Ken Hoffman: Gold's Path is Clear, Price to Hit US$10,000 Long Term
Summary
Gold Price Forecast: Ken Hoffman predicts that gold could reach a price of US$10,000 in the long term due to a shift in global economic dynamics and decreased reliance on the US dollar.
Historical Context: The discussion highlights the historical significance of gold, particularly post-World War II, and how past economic policies have influenced gold prices, drawing parallels to current economic conditions.
US Dollar and Trade: The podcast discusses the impact of de-dollarization and increased tariffs on global trade, contributing to a declining US dollar and bolstering gold's appeal as a stable investment.
Central Bank Activity: Central banks are increasingly accumulating gold as a hedge against currency devaluation, with gold becoming the second-largest holding for many banks, particularly in Asia.
Investment Opportunities: The potential for significant M&A activity in the gold mining sector is highlighted, with junior miners poised for growth as gold prices rise.
Copper Market Outlook: Despite short-term challenges, copper is expected to benefit from long-term demand driven by AI and electrification trends, with significant growth anticipated post-2026.
Battery Metals: The podcast also touches on the rising importance of manganese in battery production, particularly in China, as a cost-effective alternative to traditional battery materials.
Transcript
[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Ken Hoffman, head of commodity strategy at Redcloud Securities. Thank you so much for being here. Great to have you. Thanks for having me. Really excited to talk about gold and and precious metals. Really good to have you here today and we are going to get into gold the precious metals. I think it's going to be an exciting conversation just because it is our first time talking. I'm thinking that our audience is probably familiar with you already, but if you could give a brief introduction to your background and your current work, I think that would be a nice place to start. Sure. Uh, I've been working in commodities and metals, uh, going way back. 1991 is when I got my first analyst job at a place called Credential Securities. Um, and so I've covered the commodities space from starting as an analyst and then I became a portfolio manager. I've run a energy and basic materials uh, fund, first quartile fund. uh then worked for a bunch of very large uh hedge funds including places like Millennium uh Securities um in terms of uh investing in in in the commodity space. Uh I moved to uh Bloomberg uh where I started a group there called Bloomberg Intelligence where I ran all their gold and precious metals and base metals research. And then I I did something completely different for uh for about a decade. I went to Mckenzian company which is a large consulting firm where I worked on strategy uh for the metals and mining company a lot on the battery space but also in in the precious metal space as well. And so I've um you know particularly when I was at Bloomberg I did an awful lot of stuff on on gold uh and sort of happy to come back uh to the market these days because I I think there's just incredible opportunity ahead. Well and and what better time to be returning to gold. So we'll we'll get into your thoughts on gold. I know that in the long term you've got a $10,000 price target for gold or it's a level that you you think it could get to. So, we will we'll jump right in and I'll ask you, you know, how do we get to that level? Gold has really been on the move this year and 10,000 feels, I think, more in reach than it ever has, but it's still it's still far into the distance. Yeah. And that number, I mean, when you start doing the math, that number could be conservative. And again, I I go back and do a little bit of a history lesson. Um you know after World War II um the world decided that the US was the leading country in the world and the US wanted us on a gold standard. The reasons for a gold standard were were pretty evident. We came through a a period in you know from the late 1800s to uh up till World War II where we had a lot of problems with tariffs, a lot of problems with inflation, a very volatile economy. And so the best thing about gold is it's very consistent. you know the production of gold every year you add about 3 to 5% to the stock piles of gold in any given year so it doesn't allow countries who are tied to a gold standard to really go nuts and spend a lot of money which causes inflation etc and that really lasted until uh Vietnam war when the US needed to spend awful lot of money on the Vietnam war and so what we saw is the US government go off the gold standard because they needed to crank up those printing presses what that did was twofold it sent the price of gold from around $35 an ounce up to $800 an ounce in around 1980. So in less than a decade you've saw you know almost a you know what are we talking about 25 time increase in the price of gold. Um and you know what people had said is like look gold's sort of untethered everyone has the printing presses going it it's it's reached a new reality but then in 1980 uh we saw another sort of shift where um President Reagan came in he did a number of things once he he raised interest rates to you know over 20%. And so since gold doesn't have an interest rate a lot of people moved money away from gold and into dollars. He also started something called the Plaza Accord which was sort of all the currencies in the world sort of getting together again cementing the US dollar as the major trading currency and he was also such a an open free and fair trader. it really positioned the US dollar as the currency that the world would use and if you had that you didn't need gold and so you really went from 1980 to really 2000 uh where the price of gold did absolutely nothing start you know 2001 we have unfortunately 911 and then we have the global financial crisis and then we have uh the you know the COVID uh years all those were areas where the world had to print huge amounts of currency um and in order to sort keep the global economy working. What the US did and other countries did was to lower their trade barriers to try to increase trade to get the economy going. But all that considered, it sort of told central banks around the world, wait a minute, we we we've been selling our gold all the way until 2000 because who needs it? We have the dollar. Now all of a sudden, you're finding other countries, particularly China, coming to the four and they're not trading with dollars. They're they're you know 72% of the world's trade in 2000 was gold or I mean was was US dollars. Today that number is under 50%. And it's really starting to fall off a cliff. So now if I don't need dollars, let's buy gold. And a matter of fact today central bank's second largest holding is gold. So So now we come to today and why do we, you know, why have we started off to the races and why are we going to continue to go to the races? We have a complete change in the world economic order. Again, very similar to what happened after World War II. Um, the US is no longer interested in free and fair global trade. Um, and so they've instituted these tariffs. Tariffs going from 2% to close to 20%. Um, and so that's going to stop a lot of trade going on. And if I don't need to trade with the US so much, I don't need their dollars. Um, and so you see the selling of dollars. And and for an investors, the one um index you need to watch is called the DXY. the the um it's the dollar index. It's sort of a basket of what the US trades in. As it falls, the price of gold goes up because it's literally people selling dollars and buying gold. Um and and so as the DXY has fallen, and it's fallen about 10% this year, price of gold usually is about a 3:1 rate ratio. So 10% decline in the dollar, 30% increase in the price of gold. Um the US has said and and you've seen, you know, Trump sort of talk about these things that what he wants going forward is lower interest rates. So lower interest rates means I don't need to hold dollars, less trade. Less trade, I don't need to hold US dollars. Um and he wants a weaker dollar, something there's called the Marilago accord, which is to devalue the US dollar versus other currencies. And Trump seems pretty committed to that. So all those things mean we probably go to the lowest the the dollar has been over the last 20 years which is about a 30 to 35% decrease from its current levels. So that's about a doubling in the price of gold. So that gets that starts to get you from 3,400 to about 7,000. And then once we have that momentum and people are sort of out there saying well wait a minute um you know the US is no longer going to be the main currency. What could be a main currency? And the only currency that no one country can attack is gold. It has no central bank. It has no politics. It has no committees. Um it has no political agenda. And that's why you see particularly and I was in Asia um for two weeks. At night when you would meet a lot of wealthy investors, a lot of family office people, they're like, "We want gold. We're putting our