Will Rhind: Fed Now Has Room to Cut, Expect the Dollar to Weaken Further
Summary
Market Outlook: The recent CPI report showed cooler-than-expected inflation, leading to market optimism and expectations of a Federal Reserve rate cut, which could ease financial conditions and support stock market growth.
Gold and Currency Dynamics: Gold's rise is attributed to the weakening of paper currencies, with central banks holding more gold than US treasuries for the first time since 1996, indicating a shift towards hard assets.
AI and Tech Valuations: The current AI boom is compared to the dot-com bubble, with high valuations raising concerns of a speculative mania, yet the quality of companies today is considered higher, justifying some premium.
Commodity Investing: The commodity market is divided between strong-performing metals like gold and underperforming energy products, with geopolitical risks and supply chain issues influencing future investment strategies.
Investment Strategies: There's a shift towards more precise investment exposures tailored to specific needs, with a growing trend of self-directed investing driven by technology and increased financial literacy.
Alternative Assets: The relationship between gold and Bitcoin is seen as competitive, with both serving as alternatives to traditional assets amidst concerns over market highs and government debt.
Diversification Advice: Diversification remains crucial for building resilient portfolios, with the current market offering more investment choices and educational resources than ever before.
Transcript
Welcome back. I'm Jeremy Saffron and we're coming to you on what is shaping up to be a pivotal Friday in the markets. Now, moments ago, we just got the September CPI report which was delayed due to the ongoing US government shutdown. Now, according to the BLS, the Bureau of Labor Statistics headline inflation came in cooler than expected, rising 3% year-over-year. Now, the market's reaction was quite immediate here. The S&P 500 hit a new all-time high and gold continued to spike as traders now fully price in a Federal Reserve rate cut for next week. But this morning's optimism comes at the end of a brutal whiplash week for investors. On Tuesday, gold, as we just showed, suffered its worst single day crash in over a decade with 6% intraday swing that erased months of gains in just a matter of hours. It's since stabilized there past $4,100 on the spot side. And this is happening against a deeply conflicting macro backdrop. The IMF just released its world economic outlook calling global prospects quote dim and projecting slowing growth into 2026. And at the same time, the stock market seems to be telling a very different story. Now, we're in the middle of a strong Q3 earnings season. But valuations, particularly in tech, are at levels not seen since the dot bubble, leading major banks and even the IMF to warn of a potential market correction. So, what do we do here? How do we navigate this uh a slowing global economy, extreme volatility, and a potential bubbly stock market? Is this time for safety? Is it time for speculation? To help us make sense of it all, we're joined by a true architect of modern investing. He was there for the rise of ETFs at Eyesshares. He led the sponsor of the world's largest gold ETF. And today, he is the founder of uh C and the CEO of Granite Shares. Now, that's a firm that has amassed over 11 billion in assets by creating the very tools investors are now demanding. Will, welcome back to the show. Good to see you. >> Good to see you, too, Jeremy. Thank you so much for having me. >> 11 billion, huh? You've seen some inflows this cycle. Uh, I want to talk to you because speaking of cycles, I mean, you've been in the industry through multiple cycles. Does this combination of slowing growth, you know, some sticky inflation and this extreme volatility signal a structural shift in the market and a a new regime that investors need to prepare for? What are your thoughts on this market? >> I actually am pretty positive about the market in terms of where we are today. I think what you're seeing in the stock prices at least is the positive news that we saw today on inflation, but more broadly giving the Fed that room to cut interest rates um to ease financial conditions that will, you know, help stock market earnings and prices going forward uh from here, certainly to the end of the year. >> Yeah. Yeah. Uh we're going to get into some of those returns because I mean they've been incredible. I mean, the S&P is still kicking it today. But you've said when we talk about gold, I mean, you've said before that gold's rise isn't about it becoming more valuable, but about paper currencies falling. Uh, obviously, we got that debasement trade, we're seeing it now, reports of central banks obviously holding more gold than US treasuries for the first time since 1996. Is this debasement trade accelerating? I mean, what are you seeing in your own fund flows? Are investors actively moving into hard assets like your gold ETF, BAR, is kind of a direct response to this? They they are in short and you know we've seen this year probably the best example of where you know the dollar's fallen um year to date against