate sign on when it will be okay to start reducing your gold position. Uh and I don't see that as I've said happening anytime soon. I mean something's going to make it happen be a crisis etc. But I don't foresee what it is or how that it could be coming in the near future. Right. What happens if stocks correct? Does gold also correct? Traditionally, historically, has there been a correlation between the performance bearish or bullish of stocks and the performance bearish or bullish of gold? Mhm. So there are lots of statistics uh in terms of the correlation between the S&P and gold. Uh I will tell you that since I've been doing this, the correlation for the most part is negative. There are times when stocks and gold have been positively correlated, but far more often they're negatively correlated with respect to how these things unfold even in the COVID experience in uh 2020. um when the market collapses there's no question that liquidity becomes an issue and gold is very liquid and so gold has a tendency to have a air pocket right on the day or two or week when you have these sell-offs but as the co example reaffirms gold is always first out of that and gold stocks from those types of correction that's their steepest outperformance over the last two and a half decades. So, could there be a divot for a few days or a week? Yes. But, uh, let me throw up another chart here which is one of my favorites which is looking at the SNP in gold term. So, uh, in in this chart which which we have up there are two lines. One is black and that is the S&P itself. Right? So the gold line is the S&P in gold terms. So the black line uh if you look towards the bottom of the graph, its first bump was around 1,500 on the S&P in March of 2000. Then we had about a 52% sell-off. Took seven years for the S&P to get back to the second bump on that black line, 1500. Then we had a 58% selloff. And now today the S&P is 6600. Um it's embarrassing. I actually don't know the S&P level as well as I do the gold price, but I think it's 66 and change. Um and that's pretty impressive because from that March peak, that first bump on the black line to today, the S&P is up 324%. Uh but over the same time period, gold's up,00%. Yeah. And so the gold line that we've superimposed here is the S&P in gold terms. And as you can see, it's fallen 67% since March of 2000. So the point is the go the S&P has more than up 300. That's quadrupled um you know since the 1500. But because gold has gone up so much faster, it's actually still down 67% in gold terms from March of 2000. Wow. So what's the what's the point? The point is I think the relevant way to think about stocks versus the gold price is are we at an extreme? Because gold has over and over proven that when the S&P and general equity valuations are at extremes, gold is an incredibly effective hedge. And it's that starting point. Now, of course, I thought the S&P was an extreme level last year and and the year before. So, I'm not saying it's easy to figure out what's extreme anymore. Um, but you know, Nvidia has a $4 trillion market cap. It's bigger than all but like three or four stock exchanges in their entire, you know, we all know all the facts, right? So eventually it's going to matter and every six months that it doesn't just means that the probability is going up that it will. So I would say somewhere in here uh you know and a sale of S&P exposure to gold is going to turn out to be enormously profitable over the next three five 10 years right so a wise movement um and speaking of stocks and gold and precious metals and and portfolio the outflow that you want to have as an investor I want to remind viewers you can get a free portfolio review with one of our trusted RAI advisors just go to wealthon.comfree again that's uh wealthon.comfree and um speaking of portfolio construction I wanted to get into this how do you think investors should think and how should should size their allocation to gold how big should should uh it get and importantly what's the best way of getting that exposure. So I think over time and I'm talking you know 50 years uh it's generally been proven and has accepted even in probate courts you know widows orphan you know a po a portfolio allocation of 2 to 4% of gold has been proven over and over to increase returns on that risk return frontier. You can get the same return for less risk or a higher return for the same risk. That's I always try to remember that dispersion on the risk return frontier. So 2 to 4% is a no-brainer. You know that that's been proven. Uh as you get into these periods like we've had since 2000, you know, I'm just going to use my feeling for it. you know 10% you know to 20% is is is something that I think has been very reasonable in the current environment uh as we get so close these inflection points what's going on um you know I'll just use other people people like Grant Williams and others who um admit to their gold allocations publicly I mean you hear numbers around 50% pretty frequently so am I recommending that everyone watching this put 50% of their money in gold? No. But if you were to tell me that you had 50% of your assets in gold, I would say good move. Uh that's just where we're at in the cycle. And you know, I as I've said before, the thing that I've been in couple of periods like this in the last 25 years, but tell me right now who is gonna sell their gold? I mean, it's kind of a a smartass thing to say, but it's really true. Who is going to sell their gold here in size? You know, there just no sellers. And until we get some of these imbalances solved, etc., you know, I just uh I don't see a big sell-off. And there's nothing but risk in every other, you know, traditional asset. The S&P, you know, is it's it's risky in my opinion. very expensive, very risky, very concentrated. Sentiments all through the roof. I mean, all of the red flags are there. And I will admit they were there last year uh last year and the year before, but I will point out, you know, gold and silver, what they've done this year, the S&P is only up 11%. It's hit highs, but it's just kind of sitting there. You know, it's not it's not really breaking through. So, you know, maybe this will be the year that uh stocks correct. It it might be so. Yeah. Um and I I asked you and I'm going to take advantage of asking it again. The best way to get that exposure. Trey will answer that question, but I I also remind viewers that there's a great great way of purchasing physical gold and silver and that's through Wealthon's sister company, Hard Assets Alliance. So, be sure to check Hard Assets Alliance. hardassesalliance.com. Again, that's hardassallalliance.com. So, Trey, can you tell viewers how they what exposure they should have? Do what do you think of ET an ETF? Oh, yeah. Of of buying of, you know, buying physical gold and silver. And we will shortly get into gold miners, of course. Yeah. So, um I embarrassingly enough, I've always had an affinity for coins. I uh if I were an individual and I were starting from scratch, first thing I would do would be to buy a big slug of coins. You know, they're an annoying premium on them sometimes, not as much right now as there was say about a year ago. But coins are portable, they're accessible, they're recognizable, they're transportable. Um, you can put them in your safe deposit box. Uh, I used to carry six or so coins around in my pocket and my wife doesn't let me do it anymore at 3600 an ounce, but you know, you could always get a hole in your pocket. But, um, I used to lose them in the car and I go out and look around on it. But, uh, coins and and you know, you can take them out of this country and in any country anywhere around the world. a gold coin is, you know, super recognizable and easily uh transferable into local currency. I mean, my favorite uh aspect of this is the customs because we um downplay the importance of gold. A gold 1oz coin is 50 bucks and you're allowed to take two uh $10,000 through customs. So, yeah, I think that's 200 200 coins, right? as part of the um the the focus on goal this month that we're doing at wealthy and we had Brett Rentmester on by the way one of our RAIA trusted partners and he made a comment that I thought was wise and true many lives have been saved by a coin of gold for sure and that's absolutely true so that that's important they're great for gifting um you know to relatives nieces ne I mean there there just a lot of really really neat things that you can do with gold coins. Um the next excuse me part would be um you know a bullion exposure. Now, not as much recently, but 10 years ago, there was a lot of conspiracy theories about GLD and is the gold really there and blah blah blah. And people would read the prospectus and there's a paragraph in there about partial shares, right? So, you know, each they buy 400 ounce bars, right? So, 400 ounce bar is a pretty large amount of money. So the amount of money that's in the GLD is not going to equal exactly a 400 ounce bar increment. So they have to sort of buy things for that last bar. And just that one paragraph of what they can do. People are like, "Oh, look at that." You know, they can they can buy a derivative or I you know, you don't really know it's there. And I'd say it's for one bar anyway. And you can't audit the Bank of England. So these things were popular conspiracy theories but I think GLD is a you know phenomenal uh asset and you can buy it for at Schwab for a nickel a share you know anytime you want and we believe very strongly in the world gold council who's you know stands behind it the correlation's been in the 999 you know so I think uh GLD is great the other thing that GLD has that some of the other ETFs don't is a very rich option structure. I mean, so the professionals use GLD2 because they can hedge it with all kinds of options and derivatives. So the very deep liquid central market. So, I'm I have no trouble with people establishing bullion ownership. And I could list a couple of places um where you can do that, but I think hard assets alliance is probably the easiest and and best way to buy bullion um that I've come in very customerfriendly and um you know, for everyone again that's hardassallalliance.com. I think that's a a really important tool. uh to get your gold exposure. I would also say I would encourage everyone to establish their gold exposure first before gold equities. Gold equities are very different. They're vol more volatile and they involve the only um capital formation proposition in the gold trade which is building a new mine uh which