money into gold." I think in Singapore there's a 10,000 metric ton like Fort Knox there and family offices and wealthy people over there are just selling their dollars and putting it into gold because they can see where this is heading and they know it's a great investment and I think that's going to continue that momentum and gold always tends to overshoot. So 10,000 12,000 15,000 is is just their numbers but I think they're quite reasonable. So it really is based on history. You can see how that could play out for sure just based on how you've laid it out there. I want to talk a little bit more about what's coming for the dollar because when you talk about things like ddollarization and dollar going to its lowest level possibly ever, I think people hear that and they wonder, okay, how does this really look like? Is the dollar going away or is it more like it it becomes deemphasized? So, how how would you explain it? I think you have I do think you have a couple interesting things. I mean already what you're seeing is, you know, how tariffs are impacting in the world. I think vegetable prices, fruits and vegetable prices in July of this year rose by more than 40%, the largest increase on record. Um, so there is a lot of this is tied to people just don't want dollars. Um, they're they're taking the currencies elsewhere. Um, and you have sort of a you know the puzzle pieces don't fit. You can't um institute a big tax which tariffs are um which again consumers are starting to see. So, they're purchasing less, which is slowing down the US, which means that I'm purchasing less from overseas, so there's even less need for dollars. At the same time, we're running um nearrecord deficits. So, you need dollars for that. Okay? Normally, in order to stabilize the dollar, what you do is raise interest rates. And this is very similar to what happened with Nixon uh in the 1970s. If you go back and look at history, it's amazing how it repeats. Nixon went against the Fed. Nixon tried to replace the Fed. Nixon was arguing for much lower interest rates. Why? Because he was running big trade deficits and didn't want the big cost that comes along with that. Plus, the economy was being hurt by by the higher interest rates of the day. And so, he's like, just lower the interest rates. And and at the end of the day, what that did was really hurt the value of the dollar. Um, and send gold prices, we said, you know, from from $35 to $800. That type of situation seems like it's playing out all over again. You have Trump going after the Fed. He wants much lower interest rates. yet at the same time we're running huge budget sur deficits which need to be paid for somehow. Um and all these things are coming together where again every one of these things is a tailwind for gold. There's really nothing sitting in gold's path going forward and I think um you know large times you know really good times for gold have been there but I think they continue uh and and particularly into 2026. I think things could change if there's an election in 2026 and all of a sudden um Trump isn't allowed to do as much as he is sort of with these tariffs and you know even tariffs on like India and Brazil are sort of nobody really knows where he's going with this. All these things are doing damage to the dollar which again it seems like he wants. Um and again how do I hide in refuge if I'm an investor? It's gold and and I think there's you know that's been the momentum and it will continue to be the momentum. Yeah, nothing in gold's path. I think that's a very very strong way to put it there. And I'm wondering so in the scenario that you're laying out, how what are the implications for the US economy? How does that end up looking as we move forward here? Well, I think, you know, I'm I'm doing some work on copper right now and I'm looking at this. I mean, I I I think the US has a severe slowdown next year. Um, in in my viewpoint, I think all these things of, you know, probably one of the largest tax increases in history. Again, you see it in the price of goods in the store. So, so it's not I'm not paying more tax, but I'm paying more in the store, which you're seeing that. I think that slows down the US massively next year. Um, again, if I lower interest rates to try to help that out because, you know, we are starting to see, you know, the weekly unemployment gains. Looks like they're going above 2 million uh people for the first time in in in since co um and you're starting to see all these things. That's going to be the pressure where Trump will see, aha, see, we need to lower interest rates. But again, that might not do too much good because if if I can't afford anything, I can't afford anything. Um, but what it does do is tell investors around the world, why are you holding dollars? And again, there's there's going to be a really interesting uh push and pull where um if I lower interest rates, but I'm running deficits, that means I need someone to buy that debt. And if no one really wants to buy it because they don't have to hold dollars anymore, that means interest rates go higher. And and I think the Fed's biggest fear is this. They cut interest rates, but the real interest rate that you see in the 10year and 30-year bond do not decline. And that happened a bit last year when they started to cut rates uh in September, October of last year. The long rate didn't really move much. And so what's scary from an investor standpoint is if the Fed no longer controls interest rates, then markets do and interest rates are going to go wherever they want. And that's that's just not good. But again, that's all the destabilization of the dollar. And if and again, as an investor, all you care about is okay, where can I if I'm not going to go to the dollar, where do I want to be? I don't think I want to be in euros or yen or other currencies because in that case, the US could go after that. You know, hey, everyone's buying Swiss Franks. I'm going to put a 50% tariff on on on Switzerland for everyone buying their currencies. If it's gold, there's no one to attack. There's no one to tariff. There's no one to go after. And so, it's a great um place to hide in in areas of high uncertainty, right? You can definitely see how it all connects. And I promise we'll we'll stay on the track of gold, but just because you mentioned you're doing this research in relation to copper, I'll ask you briefly, what is your outlook for copper? Because of course it is it's Dr. copper. tells us how the economy is doing. So, what are you seeing for copper? Well, I have to make the uh opening statement on copper during LME week. LME week is when all the copper buyers and traders around the world descend in London and I'm just starting to put together my speech for for Redcloud. Um I think next year is really difficult for copper, but it's hard to judge because so for example, this year the dollar has declined by 10%. The price of copper in US terms have gone up 10%. So if I'm anywhere else in the world, my price in copper has been unchanged. So you know, do you say what is the copper price in dollars or what is the copper price that most consumers around the world are paying? And that's that's sort of difficult. But we do see that copper growth will slow from around 3% this year to about 1% next year. Um and the US copper demand will probably decline by about 6% next year um from this year's levels. And this year we'll probably be down 1 to 2%. Again, it's um you know, particularly in the US, you had a 50% tariff on copper, which sent the price of copper from around, you know, $350, $4 range to over $6 range. Um I was talking to some contractors who were saying that their monthly um bills in terms of the the building material, which is pretty copper heavy, had doubled um since a year ago, and they were and because of that, they had to increase their their prices to their customers and so they were seeing a lot fewer customers. I think that ripples through the system next year. Now, I think what happens um beyond 2026 is actually incredibly positive for copper and that is one of the things you hear a lot about is AI. Like AI is the term we hear about every second of every day. Well, to make AI work, you need these server farms. These server farms are massive in terms of power uh needs that they have. So much so that the one place in Europe that was building a lot of server farms was Spain. Spain built like six massive server farms. It they used so much power to stabilize the grid so much that the entire Spanish uh electrical grid collapsed. Um and so now what you're seeing is huge amounts of backups power being added to there. But not only there, but to China um and to the US. So much so that I think by 2035 um more uh batteries will be produced for backup power. Not only for for you know um solar farms and wind but every business out there worried about the grid being destabilized by AI is going to want backup power. Battery backup power has become super cheap. And so you're seeing this unbelievable growth of 100% in in 2024, 200% this year, and probably another 50 to 100% next year. That uses, you know, not only the the copper that's in the batteries, cuz