other currencies and in many ways you know the Federal Reserve and the US economy has been an outlier in terms of interest rates versus the rest of the developed world uh with with a few exceptions but with the interest rates coming down and again today's inflation data you know giving the Fed that room I think to to continue to cut you that interest rate differential between the US and the rest of the developed world starts to shrink and therefore the the premium if you want to call it that on US dollars uh shrinks also with that the relative attractiveness of the high yielding dollar um versus other currencies. So I think we expect the dollar to weaken further and obviously that you know in the historical context has always been good for gold. >> Yeah. And we've seen, you know, obviously we get that latest print today uh a little bit less than expected, which is always positive. Of course, the Fed possibly cutting. Um but a lot of investors have been worried about stagflation. I mean JP Morgan has called gold that ultimate hedge for this exact risk. As a product creator, I mean, how do you think about building a portfolio that's resilient to stagflation an environment where both traditional and stocks uh maybe some bonds could get hurt? Yeah, I mean I think in in an essence uh Jeremy, this is really what we do in a nutshell, which is our job to build portfolios, build investment strategies for all market conditions, regardless of whether we're in a high growth environment, a low growth environment, high inflationary environment, low inflationary environment, and everything in between. So we always hope to have something in our portfolio that we can offer investors that will perform you know in any market conditions whether it be stagflation or whether it be you know normal market conditions. I got to ask you about the commodity complex. I mean it's been fascinating to watch throughout the entire years. Obviously we're seeing some of those earnings come too as well. And then we layer on top this geopolitical risk. I mean the list of hotspots is is growing from these trade tariffs to active conflicts creating some pretty big risks for the supply chain market. Uh how does this fracturing kind of global order change the calculus for commodity investing for say the next 5 years? What are your thoughts on that on that macro front? >> Well, I think that um we really have to sort of talk about commodity investing in two camps at the moment which is hard assets and everything else. um hard assets and particularly metals have performed very well this year and that's really been the trade of this year from a commodity perspective. You know you've got gold outperforming stocks you know quite significantly and then you have silver, platinum, palladium you know other metals um that are also joining this party and outperforming. So that is the good news. The perhaps less good news is the other commodities namely some of the energy products the oil etc hasn't performed that well and that's largely because of the concerns about the global economic growth um and you know perhaps the economy slowing down and the demand not being as robust as you might expect. >> Yeah. Yeah. I'll ask you about about oil because it's been fascinating just watching some of these new tariffs come into play and what that means. It feels like crude is just taking a little bit of a breather here. But you know, we talked about it briefly there, Will, on this stock market environment, right? I mean, the macro uncertainty is creating a fascinating disconnect because corporate earnings are surprisingly strong yet valuations are at levels that many including the IMF and some major bank CEOs are warning about that potential bubble as you've heard, right? Particularly in in AI and I mean the S&P's forward PE ratio is now rivaling the the peak of the dot bubble. Is is someone who was at Eyesshares during the first tech bubble? I mean, does the current AI boom feel like a durable revolution or a speculative mania that could end badly? You seem to think it's it's we're in a good shape here. >> I I I think sort of all of it can be true. And that's the the interesting part about you know whenever you go through phases like this and you know the late '9s the dotcom bubble was was no exception in that you know there were huge amounts of money made in that time huge amounts of money lost. There was a huge amount of money that was burnt uh in terms of capital expenditure on building what we now obviously know as the internet. But the results of that were clearly the the content companies just for one that everybody knows and loves today and the Mag 7 uh players which are largely created out of the back of that. So I think that today is no different. We're talking about AI in the context of being the fourth industrial revolution >> and I think your starting place is you have to obviously come to a conclusion whether you're a believer in the AI story or not. There is absolutely no doubt, everybody can see it, that there are hundreds of billions of dollars being spent on building the AI infrastructure of the future. Not everybody will be a winner. Not everybody is going to come out smelling like roses uh in this. And