brings value to those ounces. But it's also a very capital inensive, very complicated business which um does have risks that are involved not involved in owning gold bullion. So let's say you were going to put x amount of dollars in gold. I'd put 60% in bullion coins, ETF, that type of thing first. And then once you've established that gold position, I think it's reasonable to branch off into gold equities. I would certainly uh engage the council of someone who knows the area well meaning you know either an ETF or managed product. I think gold mining companies are a tough thing to do on your own and then once you have some large uh exposure then you can get into sort of the smaller you know exploration and development type companies but that's the way I would look at the progression. the more of the more risky areas, the juniors, right? But I the one thing I'd warn people there, there there's probably 4,500, you know, precious metal mining companies in the world at some stage of development and 95% will go out of business before correct they ever mine an ounce of anything. So it's a tricky business and you have to tread carefully as an investor for sure. specifically, not to get too far off base, but the top 10. This is gold mining is sort of an industry where I call it negative survivorship bias. So, in most industries, you go to the top company like you want an auto company, GM if you want, right? But the negative survivorship bias, the problem is the bigger miners, let me put it this way. When I started doing this in 2001, Pneumont was mining 7.3 million ounces. This year they'll do five and a half maybe because they bought gold corp and new crest and they're still down 5.3. So once you start mining millions and millions of ounces it's almost impossible to replace them. So you either have to be an enormously su successful operator like Agniko Eagle, which is by far the best performing and best managed large gold company, or you end up making acquisition and development decisions that can really bite you. But below that, there's probably the next 30 to 40 companies. I think for folks that, you know, watching this, uh, that's really all of those companies will eventually be bought by the bigger guys. Uh, I'd stay out of that bottom 90% unless you, you know, have really good information or an uncle who's a geologist. Um, because they're pretty risky. But that it's that middle part just below the top. Yeah. Yeah. And standard disclaimer, this is not investment advice. This is just forformational purposes. And um, I I want to dig a little deeper into the gold equities into the miners. They've had a good run as you mentioned at the beginning. Um it's more than doubled in the past three years, right? The JDX has I think you said 120% return the past two years. Is there still value there? Right. So um valuing gold stocks obviously is a difficult thing to do. Why is it difficult? Well, first of all, you're you're building and operating. It's probably the longest duration endeavor on the planet, right? If you want to develop a gold mine, it used to take five to seven years. Now it takes 20, you know, in terms of permitting, environmental, enormous amounts of capital. I will point out that all the we haven't had a really really uh world worldass gold discovery in many years. There there's a company that monitors how many I can't remember the exact description but over 10 million ounce type deposits and three or four have gotten into that um worldclass category but only because they've been developed that way. They weren't discoveries. They've been working to develop through drilling etc. So we haven't had you know all the really big golds mines have been found. So grades are getting tougher and tougher. Um you know when I started this you could have six, seven, eight grams a ton and it was not unusual. Now where there are a lot of mines that are one gram per ton or less. Now think about that. You 400 ton truck and it's got rock in it and it you know one gram per ton. That's 400 grams. It's like eight gold silver, you know, eight one ounce coins in a 400 ton truck. So it's it's you know it's very very difficult. Interesting returns to the interesting return. So I remember the first open pit gold mine I ever saw was Detour and when I stepped up to the viewer booth my heart sank because you know it's like a two kilometer hole and you're like wow this is a really tough business trucking around rock. Having said that, uh when the gold is there and it's properly mined, the the leverage is is is pretty imp, you know, the baited a billion two three times uh the move in gold is is pretty standard. So, uh given the fact that gold stocks have just doubled, there's no question they are less cheap than they were say a year ago uh when and you know multiples to NAV were you know very low. Right now I read this morning as I tried to get a benchmark for you. I think you know most coverage universes are about 0.9 times NAV whereas we might have been at you know.5 but at the peak in the cycle that can get up to two times NAV for the really good producers. So I thought a good way to do it is uh the slide that I uh picked out that we now have up on the screen which is instead of looking at it from a per share price basis this is uh an analysis of all-in sustaining cost for the industry uh and the implied profit margin to the current gold price. So uh in 2024 for the whole year the average gold price was 23.89 89 and in the first quarter this year it was 2858 and the second quarter was 32.86 and so far in the third quarter it's been 3410. So that means in September you know the gold price is $1,000 above where it was for all of 2024. And believe me in 2024 it was similarly sloped. Um, so the profit margins uh of these gold miners, even if gold just stays, and by the way, that's 3410 and we're already we're almost at 3,700 right now. So if gold stays anywhere near these levels for the fourth quarter and the first quarter of next year, I'm going to go out on a limb and say that some of these earnings are are literally they're going to be, you know, we're going to double the cash flows at some of these companies. And uh gold stocks respond very positively, you know, to that free cash flow. Uh that's that's sort of become the big parameter these days is cash flow and free cash flow. So um I uh you know I I actually am surprised that earnings haven't been stronger than they have so far this year. But I'll just share another sort of dirty little secret in the gold mining industry is what happens when when things get tough and you let's say you have a big deposit and the reserve grade is five grams a ton. When things are tough or you have problems, what gold miners traditionally do, it's just part of the business. You know, they got a big pit here and they know where the high-grade portions are. So they're trying to make earnings. It's very easy for a gold miner to just go take a little bit more of that and run it through the mill because it's higher grade. The problem with that is the uh reserve grade is lower than you think because you've taken some of the plums off the top of the pie. And by the way, the best miners like Agico Bear, they don't I would I'm not saying everybody does this, but it's it's certainly common in the industry. So what happens is when the gold price starts to go up, they can go to the parts of the mine that they didn't mine, which are lower grade, and kind of push those through because you have a higher gold price. So generally when the gold price is rising, that's one of the reasons that profits sort of lag a little bit is that you're sort of catching up to a little bit of high grading that may have been going on in prior quarters, if you follow me. Right. they they're uh instead of going to the the high fat milk now going to the price of gold is so high but it makes it makes sense but eventually they're going to get back to reserve grade and then earn it's going to be you know the the average between the two so to speak you know it makes me think um for sure um GDX has doubled in the last two years but most likely cash flow at these companies will also double free cash flow right Mhm. Or what profit gold owner earnings probably too. Which and if the gold price stays where it is now, it's going to double again. Exactly. Exactly. And then this is to your point earlier, right? You want your core holdings of gold and precious metals. Then you want a percentage in the miners because they have or they offer the investor leverage and they have done so in the past too. and have done so uh in this in this cycle as well. So Trey be before we wrap up we got some questions from our viewers that I wanted to to share. We don't have time unfortunately for all of them. Uh there too many but uh we selected the ones that we thought were most interesting for for beers to learn as much as possible in this webinar. So the first one comes from Rich Manaval and he asks, "What might actually cause gold to reverse in price right now? Could it be a recession, deflation or even a fall in the stock market?" So looking at the deflation option first, um you know, with this much as we were just saying, total US credit market debts 14 trillion. So with that much debt in the system, if we were to have a true deflation, and we haven't had one in, you know, decades, if the Fed somehow fell asleep at the switch and didn't pump out enough liquidity to prevent it, we did have a debt deflation. I have always made the argument I I said it earlier that I don't see gold as a very good CPI inflation hedge. I do think gold's a very effective deflation hedge because if we have 104 trillion in credit which is starting to wobble that would obviously have impacts to the stock market etc. I think gold's um non-defaultable status would actually increase its profile. And again, because gold markets are so tiny compared to these other asset classes, I actually think a deflation could could light a big fire under the gold price. Um and in the recession example, uh obviously the Fed is very attuned to those numbers, and if we had a recession, I think you'd start to see rate cuts. uh you know down to very low levels again to turn that around which is very positive for the gold price. Uh and then we talked a little bit about stock market decline. While there could be a little pressure in the first week or two um I actually think that's one of the things one of the last big dominoes to fall is a big stock correction. I think that could put $500 or $1,000 in the gold price if we had, you know, a 40% S&P