the the the batteries all use a lot of copper, but the the wires that go into these battery packs and then the infrastructure and transformers and everything else that you need. Um, I think copper really catches a tailwind from this. And once we get through a period where the US isn't so disruptive using tariffs um and you see this huge tailwind from all these backup grid systems going up because of AI um I think copper has a great 2027 28 28. So it's a little tricky. If you're a short-term trader you're probably a bit nervous about copper over the next, you know, 6 to 18 months. If you're a long-term holder, you love copper for the long term because I think the demand for copper is going to be unprecedented because again the switching of the world over to to massive needs for electricity and that's why you hear you know China building the world's largest hydroelect electric dam ever um why you hear the US um talking about nuclear and other forms of electricity coming in. It's a lot of it comes back to people foresee how much uh how much power demand and to to show you how much uh I did a study for a server farm one server farm and you might have seen Tesla has something called a mega pack which is like a like a trailer car um to hold just 48 hours of electricity for one server farm you would need 7,000 of those mega packs so the power demand is just phenomenal and we are building as you know and seen the videos coming out learning today. I don't know where they are, but all that's AI, AI, AI, AI. Trillions of dollars going into it. And again, the only way we can secure the electricity for that is to build a lot of copper. And I think that's where it comes to play. That gives us a really good picture of the magnitude of copper demand. Just a small followup on on the supply side because obviously we're going to run into a crunch there. How are countries around the world doing in terms of speeding up copper supply, getting the the projects approved, the mines online? Because it's it's a very very long process and of course we're going to end up needing it. It is. And I mean, you know, in the United States, uh it takes around 29 years to get a copper mine up up online. Um I know the US government's trying to cut the red tape. um and that if they do a great job and cut all the red tape and there's a lot of silly things done with the with the uh with mining um permitting you know for example um if I have a mine in say Nevada first thing I need to do is Nevada's going to come in and do an air permit and do all this testing for 6 to n months and then be like okay then when there is done the federal government comes in and they do their air testing and then they come up with slightly different things and so they have to go back to the state and then that goes on for a year or so then they finally okay air permits per now we have to do the water permit like like why they all couldn't do all of these permits which are sort of codependent at once together is something I think needs to be done and I think it's starting to be done but even if you had a perfect scenario where all the permitting was done perfectly you know synced together there wasn't um so many um things stopping mind development you still are talking 8 to 10 years for a mind you know just How do you have to plan it? Permit it. You know, you have people underground. You don't want them collapsing. You have a lot of equipment which takes many years to build because there are almost always specialized pieces of equipment for that mine site specific. So, you do have a very long time frame no matter where you are and no matter where in the world you are. So, the world is going to have a difficult time finding this copper. And the only way to really incent, you know, this to move any bit faster is a higher price. And so I know there's a lot of guys out there like Robert Freedelland who just say like look copper is going to have this great run. I can't argue against him because the electrification trend and AI is unstoppable. Um which means demand for copper is going to be very very strong u particularly I think after 2026 and so the price of copper should go significantly higher in order to incent either incent copper or at a certain price then you're going to use alternatives. there's, you know, aluminium and other different metals that could be used to sort of supplant um copper, but but I think copper has a has a really good run because it's it's a really good uh where it sits on the periodic table is great for electricity movement. Okay. I think that gives us a nice look at the full scope of copper. So, I'll go I'll go back over to gold. And so, you're talking about the central banks obviously have woken up to this need to own gold. They've been buying and buying. And you mentioned your travels in the east. people over there definitely want gold. So I'm wondering when when does the West start to wake up to gold a little bit more than we've already seen at this point? Yeah, you still when you talk to portfolio managers, they don't have large gold holdings. Um and so um and you talk to most investors out there and I'm sure a lot of people watching this uh this podcast are probably gold bugs and so they're like, "Wait, I own gold. Like I'm really into this." But when you go to the general public, their holdings of gold, their holding of gold mining companies is near nil. Um, and so I think what happens is you'll continue to see the price of gold uh do very very well. Um, I would not be surprised if central banks continue to accumulate gold uh and the dollar continues to be less and less of world trade. Remember, we've gone from 72% to under 50% in the last 25 years. as we get to 40% or 30% of global trade, um, you know, there's going to be a need for an alternative. And I do think goldbacked currencies make perfect sense. You know, unlike cryptocurrencies, they can't be hacked. and and my biggest sort of black swan event for the next two years is this quantum computing uh comes so sophisticated and nefarious folks get a hold of it and start cracking the codes much quicker than the security of these cryptocurrencies can handle and all of a sudden they wake up till the morning to trillions of dollars of losses um you you can't do that with gold um and so I think gold really becomes to the four as sort of a global stabilizing currency force that it's always been for thousands of years and and at that point people realize they have to own gold. They have to own gold miners who are producing the material and have the value in the ground. And I and I think then gold becomes much more mainstream. But I am still shocked when I speak at gold conferences and you know I I'm at Bloomberg where I was for a decade I would go to a lot of gold conferences. I would be on your podcast as as well as others. It's it's you know almost a decade later I'm going and there's a lot of the same people from a decade before. there there hasn't been sort of a new and energized and younger crowd really interested in gold. That needs to occur and I think it will occur. Well, definitely. I think if what you're outlining there comes to pass, people are going to have to wake up to gold. And you're right, many people in our audience do own gold. They own gold stocks. But I want to ask, okay, so if we have gold going to 10,000, it sounds pretty appealing. You could just own gold and you would do you would do pretty well. But if we get into looking at the gold stocks, I'm wondering where you see the most potential if people wanted to go into the companies. Well, I do think um look uh I I really like to follow the JDXJ. It's the junior gold mining index. It's very liquid. It has pretty broad coverage. Wish it was a I wish it had more junior miners in there, but it is what it is. But I've done some research on it. It is currently trading between 75 and 80. If I look historically where gold trades versus the JDXD valuation, it should be closer to 300 today. Just on historic valuations, if you look at the premium of gold over the cost, which is at all-time record highs, um these companies are just not getting any sorts of historical valuations yet. Yes, it's it's up about 80% this year. So, it's had a good run. But if you look if I went back 25 years and just mapped out where the JDXJ has been versus the price of gold versus the margins they're getting which is a huge value of of the the what you're getting in the ground um you you are talking closer to 300 for the JDX. Now, if we were to go to 10,000, obviously it's it's quite astronomical. And so, what starts to unlock it, yes, slowly but surely, you know, we have seen that, you know, these juniors do better, but I think you're going to have to see acquisitions. I think what you're going to have to see is, you know, I can go on my Bloomberg right now and I can hedge out gold um to I think about $6,000 30 years from now and it's quite liquid. So, I mean, you may see some companies say, "Wait a minute. I, you know, I have this minor with this great asset. Um, I can produce it, say, $1,500 an ounce for the next 20 years, and I can hedge it at, you know, four, five, $6,000 over that time period. It's