there's no doubt that this will create winners and losers just like it did before. But I think everybody that's in this game right now is of the belief that the opportunity is too big to stand on the sidelines and therefore people must invest. They must try and build to take advantage of this potentially once in a generation opportunity. But of course within that there is a cautionary uh you know piece of information just like there always is which is again this is not going to be something that benefits everybody uniformally. >> Yeah. and the you know this AI buildout will obviously require a biblical amount of power and raw materials like copper you know data centers are driving a massive capital expenditure cycle is the most durable I mean outside of that we can take the risk on the S&P and some of those meg 7 but what about the picks and shovels I mean is that a way to invest in this revolution not through the tech stocks themselves but through the commodities that physically power it >> yeah I mean there there are different ways of looking at what that actually means because I think this standout company within the space is Nvidia which people would point to as being the manufacturer of the picks and shovels so to speak for the AI industry. People now also talking about Tesla in the same way that in terms of physical AI that the two leading companies out there arguably Nvidia and Tesla. Tesla obviously being the the company that will hopefully deliver the autonomous vehicles and potentially robots that that people talk about so much with or synonymously with AI. But you're absolutely right. There's also the power. Where does this power come from? That will power the AI data centers, the hyperscalers, etc. That power has to come from somewhere. And that's why there's a race you've seen with nuclear stocks with all sorts of energy providers all the way through the ecosystem and again massive wranglings between the US and China over the provision of rare earth minerals which are you know critical for the production of of some of these new technologies. So this is something that really is not just about mag 7 tech companies that the ecosystem around AI extends way further and way beyond that to you know traditional power players uh as well as you know utility companies and other perhaps less um sexy and well-known parts of the industry. >> Yeah, well said. And I mean it brings up the core you know core risk too. I mean the rise of passive investing has fueled the growth of these mega cap firms creating that kind of feedback loop where the weight on the index just continues to get bigger. No, I mean the top 10 stocks now make up a record 39% of the S&P 500. What does that concentration do in terms of risk? I mean if if any bubble pops there, I mean what happens to the millions of investors in in simple index funds? well that they their perspective shares of that index um would go down just like anybody else because the index is the market, the market is the index whichever way you want to look at it. I think one thing I would say or would point out just regarding the valuations that yes the valuations are high and you can look at the the context of you know today's valuations with for example the late '9s etc. But I would point out that you know the companies today are a lot higher quality than they were in the late '9s. So while people can look at just numbers in a vacuum and say ah you know the PE is this and that and you know there it's analogous with it. Yes. But looking beyond just the raw numbers the quality of the companies is just very very different. So you could argue just right there that you know where we are today does deserve a premium in terms of the market because the the companies are just not the same as the pets.coms and things of the parts that you know these are are massive corporations that have proved themselves in many cases over a decade. I mean clearly you go back to Microsoft Amazon these were companies that were were here in the late '9s um and have not just survived to tell the tale but have thrived and gone on to be some of the largest companies in the world. Yeah, some of them continuing to just, you know, beat expectations. I mean, what are your thoughts on investors being more selective kind of in this market? I mean, your career tells a story about evolution. You helped build that the passive revolution, but now you're also creating these highly active kind of tactical tools for for what you call the high conviction investor. Uh, is the era of, you know, simple passive buy and hold investing over? >> I don't think it's over, but it's definitely evolving, Jeremy. I think what we're seeing is with the, you know, advancements in technology, you know, that this extends to not just the the companies that we know and love, but it extends to areas of the market that we exist in, for example. And so with the advancements of technology, we're able to bring new products to market, which were not possible a few years ago. And that means new types of investment strategies. And so we're seeing an evolution where the market is going to more precise investment exposures that meet people's specific needs. So perhaps put simply, we're