correction once again because those capital flows from these very, very high price stocks to something like gold, I think, would accelerate dramatically. So, what would make gold go down? It's always embarrassing when you say, I have, you know, a hard time imagining that. What would really make gold go down would be if we could, you know, have 3% GDP growth with zero debt growth. You know, if we could grow the economy without having to have trillions of QE and, you know, really ultra low interest rates, that would that would mean let's say the stock market fell 50%. you know, there'd probably be some bargains and at that point I think gold would probably be $1,000 higher and you know, but in terms of from this level, it's hard it's hard to imagine something large enough to derail um you know, current prices right now. It all of the things that are happening in the world and that you reflected upon earlier, it's an oil tanker. It's not so easy to move. It's not so easy 100%. Yeah. uh you just touched upon this but uh from our YouTube viewer Lisa Lisar I'm sorry for butching his or her name the star Nel 7453 he said saying what about gold stocks they've been strong lately but what happens to them if the market crashes is there any historical precedence could you talk a little bit about Trey if gold stocks have held when the rest of the market has crashed or corrected. So it it's kind of depends on why stocks are going down. So in the 2000 to 2011 period for example, there were three big moves in gold stocks. Now admittedly that was coming out of a 20-year bare market for gold, right? So gold was 250 275. um average you know all- in sustaining cost for miners were was probably 400. So everybody was losing money. The you know that's when those short books were created companies like barracks stayed in business by shorting the gold into the market hoping to buy it back cheaper even though it was their main product. So, um, coming out of that, which was a re, you know, very coiled spring, um, you know, gold stocks, I I used to have these memorized, but there were three big runs like 350, 180, and 108, something like that. And in each one of those, uh, the S&P underperformed dramatically. And so the way I phrased it back then is when faith in US financial assets is challenged, you know, when faith in US financial assets is challenged, um gold stocks have a tendency to separate from the group. Um it there hasn't been uh as dramatic a example of that in this second bull market. You know, gold stocks peaked in 11 and they went down through 2015. And here's another historical problem. Because of that runup, you know, the GDX declined 85% I think over that time frame. And when you have an asset class that can have an 85% draw down, uh, you know, you're not going to have a very committed group of long-term enthusiasts, right? So, I think gold stocks are still paying the price for that. And that's a whole another discussion. And a lot of those things that happened then couldn't happen now just because of all of the exaggerations etc. But um uh do you if the stock market were to start to decline there as I mentioned earlier in the first week or two it pulls everything with it. So you know if let's let's go back to co. So, I think the S&P lost I think 32% in what 4 weeks, 3 weeks, whatever it was. It was the fastest draw down ever. And gold stocks, you know, went down uh during that period. And it's scary because, you know, they're falling. But once again, two weeks into that when gold took off, gold stocks had one of their best runs um about performance uh for the next, you know, 18 months. So, um it's hard to predict. It's different every time. Um but in my opinion, especially given as we were looking at that S&P or uh the S&P and gold terms chart, we're at such an extreme now with gold with the broad stock market that I would think that if we started to have a stock selloff, I would think gold and gold stocks would do pretty well this time around, especially with how strong the gold price is. I I I would agree. I think it makes sense. Yeah, definitely. Well, that's all the time we have today. I'm afraid we we run out of time. We can't um share any more of the the viewer questions. Trey, this was magnificent. So much information here. So many insights. I think viewers will find it enormously educating and helpful. And so, thank you very much for joining me today. It's uh so and I I I have to underline again the experiences that I've had and others have at hard assetsalliance.com uh have all been good. So they have a great team, very helpful, um very confidential, very easy to use. So I want everybody to go to hardassallalliance.com. Can't agree with more with you more. And and by the way, they they are are they are an RAIA as well. they can open some gold exposure for you through a 401k uh 401k. Um so to our audience as well, thank you so much and um oh there's something that we should tell viewers that is very exciting and then that's that wealth unit and SCP resource finance are going to co-host a global silver conference this October in Toronto. Uh you can join virtually. There's a link in the description below where you can actually buy virtual tickets to attend. Or if you want to go in person, uh, please qualify as an accredited investor and you can do that by signing up to our accredited investor list at wealth.com accredited. Uh, and Trey, you're going to be there with me and I will definitely be there in the first interview. So, it's gonna be it's gonna be fun in the same way that we did for the Rick Bull conference. Excellent. Yeah. So, all right, Mario. Thanks very much. Thank you, Trey. Thank you all for watching and we'll definitely see you next time. Take care, everybody. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthy.com/free. Thanks so much for joining us. We'll see you again next time. [Music]
Gold's Boom is Just Starting! Trey Reik's Masterclass on Gold
Summary
Transcript
Hello everyone and welcome to Wealthon's gold webinar. I'm Mario Rodriguez, the channel's executive producer and today I'm joined by my esteemed colleague, Trey Reich. Trey has decades of experience understanding and investing in the gold market. He's one of the sharpest voices on how precious metals fit into an investor's portfolio. Trey, how's it going? It's great to join you today for this special gold webinar. How are you doing, sir? Excellent, Mario, and thanks for having me. It's always fun to talk to you. So, uh, let's get started. Tra first I wanted you to give the audience an understanding of how gold and other precious metals have done compared with you know traditional investing assets like stocks, bonds and that sort of thing. Terrific. Well, thanks again for having me. And I uh I started gold back in like 2001. So I've been doing this for about a quarter century and I've given a lot of talks and uh you know in public rooms and in private meetings and along the way and those hundreds and hundreds of presentations I've learned three things sort of three rules and the first is that gold itself has more investment cues than any other investment asset. So some people think gold's an inflation hedge. Others think it's a deflation hedge. Some people look at gold as a risk on trade. Others as a riskoff asset. Some see gold as a safe harbor. Uh and probably still more view the US dollar as the ultimate safe harbor which puts reflexive pressure on gold when the dollar goes up. So my point is there are people buying gold every day for a vast array of reasons and I'm not aware of any other asset uh which has more counterveailing investment cues. That's number one. Number two, most people who have an opinion about gold hold it with very strong conviction whether or not they're really familiar with the underlying fundamentals. So, uh, gold is an emotional asset and most people have a strong opinion whether they know what they're talking about or not. And the third, uh, is that over this 25 years, the combination of the first two, uh, I've given hundreds of talks about gold. And I don't think I've ever once convinced somebody to buy gold. And my point there is it's a decision that has to come from within. It's a very personal decision. Um there's no right or wrong, you know, timing wise, uh amount of investment wise, uh reasons, investment cues. It's all very personal and it really has to come as a personal conclusion that the way you view the world makes sense to have a little gold. So everything that I'm going to say today is not to convince anyone about anything. I just want to offer a framework for how I think you can look at gold and in involve all the different variables that are involved. So again, I'm not trying to convince anybody of anything. I'm just trying to prevent a bit of a framework on how to think about gold and what it represents. In that regard, you asked about performance uh in the recent years and uh we'll get to that, but I do want to also I have a slide I traditionally use, but it's got every year since 2001 through 2025 and it has the price of gold in nine different currencies. And the reason I use the slide, we wouldn't be able to see the numbers on this podcast, is there's not a lot of red on it. So, for the past 25 years, gold's been going up, you know, most years in every currency. Uh, and as of last Friday, uh, September 12th, the return of the S&P 500 without income since December 31, 2000, so the beginning of 2001 through last Friday, the S&P was up 398% without income. And with income demonstrating the importance of dividends, the S&P was up 692%. And over the same time frame, gold was up 1,238%. From 275 to 3,600. So my point there is uh along that 25 year period, nothing has matched the performance of gold. and yet it still doesn't really get the benefit of the doubt in institutional investment circles. So, uh I'm just pointing out gold's been doing its job based on the variables we're going to talk about for two and a half decades already. Uh even though it doesn't get a lot of credit for having done so in the recent past, which is what your question was about, gold is once again outperforming all traditional assets. So, I picked an arbitrary time, the end of 2023. So, we're talking about 2024 and year-to- date in September 2025. And I'm going to list some numbers here, but they're important. So, in 2024, gold was up 27%, S&P was up 25. uh in 2025 so far, gold's up another 38 for a cumulative return of 76%. Over the same time frame, last year, silver was up 21%. This year, it's starting to outperform gold, which is typical for