free money. Why don't I do that? I'll acquire this company." Or you'll see a lot of other mining companies, you know, start to say, "Wait a minute. I need to have gold as part of my portfolio." As the value of gold goes up, the revenue goes up. it moves the needle more for these bigger companies. So, I would expect um acquisitions, probably bigger acquisitions, I I would say um some of the major miners, but as that occurs, what you're going to see historically is just a rapid roll up of smaller names. And so, you'll start to see these names rolled up and they're so cheap. I think it happens relatively rapid. So, it's it's going to be a bit of a flash sale. I think once it starts to seals, you'll see one of the major gold miners acquired by one of the real big miners. And then all of a sudden, people are like, "Wait a minute. This is why they're doing it. this is how profitable it is. Like what do we you know why are these things trading so cheap and then boom um there's as you say there there's not a lot of um wide broad ownership. As soon as you start to see that ownership sort of broaden out and you know the people who do chat rooms and things of that nature say wait a minute you know here's here's these gold companies trading at you know three four five times cash flow that's ridiculous and in something that's so valuable. um and then you'll really start to see it go off to the races and that's where I think the JDXG has just a phenomenal run and these companies do very very well. So we are we are due for some M M&A activity that is difficult to say in the gold space. We have seen some some deals so far. I'm wondering what you make of the transactions that have been taking place so far in 2025. Are you liking what you're seeing? Do they make sense to you? Yeah, the deals so far this year make a lot of sense. I I think you are seeing a pick up in M&A. um it's slowly but surely starting to go there. But if you look historically and really if you look at, you know, the the time frame of of the late 70s or the time frame really in the early 2000s, you you saw a lot of the names and one of the names I used to cover as an anal pup analyst back in the 90s, Homestake, Battle Mountain, a lot of these other companies, they're all got acquired. Um, and they all got acquired relatively quickly when the price of gold sort of took off and people like, "Wait a minute." Um, now at the end of the day, um, while you could hedge out and make guaranteed returns, a lot of companies don't do that. They like to have the price exposure, but still I I think what what happens is people tend to follow others. And so I think you need a few more deals to be done that are a bit more high-profile to where the bankers start going around to all the companies and saying, "Hey, like do you realize how cheap these things are? This just isn't right." And then you it starts feeding frenzy. Now look, um if the price does go parabolic, it's going to be really hard to sort of say, "Okay, we we've done enough here." Um you know, I had to go to the London Metal Exchange Week a few years ago. One of the reasons they always invite me back was I was the bear on lithium when it was, you know, near $70,000 and it was like, "Lithium's really common. This is a bit ridiculous where the price has gone and people were throwing tomatoes at me." Um but but the money was there to the money was made at that point. you need to know that things are cyclical and and things will go down. Um, but I but I do think we're, you know, not even the first batter has come to the plate in the first inning here. I think we have quite a long ways to go, but I do think once it starts going, um, you know, first of all, I think your podcast viewership's going to go up like a hundfold. Um, but but but I do think, you know, let's wait for that to occur, but everything is lining up right now for that to occur. And that that's really great. Still early. I I always like to hear that cuz it means there's so far to go. Okay, so we've got a good picture of what's happening with gold. I have to throw in a question on silver because if we're talking about $10,000 gold, people are of course going to wonder what is coming for the silver price, especially right now with all this talk about gold silver ratio and what's going on there. So, what are your thoughts? I mean, silver, I I I've never been a ratio person and I know people love the ratios and things of that nature. In general, what you see is, you know, a rising tide does lift all boats. And so if you talk about silver or platinum or palladium, I think silver closely follows gold. And so if we do see gold continue to have a pretty significant run, silver should be fine. Again, it's sort of um also seen it's not really held by by central banks because it's not a tier one asset. The big change for gold came a few years ago in Basel 3 when they made gold a tier one asset which means that from an accounting standpoint I count the value 100% of the value of gold. Before I could only count 50% of the value of gold. So there was less allure to owning gold. But when they said hey it's a full currency. Now could there be pressure on central banks to make gold uh make silver a tier one asset and fully valued? That's possible. But but I think there's always just a a cotales of silver to gold. So whatever is good for gold is is good for silver and we have seen silver have a really nice run here and I would think the two together do quite well. Platinum and palladium are are um a little bit different. Yes, they are precious metals um but you have to worry a little bit about them um in terms of one they're in they're an industrial metal and as I said I think industrial demand next year could be soft. Um, and two, the the the movement to uh to EVs, which you know, if you look at China, where I was just there, about 40% of the cars sold now are EVs. And in Europe, it's it's about the same. The more EVs produced, the less catalytic converters you need, um, and therefore, uh, lower demand for platinum and platium. So, there are some industrial things you need to consider with those type of metals, um, and how that impacts, uh, overall demand. Yeah, all the all the precious metals are slightly different even though we group them together. So, thank you for going into that. And I I'll let you go, but before I do, I just want to ask, are there any other areas of the resource sector that you are interested in or focused on right now? You've got such a a broad background. I'm sure there's other things you're keeping an eye on. Yeah, I mean, if I if I were in the space, the one thing I'd look at, and it's very niche, but is magnetis. Um, uh, in terms of battery demand, we are seeing this unbelievable increase in uh, battery production. I I think a lot of people particularly in North America they say well levies are dead everyone hates them but over global battery production this year is going to be up about 60 to 70%. Um most of that is going towards stationary storage. Now, if I'm a battery company, I need to get my cost as cheap as possible. And the way to do that is to actually switch from iron phosphate, uh, which most batteries today in the world are made. It's called LFP, um, to LMFP, which is iron f, which is maganese iron phosphate. What that does is it gives you a battery that has maybe 50 uh% more energy density and is cheaper uh, than LFP. uh having just been in in China a few weeks back, um production of of manganese powders in 2023 was 1,000 tons. Not much. Last year was 10,000 tons. Okay. First quarter of this year, 25,000 metric tonses. And when I was there in China, they think this year could hit 250,000 metric tonses and then a half a million metric tonses uh the year after. So, um, you know, it's going to maganganesees is going to be sort of a a really important metal for batteries. That hurts nickel and cobalt demand, by the way, but it does help uh manganese demand. Um, don't just buy anything with the name maganesees in it. Make sure that company can process it the maganesees into first of all battery grade material and then into powder. Um, what we've seen in the west is the value chain doesn't exist. And so if I produce maganese powder in the US, I then have to ship it to Korea to be made into a maganese precursor, ship it back to the US to be made into a final battery powder. There are companies in the world that actually can give you the full value chain and ship that final powder just to a cellmaker. And those companies exist in China. There's a couple of them trying to exist outside of China. And if they do, that's going to be really really huge for um for the battery business. So So watch manganesees. I've been a huge manganese bull for years. I gave the opening speech at PDK 3 years ago when I said it and people like it's not going to happen. It's happening in China and whatever happens in China battery wise happens in the rest of the world. It just we're just a little bit behind. Well, really interesting. Thank you for mentioning that one. I It sounds like a tricky one for people to address, but definitely opportunity if we can figure it out. So, thank you so much. This was really great to to have you on. Thanks you so much for having me and uh hopefully we'll come back when the price is a lot higher and discuss uh you know when we're at 10,000 we'll say okay we told you we'll get here now now let's calm down a bit uh which people don't like to hear at that point but but uh ride the wave that we're going to have uh occur right now. Absolutely. We'll make sure we'll make sure to have you back hopefully along the way to 10,000 not just when we get there. So I'll let you go for now. This was this was great and for now once again I'm Charlotte Mloud with investingnews.com and this is Ken Hoffman. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]