producing the tools that investors can use for very specific jobs as opposed to maybe going to generic solutions um as they might have done in the past. So whether that's you know specific leverage solutions, whether it's income solutions, whether it's commodity solutions, you know that now you can find something very specific that fulfills your investment objectives in whatever market environment. What what does that look like? I mean is it is it you know dividend investing? I mean you talked about a shift in retail behavior kind of a move towards what you're calling financial independence where people want to generate active income streams. Is that what's fueling the explosive demand for your leveraged ETFs which which have seen billions in inflows? >> Yes, in part. So what we're talking about and what we're seeing I think is the biggest trend in investing um certainly today and I think over the next you know 10 20 years at least is more and more of the market going self-directed and so you can call it the empowerment of the retail investor you can call it self-directed um but one thing we know to be true is that the the size or the share of retail or self-directed investing in the market is getting bigger and bigger. And that's a combination of you know advancement in technologies again allowing better easier access to markets that's you know more wealth being created that allows investors to participate in markets and that's a higher level of education that is enabling investors and giving them the confidence to start investing in the market earlier and earlier. And the confluence of all of those factors means that you've got a larger investing population going self-directed and within that have different investment needs. Whether, like you said, whether that's high income, whether it's, you know, outsized risk profiles, whether it's more conservative investing. Um, it's it's really dependent on the end investor, but we're seeing more investors doing it and doing it from a younger age. >> Yeah, it's been fascinating to watch. And of course, there's those leverage plays, too. I mean, where does the responsibility begin and end? Should there be stricter suitability screens for someone that can trade two times or kind of these option linked ETFs? >> I mean, there are for brokers. I mean, that's that's really, you know, the at the end of the day, it comes down to the broker and the suitability of the customer to buy any investment. >> However, you know, we live in a market where, you know, we are a free market. We give investors access to investments and ultimately whether it's the broker, whether it's the investor, you know, it's up to them to decide what investment objective they have and whether these are the right tools um to fulfill that and whether that's you know leverage ETFs or investments, whether it's options, whether it's other forms of of derivatives um you know that's the market that we live in and you know depending on your investment objective these tools may or may not be the right fit for you. >> Yeah. I got to ask you about investor behavior because it seems to differ globally. I mean, you're in what, the US, Europe, and Asia, I believe. Right. Well, I mean, you said that there's a there's a greater appetite for risk in Asia compared to the nanny state mentality in Europe. How do those cultural differences kind of shape the products you create and and what do you see as the future of global investing then? Yeah, I mean I I think it's always dangerous dangerous perhaps to like overgeneralize, but um my observation has been that in markets where you have strong economic growth where the demographics are in your favor i.e. skew towards a younger population and you have upward mobility. Those are the markets where we see the most activity from an investment perspective. those are vibrant you know retail markets which are typically enabled by you know the regulatory structure as well. Now to over oversimplify, we see that in North America, we see that in Asian countries, but less so in Europe. And I think that that is a you know just a difference in sometimes in culture, sometimes uh in terms of where the economies are that you know people perhaps have you know less money to spend are perhaps more risk averse and that translates through to the investment fabric. >> I wanted to ask you I mean it's kind of funny. I mean, we established a bit of a playbook for that more active selective kind of investing, but I wanted to ask about these high beta plays for the audience because usually we think of of mining stocks, right? I mean, at least for this audience and a major producer like Numont can report huge cost savings and solid results, yet the stock seems to sell off here and then that's been a reoccurring theme across the the mining space this year. Is is this simply a buy the dip opportunity? What are your thoughts? cuz I know again you're kind of the foremost gold experts but you don't have any I mean shares has no ETFs on the mining side only physical exposure. Um was that a clear deliberate decision? I mean what's the structural flaw here on those equities? Um, I don't think it's um I don't think it's necessarily a flaw with the the companies