this point in the cycle, up 46% for a combined return of 77%. and the GDX, which includes both gold and silver equities, uh, lagged, which is um, a legitimate expectation. In 2024, was only up 10%, but so far this year, it's up 105. So, the GDX is starting uh to display that beta to bullion that one would expect from gold equities. And over the uh, two-year time frame, it's now up 127. So in the slide that we're going to put up for the viewers uh we take that return from 1231 through September uh and measure it against other traditional asset classes. And you can see that the S&P over that time frame is up 41. Uh the Vanguard real estate ETFs up 11. uh Treasury index 10-year up 5.7 and believe it or not the Bloomberg commodity index is actually down 3%. So gold up 76, silver up 77, GDX up 127, S&P up 41 and by the way this year the S&P is only up 11.3%. So uh over the last 25 years and over the last 22 months, gold has significantly outperformed all traditional asset classes. That's a massive outperformance especially the last two decades and a half where one would think that we've had an ongoing bull market with the exception of the great financial crisis and some make you think that something like precious metal put out so massive all these big companies that etc. So that brings me to this question. Do you expect these this this strength to continue? You expect gold to keep up keep about performing? Is there a possibility of a pullback in the short, medium, long term even? What do you think there? So uh I've always been on the opinion that I like to use technical analysis when it supports my case. Mhm. So, don't we all? Yeah. So, in the chart that we have up uh currently, this is just a price graph of, you know, spot gold uh since 2024. And I think one of the characteristics of gold price moves is always a spurt upwards and then a consolidation. Spurt upwards and then a consolidation. has a tendency to move up pretty quickly in times like this and then it consolidates and as you can see in the recent history in the graph that we have up gold from the beginning of 2025 through April had a 30% spurt and for gold that's a lot you know I tell people all the time there's a lot of gold in the world you know all the gold ever mined is still with us so for gold to go up 30% it's like a giant poker game. Everyone who has gold each 105 $100 has to check and not sell if you know what I mean. So to go up 30% in four months is pretty extraordinary. In fact, I would say that after last year's performance being up 27, even the most strident gold bulls have probably been surprised by the strength of gold in that January to April period. But as the graph demonstrates, the consolidation has been one of the most textbook positive consolidations I've ever seen in my life. You know, it's a rising wedge and that type of thing. And uh we've had almost no selloff. And so that's a demonstration to me that gold is still underowned around the world. So even when you have a 30% move, uh people are still just getting their gold allocation started. uh and very recently gold broke out of that that uh resistance level right around 3,400 and has risen another 8%. Do I think there's a possibility for a pullback? 100%. But my point is that I think this $3,400 range, which was the resistance since April and the very tight support beneath that, I really would find it very surprising for reasons that we're going to discuss that gold would go lower than 3,400. And the way that I would put that to people is given the you know conflration of different fundamentals and the things that are going on now rate cycle being initiated by the Fed etc. you know Trump confusion tariff all of these things I can't think of anyone who would sell their gold you know at this point in the cycle I just don't think there's uh many sellers right and I can't imagine anything in the short run that would change that. So, are we due for a pullback? Yes. Would it be severe? I don't think so. So, let's drive down on the reasons. You kind of touched on them right now and we were talking about this yesterday and you have some really interesting thoughts, theory, ideas as to what's really driving the gold price right now. Um what sort of hidden and not so hidden forces are pushing people or institutions to buy the gold medal which is really driving the price way higher than even uh the most bullish gold uh bugs would have thought just as you mentioned. Can you tell that that's super interesting? I think it's uh really important, again, I've been doing this for long enough that I have these sort of throwaway phrases. I think it's very important with gold to differentiate between shortterm fundamentals and long-term fundamentals. Short-term fundamentals are there's a geopolitical event in the Middle East or something. Uh there's a CPI number that comes out, a GDP number comes out, short-term economic statistics. Those types of shortterm impacts on the gold price usually unwind pretty quickly. Um gold has a reputation for being a great geopolitical hedge. I have always sort of fought that because when you have a geopolitical event, at least a shortterm one or a single event, you get people that run into gold, but they usually trade out just as quickly in a month or two once the event has subsided. So, I almost look at geopolitical blowups as a distraction. It just delays the important progression from underlying fundamentals. Uh but on the long-term side, there are three uh basic fundamentals which we have here up on the screen uh that I think are driving the gold price both over the long term and the acceleration recently. And those three groups of fundamentals are the unsustainability of the US fiscal situation, growing anti-doll sentiment all around the world, and what I refer to as eroding Fed credibility. So, are these fundamentals new or unprecedented? Absolutely not. But I think what's happening in 24 and 25 is that each of these long-term fundamentals which gold bugs myself uh bears you know Austrian economists have tracked for two decades okay and believe me I didn't think we'd get this far with the dollar still in the position that it is but you know the system has a lot of you know propensity to engender itself and we're still where we are today. But I do believe that the acceleration is from the fact that each of these three fundamentals have hit important tipping points where they're starting to matter to large pools of capital around the world and you're starting to see that gravitation that we've expected for years uh to get a little money out of the financial system through the protection that gold offers. And I'm talking about very large pools, sovereign uh wealth, you know, um individual family offices around the world, very high net worth, etc. And we're talk, this is a global phenomenon. It's not a US phenomenon. Gold is a global asset. So I think it's these three fundamentals which we can talk about a little bit more in detail that uh that have that have hit these first are extremely important tipping points. Uh and the first one that I would mention is definitely the US deficit. So we have a chart up there now which is the annual budget deficit of the United States. And it's kind of funny in retrospect, people have been worried about the budget deficit for 20 years, but if you go back to the late 90s, uh, you know, budget deficits were still in the 2003 300 billion dollar range and we thought that was terrible. Yeah. And then we had the Clinton years where we actually went for four years into a surplus, right? And then we went down to sort of 400 and then we had the GFC which was the first you know 2008 um the first time we hit the trillion plus level and in '09 it was4 2010 was 1.3 2011 1.3 then we receded all the way back to that sort of 400 level and then what happened which is I think where this tipping point is coming into play is during co uh all of that fiscal spending took the US budget deficit to 3.1 trillion in 2020 and then the following year 2021 2.8 trillion. Now what should have happened after that is as has always happened in the past receding back to non-emergency levels and we did for one year in 2022 we got down to 1.4 4 trillion. But as you can see on the right side of this chart, we've now normalized emergency levels of spending. Yeah. In non-emergency times. Yeah. So, you know, you always say it's hard to bring the deficit down. I'm actually shocked that we've stabilized around two trillion, which is basically what's happened. Uh and and you know, trillion is a very big number. There's all these, you know, great examples. If you add up a trillion seconds, you get back to BC and, you know, a trillion inches goes around the universe. I mean, the trillion is a very hard number to understand. And I actually think part of this is the numbers have gotten so big, they don't mean anything to people anymore. It's hard to process, you know. So, yeah, the the budget deficit's two trillion. Nobody really understands how big that number is. we don't stop to examine it. And even the CBO and uh you know the administrations past two, they've sort of given up, you know, so now they're just projecting that we're going to have $2 trillion deficits at infinitum. Uh and that's a that's a and I'm sure everyone who's watching has learned that the interest on the outstanding debt is now about 1.2 2 trillion per year, which is significantly larger than the the defense budget allocation this year and next. I think it was 8.95 last year and I think this year it goes up to a trillion. Um but 1.2 trillion is now only behind like social security um as in terms of an expense line for the government. The problem with that is that we've had to issue enormous amounts of debt obviously to cover the deficit. And this next slide uh which is the graph of US public debt or US debt in public hands which is the way the CBO describes this. So uh total US debt right now is 37 trillion but about 7 trillion of it isn't in public bonds. It's bonds that are held by different parts of the government etc. And so the CBO tracks total US debt held by the public. That's currently 30 trillion. And the expectation from the CBO, which is by the way 30 trillion is 100% of GDP, which is 30 trillion. Uh, but the CBO projects that to go to 116% by 34 and then a ridiculous 172% by 2054. And the and that's not even including the off balance. Point is current total debt which is the number we see on the TV all the time is 37.5. So you have to up all those numbers by another uh you know 20%. So the the point here and and by