Ken Hoffman: Gold's Path is Clear, Price to Hit US$10,000 Long Term
Summary
Transcript
[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Ken Hoffman, head of commodity strategy at Redcloud Securities. Thank you so much for being here. Great to have you. Thanks for having me. Really excited to talk about gold and and precious metals. Really good to have you here today and we are going to get into gold the precious metals. I think it's going to be an exciting conversation just because it is our first time talking. I'm thinking that our audience is probably familiar with you already, but if you could give a brief introduction to your background and your current work, I think that would be a nice place to start. Sure. Uh, I've been working in commodities and metals, uh, going way back. 1991 is when I got my first analyst job at a place called Credential Securities. Um, and so I've covered the commodities space from starting as an analyst and then I became a portfolio manager. I've run a energy and basic materials uh, fund, first quartile fund. uh then worked for a bunch of very large uh hedge funds including places like Millennium uh Securities um in terms of uh investing in in in the commodity space. Uh I moved to uh Bloomberg uh where I started a group there called Bloomberg Intelligence where I ran all their gold and precious metals and base metals research. And then I I did something completely different for uh for about a decade. I went to Mckenzian company which is a large consulting firm where I worked on strategy uh for the metals and mining company a lot on the battery space but also in in the precious metal space as well. And so I've um you know particularly when I was at Bloomberg I did an awful lot of stuff on on gold uh and sort of happy to come back uh to the market these days because I I think there's just incredible opportunity ahead. Well and and what better time to be returning to gold. So we'll we'll get into your thoughts on gold. I know that in the long term you've got a $10,000 price target for gold or it's a level that you you think it could get to. So, we will we'll jump right in and I'll ask you, you know, how do we get to that level? Gold has really been on the move this year and 10,000 feels, I think, more in reach than it ever has, but it's still it's still far into the distance. Yeah. And that number, I mean, when you start doing the math, that number could be conservative. And again, I I go back and do a little bit of a history lesson. Um you know after World War II um the world decided that the US was the leading country in the world and the US wanted us on a gold standard. The reasons for a gold standard were were pretty evident. We came through a a period in you know from the late 1800s to uh up till World War II where we had a lot of problems with tariffs, a lot of problems with inflation, a very volatile economy. And so the best thing about gold is it's very consistent. you know the production of gold every year you add about 3 to 5% to the stock piles of gold in any given year so it doesn't allow countries who are tied to a gold standard to really go nuts and spend a lot of money which causes inflation etc and that really lasted until uh Vietnam war when the US needed to spend awful lot of money on the Vietnam war and so what we saw is the US government go off the gold standard because they needed to crank up those printing presses what that did was twofold it sent the price of gold from around $35 an ounce up to $800 an ounce in around 1980. So in less than a decade you've saw you know almost a you know what are we talking about 25 time increase in the price of gold. Um and you know what people had said is like look gold's sort of untethered everyone has the printing presses going it it's it's reached a new reality but then in 1980 uh we saw another sort of shift where um President Reagan came in he did a number of things once he he raised interest rates to you know over 20%. And so since gold doesn't have an interest rate a lot of people moved money away from gold and into dollars. He also started something called the Plaza Accord which was sort of all the currencies in the world sort of getting together again cementing the US dollar as the major trading currency and he was also such a an open free and fair trader. it really positioned the US dollar as the currency that the world would use and if you had that you didn't need gold and so you really went from 1980 to really 2000 uh where the price of gold did absolutely nothing start you know 2001 we have unfortunately 911 and then we have the global financial crisis and then we have uh the you know the COVID uh years all those were areas where the world had to print huge amounts of currency um and in order to sort keep the global economy working. What the US did and other countries did was to lower their trade barriers to try to increase trade to get the economy going. But all that considered, it sort of told central banks around the world, wait a minute, we we we've been selling our gold all the way until 2000 because who needs it? We have the dollar. Now all of a sudden, you're finding other countries, particularly China, coming to the four and they're not trading with dollars. They're they're you know 72% of the world's trade in 2000 was gold or I mean was was US dollars. Today that number is under 50%. And it's really starting to fall off a cliff. So now if I don't need dollars, let's buy gold. And a matter of fact today central bank's second largest holding is gold. So So now we come to today and why do we, you know, why have we started off to the races and why are we going to continue to go to the races? We have a complete change in the world economic order. Again, very similar to what happened after World War II. Um, the US is no longer interested in free and fair global trade. Um, and so they've instituted these tariffs. Tariffs going from 2% to close to 20%. Um, and so that's going to stop a lot of trade going on. And if I don't need to trade with the US so much, I don't need their dollars. Um, and so you see the selling of dollars. And and for an investors, the one um index you need to watch is called the DXY. the the um it's the dollar index. It's sort of a basket of what the US trades in. As it falls, the price of gold goes up because it's literally people selling dollars and buying gold. Um and and so as the DXY has fallen, and it's fallen about 10% this year, price of gold usually is about a 3:1 rate ratio. So 10% decline in the dollar, 30% increase in the price of gold. Um the US has said and and you've seen, you know, Trump sort of talk about these things that what he wants going forward is lower interest rates. So lower interest rates means I don't need to hold dollars, less trade. Less trade, I don't need to hold US dollars. Um and he wants a weaker dollar, something there's called the Marilago accord, which is to devalue the US dollar versus other currencies. And Trump seems pretty committed to that. So all those things mean we probably go to the lowest the the dollar has been over the last 20 years which is about a 30 to 35% decrease from its current levels. So that's about a doubling in the price of gold. So that gets that starts to get you from 3,400 to about 7,000. And then once we have that momentum and people are sort of out there saying well wait a minute um you know the US is no longer going to be the main currency. What could be a main currency? And the only currency that no one country can attack is gold. It has no central bank. It has no politics. It has no committees. Um it has no political agenda. And that's why you see particularly and I was in Asia um for two weeks. At night when you would meet a lot of wealthy investors, a lot of family office people, they're like, "We want gold. We're putting our money into gold." I think in Singapore there's a 10,000 metric ton like Fort Knox there and family offices and wealthy people over there are just selling their dollars and putting it into gold because they can see where this is heading and they know it's a great investment and I think that's going to continue that momentum and gold always tends to overshoot. So 10,000 12,000 15,000 is is just their numbers but I think they're quite reasonable. So it really is based on history. You can see how that could play out for sure just based on how you've laid it out there. I want to talk a little bit more about what's coming for the dollar because when you talk about things like