themselves or the idea of investing in say something like gold mining or gold as a proxy through through gold mining stocks. >> You know, for us it wasn't a deliberate decision not to do that. Um, I think it's just something that we have been so active in the physical gold and physical commodity space for so long. That was the first natural move for us and you know at least when it comes to gold uh the gold companies you have tended to underperform gold but I think part of the reason for that um has been that in previous bull cycles it's always been difficult for the companies to ultimately control costs in other words that the costs have been rising inflationary pressures uh on costs have been rising faster than you know the growth of the companies or the revenues of the companies themselves and that's always created this this sort of you know disconnect between the price of whatever the mining company is and the price of the commodity itself. And so you know that philosophically that doesn't mean that we are uh against or or you know not willing to invest or bring products that are involved in underlying mining companies. It's more just an explanation for your direct question around pneumont and perhaps why some gold companies don't seem to participate uh in the gold price movement as much as gold itself. >> Yeah. Yeah. And I mean it brings up a crucial point of of trust for our audience, right? I mean you were at the helm of the sponsor for the world's largest gold ETF. In your experience for physically backed products like like your bar or PLTM ETFs, I mean is the metal really there? I mean, h how does an investor get comfortable that the paper they own is fully backed by the physical asset in a vault somewhere? >> Great question. So, at least when it comes to us, I can tell you that the underlying gold platinum in our case is really just the two that we have. they're physically backed and not just physically backed which means that they have you know physical bars or platin ingot um in a vault but they're allocated which means that they are the property of the trust that's the ETF vehicle and that ETF vehicle is owned directly by the shareholders they're not the property of a bank or a third party and they're not what we call unallocated or they're not in simple terms able to be lent out into the market, which is the great concern I think when it comes to investing in gold from a lot of gold investors. So, at least the the ETFs that we sponsor, the Granite Shares Bar ETF and Platinum, which is our PLTN, they're physically backed, don't have counterparty or credit risk of a respective custodian, and can't be lent out. And I think the other thing that's worth pointing out is, of course, these are highly regulated financial products. They of course law by regulation have to be regulated, have to go through um financial audits just like any fund. But we go one step um further than that and actually have a third-party independent metal inspector come into the vaults two times a year and do a audit of the metal that's in the custodian's vault against the records that have been held by the fund just to make sure that your investors get that sort of ultimate um confidence or trust that the actual metal is there. So that's beyond even the the statutory financial audits. Yeah, I want to have a little bit of fun. Look beyond gold because you just brought up platinum. I mean, you've said in the past that this platinum run could be significant. It's often an overlooked story. I mean, it's an industrial metal with precious metal qualities and it's still facing supply deficits. I mean, what's the case for your platinum ETF PL PLTM today? >> Yeah, it's a great great question and something that I think we've been big believers in the platinum story for quite some time. uh just hasn't worked out. And this year maybe is the final time we say that this was the year that platinum broke out. Of course, for for everybody watching the show, I think that everyone would be familiar with the fact that once upon a time platinum used to trade at a premium to gold. That was the the gold platinum premium. Uh platinum was so much known for this that in the English language we created a word that was synonymous with above gold. In other words, platinum was a platinum credit card was superior to a gold credit card, etc. Um, such as this prem this premium sort of baked into law. Um, but of course, platinum ended up trading at a discount to gold particularly after the financial crisis and really remained that way um, ever since. So, as we sit today, could $1,600, you know, platinum turn into $4,000 platinum or plus? then maybe that um that sounds difficult to comprehend at the moment, but as you said, this is a market that's 30 times rarer than gold. So, we're talking about a lot smaller market. It has some of the same properties as gold in terms of being used for jewelry. It's used for investment and of course, it has a vibrant uh demand in industry, not just in terms of traditional industries, but also perhaps the industries of the future. talking about uh the potential for platinum's use in the production of hydrogen uh production of green hydrogen which of course plays a part in the new or