the way that 37.5 today of total US government debt uh is versus GDP of 30. So that's 123%. And this doesn't even get into the unfunded liabilities and the social security and all that stuff gets into truth. So, um, we've hit the point where, um, you know, I've worried about the budget deficit for 20 years, I admit. And it's gotten to the point where everybody says, "Don't worry about it. It doesn't matter." But we're just hitting that point, that interest burden. It brings into the realm of thinking the concept of the doom loop. In other words, the interest is so high, we need to issue more debt, which drives the rates up, which keeps the interest going up. And you hit this doom loop. And the doom loop argument's been around for years. I've never paid, you know, that much attention to it, but it's starting it's starting to get into people's consciousness. And the the second big group of long-term fundamentals is the anti-doll sentiment. Um now once again you know bricks formed 15 years ago 20 years ago uh and I've read hundreds and hundreds of pages about people cons you know that there will be an alternative currency the Gulf cooperation council bricks I mean and I I don't really pay attention to it anymore because nothing ever comes of it the dollar standard is going to be very difficult to displace however I do think very importantly and There there's a million charts on this. People are focused on central bank gold buying. And I put that chart up, but it's not that interesting. It was 400 to 300 tons per year for 15 years, but then it popped up to a,000 tons, more than double the prior decade in 20 uh 22, 23, and 24. So what? And so everyone looks at that central bank chart with the big bars at a thousand tons and they're like, well, what caused that? So I wanted to come up with a couple of charts that I think are are more interesting in describing the same thing. So this first chart uh that we picked is a graph of Chinese gold holdings versus Chinese treasury holdings. And the way we plotted it is the gold line on the top is the number of ounces in the Chinese gold reserves and the black line that receding is the value of total US treasury holdings. So obviously the ounce figure doesn't take into account fluctuations in the gold price and the treasuries does. So it's not a perfect comparison but it's but it's pretty I like it because you have to buy additional ounces. it shows intent. But anyway, we put in a red line here uh at the US freezing of Russian foreign exchange reserves, which was February of 2022. I don't know if you recall specifically, but uh Biden froze, you know, 350 billion FX reserves of Russia's money, basically took it away. So, I really believe that created an acceleration of this anti-dollar sentiment by a factor of 10. Like, who the heck would want to have treasuries if they can be taken away? So, if you look at this graph, the gold line on the top, China has increased its holding of gold ounces 18% since February of 22. and they've reduced their treasury holdings by 26%. From a trillion to 756 billion. So I just use that as an example. China, you know, their FX reserve distribution has dramatically uh changed since this February 22 freing freezing of Russian uh foreign exchange reserves. Another way to look at this, which is the second chart we have up here about anti-dollar sentiment, is a Tavi Costa uh graph from Crescat Capital. Uh, and he's very good. Well, you interviewed him a couple months ago. Yeah. But he's put so people can go on. Yeah. He's a true uh production artist in terms of charting. But uh this chart is a very simple description of all central bank treasury holdings versus all central bank gold holdings. And you can see that the gold line has exceeded the blue line for the first time I think since 1996. Uh so at the end of Q2 the value of gold which I think was about 28% of reserves exceeded the value of treasuries for the first time since 1996. The total value of all dollar denominated uh reserve holdings still exceeds gold but this is a comparison just of gold to treasuries. So um in my you and I should underline why are these things important? Um, you know, the question is why is gold performing so well and we did the deficit, now we're doing the dollar. But I need to remind viewers these are trends that I just don't see reversing anytime soon, right? I mean central banks there was just a survey of central banks conducted by the world gold council and 95% of respondents this was between February and April of 70 central banks around the world predicted that in the next five years gold reserves will be higher in total and 41% predicted they would increase their gold reserves and zero predicted a decline in every category. So, you know, this when central banks get on this type of a path, it's it doesn't reverse quickly. So, my point there is that this anti-doll sentiment is not going to recede. It's only going to accelerate. The US budget deficit, I don't see how it could possibly get much better in in coming quarters or years. no administration seems willing, you know, to to to to take the efforts to try to bring that um, you know, under control. Uh, and then the third category, and uh, I've spent an awful lot of time studying the Fed, and I've learned over the years criticizing the Fed is is not a great thing to do in public, like with a room full of trustees, etc., because you don't want to upset people. Um I have to tone down my views of the Fed for public consumption but in my view just to give a recent example um PAL's you know 120 billion of monthly QE in 2021 uh you know when we had CPI already at five going to seven uh GDP at six and unemployment had fallen from 14 peak and COVID all the way down to five and yet they were still pumping 120 billion in QE monthly in 2021 all the way to the end of the year. I think that will go down as the worst Fed policy error in history and it caused that whole inflationary outbreak or certainly made it worse exacerbated it. uh and the Fed has still not really taken any bl you know credit blame for that in subsequent you know discussions of the inflationary outbreak. Uh but the you know and most recently you know skipping to today we just had a Fed meeting earlier today and um at that meeting it's almost become like a soap opera of political chicainery on Monday uh the Senate confirms Steven Mirin who's in Trump's council of economic adviserss to be the temporary replacement for Adriana Cougler who Trump sort of ran off the board and Lisa Cook had to have an appeals court overturn Trump's firing of her so she could go to the meeting. So, as I joke, as interesting as the meeting was today, uh I look forward to reading the minutes from this meeting in two weeks because Stephen Marin uh has already said that he's going to introduce a third goal to the Fed's dual mandate. The Fed's dual mandate of of you know maximum employment and stable prices. He wants to introduce a he will say I'm sure we will read that he said today that he wants to introduce a third goal which is stable long-term interest rates which of course would give the Fed a three-part dual mandate that would tie them in knots. But anyway, so what's my point there? the whole the Fed has become it's gone from just making bad decisions uh to just being a the almost a theater of of absurd you know political forces which have really no no place at the Fed to begin with. So I may be one of the only people who think Fed credibility is already pretty low. uh but I would say that those buying gold um agree with me and I you know I think around the world there's a lot of people who would agree with me in that sense. So those are the three big fundamentals and I repeat why are they important why is it important to keep pounding that out because in each case I just don't see a reversal you know in the next three to five years there will be a continuation of these forces and therefore a continuation of the buying pressure of the demand of the shiny metal gold. Very interesting. By the way, for those of you who are watching, we've put together a free gold investment report and because it is it it is gold month and uh we are focusing on gold. You can get that at wealth.com gold. And um now Trey, you have another very interesting perspective because uh when people think about gold, they think about gold as an inflation hedge. But I know that that is not your take. Can you share with viewers uh what do you think about that please? So I'm glad you brought that up. Remember in the first thing I said some people think gold's an inflation hedge and other people see it as a deflation hedge. So in this is my personal opinion is that gold and CPI type inflation don't really have anything to do with each other. Now, why that's an unusual view is the vast majority of people, I would say 90% if you were to do a poll, would say that they're inextricably linked and that gold is a hedge against CPI inflation. So, I'll skip the fact that historically it just never been the case. You know, over long, short, medium periods of time, you can have small periods where gold serves as an inflation edge, but over the long run, it hasn't. And my argument for this, my throwaway phrase in this category is if the price of hadonically adjusted hot dogs, that was alliteration on purpose, goes up and the CPI, why would that make you like why would anybody anybody buy gold if the price of hot dogs went up? Um, and secondly, if you have inflation, CPI type inflation in any society or economy, uh, I don't see any reason why gold should go up any faster than any other price. So, uh, I'm not a big fan of the CPI inflation relationship with gold. However, if you have monetary inflation, which is what we've been experiencing since 2000 and an accelerated basis since 2009 and what I refer affectionately to as the modern era of unconventional central banking um you know with trillions and trillions of QE and the Fed's balance sheet hitting 9 trillion effect to velocity speed with the Greenspan Fed and it it correlates really well with these 25 years of outperformance by gold. So in a monetary inflation environment, uh, gold should and has and will continue to outperform. Now, um, Trey, how should investors, and this is a little bit similar to a question we asked previously, but how should investors judge how much longer this gold bull market might run? You might have already answered because of what you're saying, right? These forces are happening and will continue to happen, right? Anti- dollar sentiment, Fed credibility and uh the very big deficits