ddollarization and dollar going to its lowest level possibly ever, I think people hear that and they wonder, okay, how does this really look like? Is the dollar going away or is it more like it it becomes deemphasized? So, how how would you explain it? I think you have I do think you have a couple interesting things. I mean already what you're seeing is, you know, how tariffs are impacting in the world. I think vegetable prices, fruits and vegetable prices in July of this year rose by more than 40%, the largest increase on record. Um, so there is a lot of this is tied to people just don't want dollars. Um, they're they're taking the currencies elsewhere. Um, and you have sort of a you know the puzzle pieces don't fit. You can't um institute a big tax which tariffs are um which again consumers are starting to see. So, they're purchasing less, which is slowing down the US, which means that I'm purchasing less from overseas, so there's even less need for dollars. At the same time, we're running um nearrecord deficits. So, you need dollars for that. Okay? Normally, in order to stabilize the dollar, what you do is raise interest rates. And this is very similar to what happened with Nixon uh in the 1970s. If you go back and look at history, it's amazing how it repeats. Nixon went against the Fed. Nixon tried to replace the Fed. Nixon was arguing for much lower interest rates. Why? Because he was running big trade deficits and didn't want the big cost that comes along with that. Plus, the economy was being hurt by by the higher interest rates of the day. And so, he's like, just lower the interest rates. And and at the end of the day, what that did was really hurt the value of the dollar. Um, and send gold prices, we said, you know, from from $35 to $800. That type of situation seems like it's playing out all over again. You have Trump going after the Fed. He wants much lower interest rates. yet at the same time we're running huge budget sur deficits which need to be paid for somehow. Um and all these things are coming together where again every one of these things is a tailwind for gold. There's really nothing sitting in gold's path going forward and I think um you know large times you know really good times for gold have been there but I think they continue uh and and particularly into 2026. I think things could change if there's an election in 2026 and all of a sudden um Trump isn't allowed to do as much as he is sort of with these tariffs and you know even tariffs on like India and Brazil are sort of nobody really knows where he's going with this. All these things are doing damage to the dollar which again it seems like he wants. Um and again how do I hide in refuge if I'm an investor? It's gold and and I think there's you know that's been the momentum and it will continue to be the momentum. Yeah, nothing in gold's path. I think that's a very very strong way to put it there. And I'm wondering so in the scenario that you're laying out, how what are the implications for the US economy? How does that end up looking as we move forward here? Well, I think, you know, I'm I'm doing some work on copper right now and I'm looking at this. I mean, I I I think the US has a severe slowdown next year. Um, in in my viewpoint, I think all these things of, you know, probably one of the largest tax increases in history. Again, you see it in the price of goods in the store. So, so it's not I'm not paying more tax, but I'm paying more in the store, which you're seeing that. I think that slows down the US massively next year. Um, again, if I lower interest rates to try to help that out because, you know, we are starting to see, you know, the weekly unemployment gains. Looks like they're going above 2 million uh people for the first time in in in since co um and you're starting to see all these things. That's going to be the pressure where Trump will see, aha, see, we need to lower interest rates. But again, that might not do too much good because if if I can't afford anything, I can't afford anything. Um, but what it does do is tell investors around the world, why are you holding dollars? And again, there's there's going to be a really interesting uh push and pull where um if I lower interest rates, but I'm running deficits, that means I need someone to buy that debt. And if no one really wants to buy it because they don't have to hold dollars anymore, that means interest rates go higher. And and I think the Fed's biggest fear is this. They cut interest rates, but the real interest rate that you see in the 10year and 30-year bond do not decline. And that happened a bit last year when they started to cut rates uh in September, October of last year. The long rate didn't really move much. And so what's scary from an investor standpoint is if the Fed no longer controls interest rates, then markets do and interest rates are going to go wherever they want. And that's that's just not good. But again, that's all the destabilization of the dollar. And if and again, as an investor, all you care about is okay, where can I if I'm not going to go to the dollar, where do I want to be? I don't think I want to be in euros or yen or other currencies because in that case, the US could go after that. You know, hey, everyone's buying Swiss Franks. I'm going to put a 50% tariff on on on Switzerland for everyone buying their currencies. If it's gold, there's no one to attack. There's no one to tariff. There's no one to go after. And so, it's a great um place to hide in in areas of high uncertainty, right? You can definitely see how it all connects. And I promise we'll we'll stay on the track of gold, but just because you mentioned you're doing this research in relation to copper, I'll ask you briefly, what is your outlook for copper? Because of course it is it's Dr. copper. tells us how the economy is doing. So, what are you seeing for copper? Well, I have to make the uh opening statement on copper during LME week. LME week is when all the copper buyers and traders around the world descend in London and I'm just starting to put together my speech for for Redcloud. Um I think next year is really difficult for copper, but it's hard to judge because so for example, this year the dollar has declined by 10%. The price of copper in US terms have gone up 10%. So if I'm anywhere else in the world, my price in copper has been unchanged. So you know, do you say what is the copper price in dollars or what is the copper price that most consumers around the world are paying? And that's that's sort of difficult. But we do see that copper growth will slow from around 3% this year to about 1% next year. Um and the US copper demand will probably decline by about 6% next year um from this year's levels. And this year we'll probably be down 1 to 2%. Again, it's um you know, particularly in the US, you had a 50% tariff on copper, which sent the price of copper from around, you know, $350, $4 range to over $6 range. Um I was talking to some contractors who were saying that their monthly um bills in terms of the the building material, which is pretty copper heavy, had doubled um since a year ago, and they were and because of that, they had to increase their their prices to their customers and so they were seeing a lot fewer customers. I think that ripples through the system next year. Now, I think what happens um beyond 2026 is actually incredibly positive for copper and that is one of the things you hear a lot about is AI. Like AI is the term we hear about every second of every day. Well, to make AI work, you need these server farms. These server farms are massive in terms of power uh needs that they have. So much so that the one place in Europe that was building a lot of server farms was Spain. Spain built like six massive server farms. It they used so much power to stabilize the grid so much that the entire Spanish uh electrical grid collapsed. Um and so now what you're seeing is huge amounts of backups power being added to there. But not only there, but to China um and to the US. So much so that I think by 2035 um more uh batteries will be produced for backup power. Not only for for you know um solar farms and wind but every business out there worried about the grid being destabilized by AI is going to want backup power. Battery backup power has become super cheap. And so you're seeing this unbelievable growth of 100% in in 2024, 200% this year, and probably another 50 to 100% next year. That uses, you know, not only the the copper that's in the batteries, cuz the the the batteries all use a lot of copper, but the the wires that go into these battery packs and then the infrastructure and transformers and everything else that you need. Um, I think copper really catches a tailwind from this. And once we get through a period where the US isn't so disruptive using tariffs um and you see this huge tailwind from all these backup grid systems going up because of AI um I think copper has a great 2027 28 28. So it's a little tricky. If you're a short-term trader you're probably a bit nervous about copper over the next, you know, 6 to 18 months. If you're a long-term holder, you love copper for the long term because I think the demand