the electrification uh of everything argument. >> Is it just a supply and demand story? I mean we got the constrained South African output which we know about the the record automotive demand and these tightening inventories. I mean do you see do do you see that gap closing will and and what would it take for platinum to reclaim any kind of premium valuation? I I think that's what you're seeing at the moment, Jeremy. Is supply and demand driven because it's a it's a smaller market. But in the same way as it is for gold, you know, that the central banks have been, you know, strong bid in the gold market. Now the investors have jumped in um really, you know, helping to move that price. I think platinum's a similar thing that you've got the supply and demand imbalance. You have strong demand. Um but it would take you know for platinum to go a lot higher. If investors really started to em embrace platinum uh at the moment then you could see the price going higher. >> Okay. Well we can't talk about metals without talking about silver. It's facing a massive multi-year uh supply deficit. I mean we've been covering it quite a bit here at Kiko News and it's driven by that soaring industrial supply and then of course we've had these comx inventory losses happening a little bit too. It seems like it's working itself up, but some banks are forecasting prices as high as $65 by 2026. I mean, I know you can't give us a price outlook here, but what's your take on the silver story? I I I think so similar to platinum um in that it was inconceivable and and maybe you know people will say that of course these things are always easy to say within with hindsight but it was perhaps inconceivable that we were in an environment where we were hitting $4,000 gold or certainly north $35,000 gold and we weren't seeing much of a equivalent move in the likes of silver in the likes of platinum. Now that's starting to change. Um, and as you rightly said, you've got supply favorable supply demand conditions in both silver and in platinum. >> But I think, you know, in ordinary market environments, we would have expected this to happen. You know, price of gold moves up almost always, you're talking about a lock step movement in the price of silver, albeit with a bit more volatility. So it was perhaps unusual that we were seeing such a rally in gold and not the kind of equivalent response from the silver market. So maybe now it's a it's more of a question of catching up. You know the gold silver ratio I think got to sort of alltime extremes. Um and now it's more probably a question of of silver prices catching up to gold as opposed to anything else. >> Yeah. Did you I mean were you worried there for a minute when we saw this this backradation happening in in COMX? We were hearing about this supply squeeze. I mean, were you worried at all about that? I mean perhaps worried is is maybe a bit a bit step too far in terms of um I think that you know again these these things whether it be natural supply demand conditions squeezes and different parts of the market. We've seen tariffs play a role in terms of interrupting flows and you know demand for certain types of of flows at different times from where the US and UK other markets. So it wasn't necessarily a question of of worry, but I think it just exacerbates an already stretched situation when you're talking about some of these markets where they are under supplied and you know small demand distortions can have an outsized impact on the underlying market. >> Mhm. Yeah. I want to ask you I mean we could get to that frontier when we talk about alternatives to fiat currency and that debasement trade. We got to talk about Bitcoin as well. I mean how do you view the relationship between gold and Bitcoin in a portfolio today? I mean, obviously it's a touchy subject. We know that they're different, but are they competitors? Do they serve different roles? What what are your clients telling you? >> I mean, I think now um we have to view them as competitors in the sense that they're competing for investment capital. >> And one can choose to invest in gold, invest in Bitcoin or do both. But I think >> one thing is clear that there is now demand. And I think the Bitcoin story has actually helped the story for gold um and vice versa. But with, you know, people being concerned about markets at all-time highs, concerned about the level of government debt around the world, concerned about inflation more or less, still being, you know, a little bit more stubborn than perhaps central banks would like, that this demand for uh alternatives to traditional assets is something that's very much in demand. I don't think is going away. So clearly gold has always played a part in that story for for hundreds or thousands of years as we know. >> But Bitcoin I think is also playing a role in that now. >> Yeah. I'm so curious. I mean why do we see capital flow out of crypto and into gold every time this risk spikes like we saw the last time? I mean obviously just central bank. >> Yeah. Look, I mean, I think when it comes to risk, my personal view, and I don't think this is necessarily a unique view by any means, but to me, Bitcoin is firmly and cryptocurrencies more broadly