and huge debt load that the US carries now. But um how do you think how how should we or as an investor what perspective should I have for this gold market? What outlook should I have? Well, one of the ways I phrase this is is gold a permanent investment and you know at at some level uh as a diversifier and uh you know we'll talk a little bit about percentages in in a minute but you know gold is a permanent portfolio holding on some level. However, I think we're in a position where uh allocations to gold could easily be sort of 10 or 20 times that average. And we'll get to the numbers in a minute. And the question is how long uh should gold be such an overweight position, which is I think the the position we're in today. Um, and I think the answer to that, another way to phrase it was will be what can I look for uh as a sign, you know, that it's time to reduce my my gold position and perhaps even increase my position in stocks or something like that. So, I like to make things simple. So the chart that I chose uh you know on this topic which we have up is a very simple chart which I have always said is the best I can do to reduce the gold thesis to a single graph. Uh and this graph measures a simple ratio total US credit market debt to GDP. So uh you might ask why is that ratio important? Well, if you have debt in any economy, uh, which are paper claims, the underlying productive output, which is the GDP, has to support the debt. They have to pay the interest. You know, there's times when we had 0% mortgages and stuff where that ratio breaks down. But even when we had 0% mortgages, you know, and and and you had these in elevated house prices, somebody has to pay, you know, the burden of that debt at some point. So there's a ratio of debt to GDP, you know, that is uh optimal for any economy. And as this graph shows in the US, you know, from 1916 to 1980, that number was around 150 to 170%. Um, and except for the depression, which was a denominator event, the GDP fell by 50%. The ratio of debt to GDP shot up, FDR had to devalue the dollar, etc., etc. The only other time this sort of relationship, historic relationship in the US has broken down has been, as you pointed out, the post Greenspan era. And this has all been a numerator event. We've been adding trillions and trillions of unproductive debt on top of relatively stable GDP. Uh, and that's poked this debt to GDP ratio up to its current level today, 344%. So I believe very strongly by the way this is a very I think this is unquestionably the most important consideration in looking at gold as an investment until the debt load in the US comes back to some serviceable ratio to the underlying productive output uh gold will be a mandatory portfolio investment because it's this is what QE is all about when the economy can't support the debt load the Fed has to step in. So that $9 trillion balance sheet, everybody has their own specific explanation for why they think the Fed needs a $9 trillion balance sheet. Uh but I'm saying I'm pretty certain it's because without that excess liquidity, the debt load would have started to deflate and you would have gotten, you know, some sort of recession or god forbid a debt deflation, rationalization, something like that. And that's going to be very painful when it eventually happens. So, we just got our most recent update on this. The Fed puts out a quarterly report. It's called the Z1. Used to be called the flow of funds, but it's essentially the aggregate economic um textbook for the for US finances. And uh the second quarter Z1 was just published last week on 911. uh and the total outstanding US credit is now 104 trillion and GDP is 30.3. So the ratio is 344. And I guess what I'm saying is until that gets down to maybe 200% or 250 which would imply an enormous amount of debt default. Like it's not going to be easy, right? So the only way to get that ratio down, there's only two paths. default or debasement, right? Either we're gonna default on the debt to bring the debt load down or we're gonna debase the currency to get the ratio back in line. And that's clearly what the Fed and other central banks around the world continue to choose. So what about gold? Well, it can neither default nor be debased, right? So there's very few I'm not sure that I know another asset that's similar to gold in that regards. Nobody else's liability can't default can't be debaseed. So that to me is the ultimate sign on when it will be okay to start reducing your gold position. Uh and I don't see that as I've said happening anytime soon. I mean something's going to make it happen be a crisis etc. But I don't foresee what it is or how that it could be coming in the near future. Right. What happens if stocks correct? Does gold also correct? Traditionally, historically, has there been a correlation between the performance bearish or bullish of stocks and the performance bearish or bullish of gold? Mhm. So there are lots of statistics uh in terms of the correlation between the S&P and gold. Uh I will tell you that since I've been doing this, the correlation for the most part is negative. There are times when stocks and gold have been positively correlated, but far more often they're negatively correlated with respect to how these things unfold even in the COVID experience in uh 2020. um when the market collapses there's no question that liquidity becomes an issue and gold is very liquid and so gold has a tendency to have a air pocket right on the day or two or week when you have these sell-offs but as the co example reaffirms gold is always first out of that and gold stocks from those types of correction that's their steepest outperformance over the last two and a half decades. So, could there be a divot for a few days or a week? Yes. But, uh, let me throw up another chart here which is one of my favorites which is looking at the SNP in gold term. So, uh, in in this chart which which we have up there are two lines. One is black and that is the S&P itself. Right? So the gold line is the S&P in gold terms. So the black line uh if you look towards the bottom of the graph, its first bump was around 1,500 on the S&P in March of 2000. Then we had about a 52% sell-off. Took seven years for the S&P to get back to the second bump on that black line, 1500. Then we had a 58% selloff. And now today the S&P is 6600. Um it's embarrassing. I actually don't know the S&P level as well as I do the gold price, but I think it's 66 and change. Um and that's pretty impressive because from that March peak, that first bump on the black line to today, the S&P is up 324%. Uh but over the same time period, gold's up,00%. Yeah. And so the gold line that we've superimposed here is the S&P in gold terms. And as you can see, it's fallen 67% since March of 2000. So the point is the go the S&P has more than up 300. That's quadrupled um you know since the 1500. But because gold has gone up so much faster, it's actually still down 67% in gold terms from March of 2000. Wow. So what's the what's the point? The point is I think the relevant way to think about stocks versus the gold price is are we at an extreme? Because gold has over and over proven that when the S&P and general equity valuations are at extremes, gold is an incredibly effective hedge. And it's that starting point. Now, of course, I thought the S&P was an extreme level last year and and the year before. So, I'm not saying it's easy to figure out what's extreme anymore. Um, but you know, Nvidia has a $4 trillion market cap. It's bigger than all but like three or four stock exchanges in their entire, you know, we all know all the facts, right? So eventually it's going to matter and every six months that it doesn't just means that the probability is going up that it will. So I would say somewhere in here uh you know and a sale of S&P exposure to gold is going to turn out to be enormously profitable over the next three five 10 years right so a wise movement um and speaking of stocks and gold and precious metals and and portfolio the outflow that you want to have as an investor I want to remind viewers you can get a free portfolio review with one of our trusted RAI advisors just go to wealthon.comfree again that's uh wealthon.comfree and um speaking of portfolio construction I wanted to get into this how do you think investors should think and how should should size their allocation to gold how big should should uh it get and importantly what's the best way of getting that exposure. So I think over time and I'm talking you know 50 years uh it's generally been proven and has accepted even in probate courts you know widows orphan you know a po a portfolio allocation of 2 to 4% of gold has been proven over and over to increase returns on that risk return frontier. You can get the same return for less risk or a higher return for the same risk. That's I always try to remember that dispersion on the risk return frontier. So 2 to 4% is a no-brainer. You know that that's been proven. Uh as you get into these periods like we've had since 2000, you know, I'm just going to use my feeling for it. you know 10% you know to 20% is is is something that I think has been very reasonable in the current environment uh as we get so close these inflection points what's going on um you know I'll just use other people people like Grant Williams and others who um admit to their gold allocations publicly I mean you hear numbers around 50% pretty frequently so am I recommending that everyone watching this put 50% of their money in gold? No. But if you were to tell me that you had 50% of your assets in gold, I would say good move. Uh that's just where we're at in the cycle. And you know, I as I've said before, the thing that I've been in couple of periods like this in the last 25 years, but tell me right now who is gonna sell their gold? I mean, it's kind of a a smartass thing to say, but it's really true. Who is going to sell their gold here in size? You know, there just no sellers. And until we get some of these imbalances solved, etc., you know, I just uh I don't see a big sell-off. And there's nothing but risk in every other, you know, traditional asset. The S&P, you know, is it's it's risky in my opinion. very expensive, very risky, very concentrated. Sentiments all through the roof. I mean, all of the red flags are there. And I will admit they were there last year uh last year and the year before, but I will point out, you know, gold and silver, what they've done this year, the S&P is only up 11%. It's hit highs, but it's just kind of sitting there. You know, it's not it's