for copper is going to be unprecedented because again the switching of the world over to to massive needs for electricity and that's why you hear you know China building the world's largest hydroelect electric dam ever um why you hear the US um talking about nuclear and other forms of electricity coming in. It's a lot of it comes back to people foresee how much uh how much power demand and to to show you how much uh I did a study for a server farm one server farm and you might have seen Tesla has something called a mega pack which is like a like a trailer car um to hold just 48 hours of electricity for one server farm you would need 7,000 of those mega packs so the power demand is just phenomenal and we are building as you know and seen the videos coming out learning today. I don't know where they are, but all that's AI, AI, AI, AI. Trillions of dollars going into it. And again, the only way we can secure the electricity for that is to build a lot of copper. And I think that's where it comes to play. That gives us a really good picture of the magnitude of copper demand. Just a small followup on on the supply side because obviously we're going to run into a crunch there. How are countries around the world doing in terms of speeding up copper supply, getting the the projects approved, the mines online? Because it's it's a very very long process and of course we're going to end up needing it. It is. And I mean, you know, in the United States, uh it takes around 29 years to get a copper mine up up online. Um I know the US government's trying to cut the red tape. um and that if they do a great job and cut all the red tape and there's a lot of silly things done with the with the uh with mining um permitting you know for example um if I have a mine in say Nevada first thing I need to do is Nevada's going to come in and do an air permit and do all this testing for 6 to n months and then be like okay then when there is done the federal government comes in and they do their air testing and then they come up with slightly different things and so they have to go back to the state and then that goes on for a year or so then they finally okay air permits per now we have to do the water permit like like why they all couldn't do all of these permits which are sort of codependent at once together is something I think needs to be done and I think it's starting to be done but even if you had a perfect scenario where all the permitting was done perfectly you know synced together there wasn't um so many um things stopping mind development you still are talking 8 to 10 years for a mind you know just How do you have to plan it? Permit it. You know, you have people underground. You don't want them collapsing. You have a lot of equipment which takes many years to build because there are almost always specialized pieces of equipment for that mine site specific. So, you do have a very long time frame no matter where you are and no matter where in the world you are. So, the world is going to have a difficult time finding this copper. And the only way to really incent, you know, this to move any bit faster is a higher price. And so I know there's a lot of guys out there like Robert Freedelland who just say like look copper is going to have this great run. I can't argue against him because the electrification trend and AI is unstoppable. Um which means demand for copper is going to be very very strong u particularly I think after 2026 and so the price of copper should go significantly higher in order to incent either incent copper or at a certain price then you're going to use alternatives. there's, you know, aluminium and other different metals that could be used to sort of supplant um copper, but but I think copper has a has a really good run because it's it's a really good uh where it sits on the periodic table is great for electricity movement. Okay. I think that gives us a nice look at the full scope of copper. So, I'll go I'll go back over to gold. And so, you're talking about the central banks obviously have woken up to this need to own gold. They've been buying and buying. And you mentioned your travels in the east. people over there definitely want gold. So I'm wondering when when does the West start to wake up to gold a little bit more than we've already seen at this point? Yeah, you still when you talk to portfolio managers, they don't have large gold holdings. Um and so um and you talk to most investors out there and I'm sure a lot of people watching this uh this podcast are probably gold bugs and so they're like, "Wait, I own gold. Like I'm really into this." But when you go to the general public, their holdings of gold, their holding of gold mining companies is near nil. Um, and so I think what happens is you'll continue to see the price of gold uh do very very well. Um, I would not be surprised if central banks continue to accumulate gold uh and the dollar continues to be less and less of world trade. Remember, we've gone from 72% to under 50% in the last 25 years. as we get to 40% or 30% of global trade, um, you know, there's going to be a need for an alternative. And I do think goldbacked currencies make perfect sense. You know, unlike cryptocurrencies, they can't be hacked. and and my biggest sort of black swan event for the next two years is this quantum computing uh comes so sophisticated and nefarious folks get a hold of it and start cracking the codes much quicker than the security of these cryptocurrencies can handle and all of a sudden they wake up till the morning to trillions of dollars of losses um you you can't do that with gold um and so I think gold really becomes to the four as sort of a global stabilizing currency force that it's always been for thousands of years and and at that point people realize they have to own gold. They have to own gold miners who are producing the material and have the value in the ground. And I and I think then gold becomes much more mainstream. But I am still shocked when I speak at gold conferences and you know I I'm at Bloomberg where I was for a decade I would go to a lot of gold conferences. I would be on your podcast as as well as others. It's it's you know almost a decade later I'm going and there's a lot of the same people from a decade before. there there hasn't been sort of a new and energized and younger crowd really interested in gold. That needs to occur and I think it will occur. Well, definitely. I think if what you're outlining there comes to pass, people are going to have to wake up to gold. And you're right, many people in our audience do own gold. They own gold stocks. But I want to ask, okay, so if we have gold going to 10,000, it sounds pretty appealing. You could just own gold and you would do you would do pretty well. But if we get into looking at the gold stocks, I'm wondering where you see the most potential if people wanted to go into the companies. Well, I do think um look uh I I really like to follow the JDXJ. It's the junior gold mining index. It's very liquid. It has pretty broad coverage. Wish it was a I wish it had more junior miners in there, but it is what it is. But I've done some research on it. It is currently trading between 75 and 80. If I look historically where gold trades versus the JDXD valuation, it should be closer to 300 today. Just on historic valuations, if you look at the premium of gold over the cost, which is at all-time record highs, um these companies are just not getting any sorts of historical valuations yet. Yes, it's it's up about 80% this year. So, it's had a good run. But if you look if I went back 25 years and just mapped out where the JDXJ has been versus the price of gold versus the margins they're getting which is a huge value of of the the what you're getting in the ground um you you are talking closer to 300 for the JDX. Now, if we were to go to 10,000, obviously it's it's quite astronomical. And so, what starts to unlock it, yes, slowly but surely, you know, we have seen that, you know, these juniors do better, but I think you're going to have to see acquisitions. I think what you're going to have to see is, you know, I can go on my Bloomberg right now and I can hedge out gold um to I think about $6,000 30 years from now and it's quite liquid. So, I mean, you may see some companies say, "Wait a minute. I, you know, I have this minor with this great asset. Um, I can produce it, say, $1,500 an ounce for the next 20 years, and I can hedge it at, you know, four, five, $6,000 over that time period. It's free money. Why don't I do that? I'll acquire this company." Or you'll see a lot of other mining companies, you know, start to say, "Wait a minute. I need to have gold as part of my portfolio." As the value of gold goes up, the revenue goes up. it moves the needle more for these bigger companies. So, I would expect um acquisitions, probably bigger acquisitions, I I would say um some of the major miners, but as that occurs, what you're going to see historically is just a rapid roll up of smaller names. And so, you'll start to see these names rolled up and they're so cheap. I think it happens relatively rapid. So, it's it's going to be a bit of a flash sale. I think once