are firmly risk assets at this stage. And so therefore, they're much more speculative, much more volatile than gold. So the the the thread that joins them together is view or a demand for something that is not traditional assets, something that is independent from the traditional financial systems. But in terms of how they react, they are different assets. Of course, gold much more defensive, much less volatile than something like Bitcoin or broadly cryptocurrencies. >> Yeah, well said. Uh okay, well let's end with this. I mean, for an investor and some of our viewers at home who started with the simple promise of kind of passive investing, but now they're faced with this incredibly complex and kind of volatile world. I mean, what's your single most important piece of advice for building a portfolio that can kind of well, not kind of, but actually survive and thrive in this, you know, in the in the decade to come. Well, I think the the the word today is the same word that it perhaps should have been through all the time when it comes to investing, which is diversification and the the importance of having diversified portfolio that has different risks in there, uncorrelated or less correlated risks. Um, so whether that's combination of stocks, bonds, commodities, gold, etc. or other asset classes, I think it's important to diversify. But at the same time, you know, let's also be optimistic. There's never been a better time to be an investor. There's never been, you know, more products available, more investment choices, and more access to education. You know, you can put a product perspectus into chat GPT and get a simple explanation of a 5 600 page worth very heavy legal document. And so there's no excuses really now for people not being able to understand the basic concepts of of the investments. And therefore, it's never been easier to tailor a portfolio to whatever your financial goals or objectives are. >> Yeah, well said. And uh do your research. That's what I heard from you. All right. From pioneering the the passive revolution, which you really have to building those tools for this new hyperactive market, fascinating look at investing, Will Run, founder and CEO of Granite Shares. Will, thanks for your time today. Uh very unique perspective and I mean 11 billion, man. Keep crushing it. >> Thank you, Jeremy. Much appreciated. >> Thanks. Well, appreciate your time. All right, we're going to have more coming up here on Kicko News. Of course, we're watching the markets and we have some fantastic guests. So, hit that subscribe button. Stay tuned. I'm Jeremy Saffer. We'll see you next time. Heat. Heat.
Will Rhind: Fed Now Has Room to Cut, Expect the Dollar to Weaken Further
Summary
Transcript
Welcome back. I'm Jeremy Saffron and we're coming to you on what is shaping up to be a pivotal Friday in the markets. Now, moments ago, we just got the September CPI report which was delayed due to the ongoing US government shutdown. Now, according to the BLS, the Bureau of Labor Statistics headline inflation came in cooler than expected, rising 3% year-over-year. Now, the market's reaction was quite immediate here. The S&P 500 hit a new all-time high and gold continued to spike as traders now fully price in a Federal Reserve rate cut for next week. But this morning's optimism comes at the end of a brutal whiplash week for investors. On Tuesday, gold, as we just showed, suffered its worst single day crash in over a decade with 6% intraday swing that erased months of gains in just a matter of hours. It's since stabilized there past $4,100 on the spot side. And this is happening against a deeply conflicting macro backdrop. The IMF just released its world economic outlook calling global prospects quote dim and projecting slowing growth into 2026. And at the same time, the stock market seems to be telling a very different story. Now, we're in the middle of a strong Q3 earnings season. But valuations, particularly in tech, are at levels not seen since the dot bubble, leading major banks and even the IMF to warn of a potential market correction. So, what do we do here? How do we navigate this uh a slowing global economy, extreme volatility, and a potential bubbly stock market? Is this time for safety? Is it time for speculation? To help us make sense of it all, we're joined by a true architect of modern investing. He was there for the rise of ETFs at Eyesshares. He led the sponsor of the world's largest gold ETF. And today, he is the founder of uh C and the CEO of Granite Shares. Now, that's a firm that has amassed over 11 billion in assets by creating the very tools investors are now demanding. Will, welcome back to the show. Good to see you. >> Good to see you, too, Jeremy. Thank you so much for having me. >> 11 billion, huh? You've seen some inflows this cycle. Uh, I want to talk to you because speaking of cycles, I mean, you've been in the industry through multiple cycles. Does this combination of slowing growth, you know, some sticky inflation and this extreme volatility signal a structural shift in the market and a a new regime that investors need to prepare for? What are your thoughts on this market? >> I actually am pretty positive about the market in terms of where we