not really breaking through. So, you know, maybe this will be the year that uh stocks correct. It it might be so. Yeah. Um and I I asked you and I'm going to take advantage of asking it again. The best way to get that exposure. Trey will answer that question, but I I also remind viewers that there's a great great way of purchasing physical gold and silver and that's through Wealthon's sister company, Hard Assets Alliance. So, be sure to check Hard Assets Alliance. hardassesalliance.com. Again, that's hardassallalliance.com. So, Trey, can you tell viewers how they what exposure they should have? Do what do you think of ET an ETF? Oh, yeah. Of of buying of, you know, buying physical gold and silver. And we will shortly get into gold miners, of course. Yeah. So, um I embarrassingly enough, I've always had an affinity for coins. I uh if I were an individual and I were starting from scratch, first thing I would do would be to buy a big slug of coins. You know, they're an annoying premium on them sometimes, not as much right now as there was say about a year ago. But coins are portable, they're accessible, they're recognizable, they're transportable. Um, you can put them in your safe deposit box. Uh, I used to carry six or so coins around in my pocket and my wife doesn't let me do it anymore at 3600 an ounce, but you know, you could always get a hole in your pocket. But, um, I used to lose them in the car and I go out and look around on it. But, uh, coins and and you know, you can take them out of this country and in any country anywhere around the world. a gold coin is, you know, super recognizable and easily uh transferable into local currency. I mean, my favorite uh aspect of this is the customs because we um downplay the importance of gold. A gold 1oz coin is 50 bucks and you're allowed to take two uh $10,000 through customs. So, yeah, I think that's 200 200 coins, right? as part of the um the the focus on goal this month that we're doing at wealthy and we had Brett Rentmester on by the way one of our RAIA trusted partners and he made a comment that I thought was wise and true many lives have been saved by a coin of gold for sure and that's absolutely true so that that's important they're great for gifting um you know to relatives nieces ne I mean there there just a lot of really really neat things that you can do with gold coins. Um the next excuse me part would be um you know a bullion exposure. Now, not as much recently, but 10 years ago, there was a lot of conspiracy theories about GLD and is the gold really there and blah blah blah. And people would read the prospectus and there's a paragraph in there about partial shares, right? So, you know, each they buy 400 ounce bars, right? So, 400 ounce bar is a pretty large amount of money. So the amount of money that's in the GLD is not going to equal exactly a 400 ounce bar increment. So they have to sort of buy things for that last bar. And just that one paragraph of what they can do. People are like, "Oh, look at that." You know, they can they can buy a derivative or I you know, you don't really know it's there. And I'd say it's for one bar anyway. And you can't audit the Bank of England. So these things were popular conspiracy theories but I think GLD is a you know phenomenal uh asset and you can buy it for at Schwab for a nickel a share you know anytime you want and we believe very strongly in the world gold council who's you know stands behind it the correlation's been in the 999 you know so I think uh GLD is great the other thing that GLD has that some of the other ETFs don't is a very rich option structure. I mean, so the professionals use GLD2 because they can hedge it with all kinds of options and derivatives. So the very deep liquid central market. So, I'm I have no trouble with people establishing bullion ownership. And I could list a couple of places um where you can do that, but I think hard assets alliance is probably the easiest and and best way to buy bullion um that I've come in very customerfriendly and um you know, for everyone again that's hardassallalliance.com. I think that's a a really important tool. uh to get your gold exposure. I would also say I would encourage everyone to establish their gold exposure first before gold equities. Gold equities are very different. They're vol more volatile and they involve the only um capital formation proposition in the gold trade which is building a new mine uh which brings value to those ounces. But it's also a very capital inensive, very complicated business which um does have risks that are involved not involved in owning gold bullion. So let's say you were going to put x amount of dollars in gold. I'd put 60% in bullion coins, ETF, that type of thing first. And then once you've established that gold position, I think it's reasonable to branch off into gold equities. I would certainly uh engage the council of someone who knows the area well meaning you know either an ETF or managed product. I think gold mining companies are a tough thing to do on your own and then once you have some large uh exposure then you can get into sort of the smaller you know exploration and development type companies but that's the way I would look at the progression. the more of the more risky areas, the juniors, right? But I the one thing I'd warn people there, there there's probably 4,500, you know, precious metal mining companies in the world at some stage of development and 95% will go out of business before correct they ever mine an ounce of anything. So it's a tricky business and you have to tread carefully as an investor for sure. specifically, not to get too far off base, but the top 10. This is gold mining is sort of an industry where I call it negative survivorship bias. So, in most industries, you go to the top company like you want an auto company, GM if you want, right? But the negative survivorship bias, the problem is the bigger miners, let me put it this way. When I started doing this in 2001, Pneumont was mining 7.3 million ounces. This year they'll do five and a half maybe because they bought gold corp and new crest and they're still down 5.3. So once you start mining millions and millions of ounces it's almost impossible to replace them. So you either have to be an enormously su successful operator like Agniko Eagle, which is by far the best performing and best managed large gold company, or you end up making acquisition and development decisions that can really bite you. But below that, there's probably the next 30 to 40 companies. I think for folks that, you know, watching this, uh, that's really all of those companies will eventually be bought by the bigger guys. Uh, I'd stay out of that bottom 90% unless you, you know, have really good information or an uncle who's a geologist. Um, because they're pretty risky. But that it's that middle part just below the top. Yeah. Yeah. And standard disclaimer, this is not investment advice. This is just forformational purposes. And um, I I want to dig a little deeper into the gold equities into the miners. They've had a good run as you mentioned at the beginning. Um it's more than doubled in the past three years, right? The JDX has I think you said 120% return the past two years. Is there still value there? Right. So um valuing gold stocks obviously is a difficult thing to do. Why is it difficult? Well, first of all, you're you're building and operating. It's probably the longest duration endeavor on the planet, right? If you want to develop a gold mine, it used to take five to seven years. Now it takes 20, you know, in terms of permitting, environmental, enormous amounts of capital. I will point out that all the we haven't had a really really uh world worldass gold discovery in many years. There there's a company that monitors how many I can't remember the exact description but over 10 million ounce type deposits and three or four have gotten into that um worldclass category but only because they've been developed that way. They weren't discoveries. They've been working to develop through drilling etc. So we haven't had you know all the really big golds mines have been found. So grades are getting tougher and tougher. Um you know when I started this you could have six, seven, eight grams a ton and it was not unusual. Now where there are a lot of mines that are one gram per ton or less. Now think about that. You 400 ton truck and it's got rock in it and it you know one gram per ton. That's 400 grams. It's like eight gold silver, you know, eight one ounce coins in a 400 ton truck. So it's it's you know it's very very difficult. Interesting returns to the interesting return. So I remember the first open pit gold mine I ever saw was Detour and when I stepped up to the viewer booth my heart sank because you know it's like a two kilometer hole and you're like wow this is a really tough business trucking around rock. Having said that, uh when the gold is there and it's properly mined, the the leverage is is is pretty imp, you know, the baited a billion two three times uh the move in gold is is pretty standard. So, uh given the fact that gold stocks have just doubled, there's no question they are less cheap than they were say a year ago uh when and you know multiples to NAV were you know very low. Right now I read this morning as I tried to get a benchmark for you. I think you know most coverage universes are about 0.9 times NAV whereas we might have been at you know.5 but at the peak in the cycle that can get up to two times NAV for the really good producers. So I thought a good way to do it is uh the slide that I uh picked out that we now have up on the screen which is instead of looking at it from a per share price basis this is uh an analysis of all-in sustaining cost for the industry uh and the implied profit margin to the current gold price. So uh in 2024 for the whole year the average gold price was 23.89 89 and in the first quarter this year it was 2858 and the second quarter was 32.86 and so far in the third quarter it's been 3410. So that means in September you know the gold price is $1,000 above where it was for all of 2024. And believe me in 2024 it was similarly sloped. Um, so the profit margins uh of these gold miners, even if gold just stays, and by the way, that's 3410 and we're already we're almost at 3,700 right now. So if gold stays anywhere near these levels for the fourth quarter and the first quarter of next year, I'm going to go out on a limb and say that some of these earnings are are literally they're going to be, you know, we're going to double the cash flows at some of these