it starts to seals, you'll see one of the major gold miners acquired by one of the real big miners. And then all of a sudden, people are like, "Wait a minute. This is why they're doing it. this is how profitable it is. Like what do we you know why are these things trading so cheap and then boom um there's as you say there there's not a lot of um wide broad ownership. As soon as you start to see that ownership sort of broaden out and you know the people who do chat rooms and things of that nature say wait a minute you know here's here's these gold companies trading at you know three four five times cash flow that's ridiculous and in something that's so valuable. um and then you'll really start to see it go off to the races and that's where I think the JDXG has just a phenomenal run and these companies do very very well. So we are we are due for some M M&A activity that is difficult to say in the gold space. We have seen some some deals so far. I'm wondering what you make of the transactions that have been taking place so far in 2025. Are you liking what you're seeing? Do they make sense to you? Yeah, the deals so far this year make a lot of sense. I I think you are seeing a pick up in M&A. um it's slowly but surely starting to go there. But if you look historically and really if you look at, you know, the the time frame of of the late 70s or the time frame really in the early 2000s, you you saw a lot of the names and one of the names I used to cover as an anal pup analyst back in the 90s, Homestake, Battle Mountain, a lot of these other companies, they're all got acquired. Um, and they all got acquired relatively quickly when the price of gold sort of took off and people like, "Wait a minute." Um, now at the end of the day, um, while you could hedge out and make guaranteed returns, a lot of companies don't do that. They like to have the price exposure, but still I I think what what happens is people tend to follow others. And so I think you need a few more deals to be done that are a bit more high-profile to where the bankers start going around to all the companies and saying, "Hey, like do you realize how cheap these things are? This just isn't right." And then you it starts feeding frenzy. Now look, um if the price does go parabolic, it's going to be really hard to sort of say, "Okay, we we've done enough here." Um you know, I had to go to the London Metal Exchange Week a few years ago. One of the reasons they always invite me back was I was the bear on lithium when it was, you know, near $70,000 and it was like, "Lithium's really common. This is a bit ridiculous where the price has gone and people were throwing tomatoes at me." Um but but the money was there to the money was made at that point. you need to know that things are cyclical and and things will go down. Um, but I but I do think we're, you know, not even the first batter has come to the plate in the first inning here. I think we have quite a long ways to go, but I do think once it starts going, um, you know, first of all, I think your podcast viewership's going to go up like a hundfold. Um, but but but I do think, you know, let's wait for that to occur, but everything is lining up right now for that to occur. And that that's really great. Still early. I I always like to hear that cuz it means there's so far to go. Okay, so we've got a good picture of what's happening with gold. I have to throw in a question on silver because if we're talking about $10,000 gold, people are of course going to wonder what is coming for the silver price, especially right now with all this talk about gold silver ratio and what's going on there. So, what are your thoughts? I mean, silver, I I I've never been a ratio person and I know people love the ratios and things of that nature. In general, what you see is, you know, a rising tide does lift all boats. And so if you talk about silver or platinum or palladium, I think silver closely follows gold. And so if we do see gold continue to have a pretty significant run, silver should be fine. Again, it's sort of um also seen it's not really held by by central banks because it's not a tier one asset. The big change for gold came a few years ago in Basel 3 when they made gold a tier one asset which means that from an accounting standpoint I count the value 100% of the value of gold. Before I could only count 50% of the value of gold. So there was less allure to owning gold. But when they said hey it's a full currency. Now could there be pressure on central banks to make gold uh make silver a tier one asset and fully valued? That's possible. But but I think there's always just a a cotales of silver to gold. So whatever is good for gold is is good for silver and we have seen silver have a really nice run here and I would think the two together do quite well. Platinum and palladium are are um a little bit different. Yes, they are precious metals um but you have to worry a little bit about them um in terms of one they're in they're an industrial metal and as I said I think industrial demand next year could be soft. Um, and two, the the the movement to uh to EVs, which you know, if you look at China, where I was just there, about 40% of the cars sold now are EVs. And in Europe, it's it's about the same. The more EVs produced, the less catalytic converters you need, um, and therefore, uh, lower demand for platinum and platium. So, there are some industrial things you need to consider with those type of metals, um, and how that impacts, uh, overall demand. Yeah, all the all the precious metals are slightly different even though we group them together. So, thank you for going into that. And I I'll let you go, but before I do, I just want to ask, are there any other areas of the resource sector that you are interested in or focused on right now? You've got such a a broad background. I'm sure there's other things you're keeping an eye on. Yeah, I mean, if I if I were in the space, the one thing I'd look at, and it's very niche, but is magnetis. Um, uh, in terms of battery demand, we are seeing this unbelievable increase in uh, battery production. I I think a lot of people particularly in North America they say well levies are dead everyone hates them but over global battery production this year is going to be up about 60 to 70%. Um most of that is going towards stationary storage. Now, if I'm a battery company, I need to get my cost as cheap as possible. And the way to do that is to actually switch from iron phosphate, uh, which most batteries today in the world are made. It's called LFP, um, to LMFP, which is iron f, which is maganese iron phosphate. What that does is it gives you a battery that has maybe 50 uh% more energy density and is cheaper uh, than LFP. uh having just been in in China a few weeks back, um production of of manganese powders in 2023 was 1,000 tons. Not much. Last year was 10,000 tons. Okay. First quarter of this year, 25,000 metric tonses. And when I was there in China, they think this year could hit 250,000 metric tonses and then a half a million metric tonses uh the year after. So, um, you know, it's going to maganganesees is going to be sort of a a really important metal for batteries. That hurts nickel and cobalt demand, by the way, but it does help uh manganese demand. Um, don't just buy anything with the name maganesees in it. Make sure that company can process it the maganesees into first of all battery grade material and then into powder. Um, what we've seen in the west is the value chain doesn't exist. And so if I produce maganese powder in the US, I then have to ship it to Korea to be made into a maganese precursor, ship it back to the US to be made into a final battery powder. There are companies in the world that actually can give you the full value chain and ship that final powder just to a cellmaker. And those companies exist in China. There's a couple of them trying to exist outside of China. And if they do, that's going to be really really huge for um for the battery business. So So watch manganesees. I've been a huge manganese bull for years. I gave the opening speech at PDK 3 years ago when I said it and people like it's not going to happen. It's happening in China and whatever happens in China battery wise happens in the rest of the world. It just we're just a little bit behind. Well, really interesting. Thank you for mentioning that one. I It sounds like a tricky one for people to address, but definitely opportunity if we can figure it out. So, thank you so much. This was really great to to have you on. Thanks you so much for having me and uh hopefully we'll come back when the price is a lot higher and discuss uh you know when we're at 10,000 we'll say okay we told you we'll get here now now let's calm down a bit uh which people don't like to hear at that point but but uh ride the wave that we're going to have uh occur right now. Absolutely. We'll make sure we'll make sure to have you back hopefully along the way to 10,000 not just when we get there. So I'll let you go for now. This was this was great and for now once again I'm Charlotte Mloud with investingnews.com and this is Ken Hoffman. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]