companies. And uh gold stocks respond very positively, you know, to that free cash flow. Uh that's that's sort of become the big parameter these days is cash flow and free cash flow. So um I uh you know I I actually am surprised that earnings haven't been stronger than they have so far this year. But I'll just share another sort of dirty little secret in the gold mining industry is what happens when when things get tough and you let's say you have a big deposit and the reserve grade is five grams a ton. When things are tough or you have problems, what gold miners traditionally do, it's just part of the business. You know, they got a big pit here and they know where the high-grade portions are. So they're trying to make earnings. It's very easy for a gold miner to just go take a little bit more of that and run it through the mill because it's higher grade. The problem with that is the uh reserve grade is lower than you think because you've taken some of the plums off the top of the pie. And by the way, the best miners like Agico Bear, they don't I would I'm not saying everybody does this, but it's it's certainly common in the industry. So what happens is when the gold price starts to go up, they can go to the parts of the mine that they didn't mine, which are lower grade, and kind of push those through because you have a higher gold price. So generally when the gold price is rising, that's one of the reasons that profits sort of lag a little bit is that you're sort of catching up to a little bit of high grading that may have been going on in prior quarters, if you follow me. Right. they they're uh instead of going to the the high fat milk now going to the price of gold is so high but it makes it makes sense but eventually they're going to get back to reserve grade and then earn it's going to be you know the the average between the two so to speak you know it makes me think um for sure um GDX has doubled in the last two years but most likely cash flow at these companies will also double free cash flow right Mhm. Or what profit gold owner earnings probably too. Which and if the gold price stays where it is now, it's going to double again. Exactly. Exactly. And then this is to your point earlier, right? You want your core holdings of gold and precious metals. Then you want a percentage in the miners because they have or they offer the investor leverage and they have done so in the past too. and have done so uh in this in this cycle as well. So Trey be before we wrap up we got some questions from our viewers that I wanted to to share. We don't have time unfortunately for all of them. Uh there too many but uh we selected the ones that we thought were most interesting for for beers to learn as much as possible in this webinar. So the first one comes from Rich Manaval and he asks, "What might actually cause gold to reverse in price right now? Could it be a recession, deflation or even a fall in the stock market?" So looking at the deflation option first, um you know, with this much as we were just saying, total US credit market debts 14 trillion. So with that much debt in the system, if we were to have a true deflation, and we haven't had one in, you know, decades, if the Fed somehow fell asleep at the switch and didn't pump out enough liquidity to prevent it, we did have a debt deflation. I have always made the argument I I said it earlier that I don't see gold as a very good CPI inflation hedge. I do think gold's a very effective deflation hedge because if we have 104 trillion in credit which is starting to wobble that would obviously have impacts to the stock market etc. I think gold's um non-defaultable status would actually increase its profile. And again, because gold markets are so tiny compared to these other asset classes, I actually think a deflation could could light a big fire under the gold price. Um and in the recession example, uh obviously the Fed is very attuned to those numbers, and if we had a recession, I think you'd start to see rate cuts. uh you know down to very low levels again to turn that around which is very positive for the gold price. Uh and then we talked a little bit about stock market decline. While there could be a little pressure in the first week or two um I actually think that's one of the things one of the last big dominoes to fall is a big stock correction. I think that could put $500 or $1,000 in the gold price if we had, you know, a 40% S&P correction once again because those capital flows from these very, very high price stocks to something like gold, I think, would accelerate dramatically. So, what would make gold go down? It's always embarrassing when you say, I have, you know, a hard time imagining that. What would really make gold go down would be if we could, you know, have 3% GDP growth with zero debt growth. You know, if we could grow the economy without having to have trillions of QE and, you know, really ultra low interest rates, that would that would mean let's say the stock market fell 50%. you know, there'd probably be some bargains and at that point I think gold would probably be $1,000 higher and you know, but in terms of from this level, it's hard it's hard to imagine something large enough to derail um you know, current prices right now. It all of the things that are happening in the world and that you reflected upon earlier, it's an oil tanker. It's not so easy to move. It's not so easy 100%. Yeah. uh you just touched upon this but uh from our YouTube viewer Lisa Lisar I'm sorry for butching his or her name the star Nel 7453 he said saying what about gold stocks they've been strong lately but what happens to them if the market crashes is there any historical precedence could you talk a little bit about Trey if gold stocks have held when the rest of the market has crashed or corrected. So it it's kind of depends on why stocks are going down. So in the 2000 to 2011 period for example, there were three big moves in gold stocks. Now admittedly that was coming out of a 20-year bare market for gold, right? So gold was 250 275. um average you know all- in sustaining cost for miners were was probably 400. So everybody was losing money. The you know that's when those short books were created companies like barracks stayed in business by shorting the gold into the market hoping to buy it back cheaper even though it was their main product. So, um, coming out of that, which was a re, you know, very coiled spring, um, you know, gold stocks, I I used to have these memorized, but there were three big runs like 350, 180, and 108, something like that. And in each one of those, uh, the S&P underperformed dramatically. And so the way I phrased it back then is when faith in US financial assets is challenged, you know, when faith in US financial assets is challenged, um gold stocks have a tendency to separate from the group. Um it there hasn't been uh as dramatic a example of that in this second bull market. You know, gold stocks peaked in 11 and they went down through 2015. And here's another historical problem. Because of that runup, you know, the GDX declined 85% I think over that time frame. And when you have an asset class that can have an 85% draw down, uh, you know, you're not going to have a very committed group of long-term enthusiasts, right? So, I think gold stocks are still paying the price for that. And that's a whole another discussion. And a lot of those things that happened then couldn't happen now just because of all of the exaggerations etc. But um uh do you if the stock market were to start to decline there as I mentioned earlier in the first week or two it pulls everything with it. So you know if let's let's go back to co. So, I think the S&P lost I think 32% in what 4 weeks, 3 weeks, whatever it was. It was the fastest draw down ever. And gold stocks, you know, went down uh during that period. And it's scary because, you know, they're falling. But once again, two weeks into that when gold took off, gold stocks had one of their best runs um about performance uh for the next, you know, 18 months. So, um it's hard to predict. It's different every time. Um but in my opinion, especially given as we were looking at that S&P or uh the S&P and gold terms chart, we're at such an extreme now with gold with the broad stock market that I would think that if we started to have a stock selloff, I would think gold and gold stocks would do pretty well this time around, especially with how strong the gold price is. I I I would agree. I think it makes sense. Yeah, definitely. Well, that's all the time we have today. I'm afraid we we run out of time. We can't um share any more of the the viewer questions. Trey, this was magnificent. So much information here. So many insights. I think viewers will find it enormously educating and helpful. And so, thank you very much for joining me today. It's uh so and I I I have to underline again the experiences that I've had and others have at hard assetsalliance.com uh have all been good. So they have a great team, very helpful, um very confidential, very easy to use. So I want everybody to go to hardassallalliance.com. Can't agree with more with you more. And and by the way, they they are are they are an RAIA as well. they can open some gold exposure for you through a 401k uh 401k. Um so to our audience as well, thank you so much and um oh there's something that we should tell viewers that is very exciting and then that's that wealth unit and SCP resource finance are going to co-host a global silver conference this October in Toronto. Uh you can join virtually. There's a link in the description below where you can actually buy virtual tickets to attend. Or if you want to go in person, uh, please qualify as an accredited investor and you can do that by signing up to our accredited investor list at wealth.com accredited. Uh, and Trey, you're going to be there with me and I will definitely be there in the first interview. So, it's gonna be it's gonna be fun in the same way that we did for the Rick Bull conference. Excellent. Yeah. So, all right, Mario. Thanks very much. Thank you, Trey. Thank you all for watching and we'll definitely see you next time. Take care, everybody. If you have any questions about how to navigate the current environment, Wealthon can help connect you with a vetted advisor to get a free portfolio review. Just click the link in the description below or head to wealthon.com/free. There's no obligation and it will just take a few minutes of your time. Again, that's wealthy.com/free. Thanks so much for joining us. We'll see you again next time. [Music]