are today. I think what you're seeing in the stock prices at least is the positive news that we saw today on inflation, but more broadly giving the Fed that room to cut interest rates um to ease financial conditions that will, you know, help stock market earnings and prices going forward uh from here, certainly to the end of the year. >> Yeah. Yeah. Uh we're going to get into some of those returns because I mean they've been incredible. I mean, the S&P is still kicking it today. But you've said when we talk about gold, I mean, you've said before that gold's rise isn't about it becoming more valuable, but about paper currencies falling. Uh, obviously, we got that debasement trade, we're seeing it now, reports of central banks obviously holding more gold than US treasuries for the first time since 1996. Is this debasement trade accelerating? I mean, what are you seeing in your own fund flows? Are investors actively moving into hard assets like your gold ETF, BAR, is kind of a direct response to this? They they are in short and you know we've seen this year probably the best example of where you know the dollar's fallen um year to date against other currencies and in many ways you know the Federal Reserve and the US economy has been an outlier in terms of interest rates versus the rest of the developed world uh with with a few exceptions but with the interest rates coming down and again today's inflation data you know giving the Fed that room I think to to continue to cut you that interest rate differential between the US and the rest of the developed world starts to shrink and therefore the the premium if you want to call it that on US dollars uh shrinks also with that the relative attractiveness of the high yielding dollar um versus other currencies. So I think we expect the dollar to weaken further and obviously that you know in the historical context has always been good for gold. >> Yeah. And we've seen, you know, obviously we get that latest print today uh a little bit less than expected, which is always positive. Of course, the Fed possibly cutting. Um but a lot of investors have been worried about stagflation. I mean JP Morgan has called gold that ultimate hedge for this exact risk. As a product creator, I mean, how do you think about building a portfolio that's resilient to stagflation an environment where both traditional and stocks uh maybe some bonds could get hurt? Yeah, I mean I think in in an essence uh Jeremy, this is really what we do in a nutshell, which is our job to build portfolios, build investment strategies for all market conditions, regardless of whether we're in a high growth environment, a low growth environment, high inflationary environment, low inflationary environment, and everything in between. So we always hope to have something in our portfolio that we can offer investors that will perform you know in any market conditions whether it be stagflation or whether it be you know normal market conditions. I got to ask you about the commodity complex. I mean it's been fascinating to watch throughout the entire years. Obviously we're seeing some of those earnings come too as well. And then we layer on top this geopolitical risk. I mean the list of hotspots is is growing from these trade tariffs to active conflicts creating some pretty big risks for the supply chain market. Uh how does this fracturing kind of global order change the calculus for commodity investing for say the next 5 years? What are your thoughts on that on that macro front? >> Well, I think that um we really have to sort of talk about commodity investing in two camps at the moment which is hard assets and everything else. um hard assets and particularly metals have performed very well this year and that's really been the trade of this year from a commodity perspective. You know you've got gold outperforming stocks you know quite significantly and then you have silver, platinum, palladium you know other metals um that are also joining this party and outperforming. So that is the good news. The perhaps less good news is the other commodities namely some of the energy products the oil etc hasn't performed that well and that's largely because of the concerns about the global economic growth um and you know perhaps the economy slowing down and the demand not being as robust as you might expect. >> Yeah. Yeah. I'll ask you about about oil because it's been fascinating just watching some of these new tariffs come into play and what that means. It feels like crude is just taking a little bit of a breather here. But you know, we talked about it briefly there, Will, on this stock market environment, right? I mean, the macro uncertainty is creating a fascinating disconnect because corporate earnings are surprisingly strong yet valuations are at levels that many including the IMF and some major bank CEOs are warning about that potential bubble as you've heard, right? Particularly in in AI and I mean the S&P's forward PE ratio is now rivaling the the peak of the dot bubble. Is is someone who was at Eyesshares during the first tech bubble? I mean, does the current AI boom feel like a durable revolution or a speculative mania that could end badly? You seem to think it's it's we're in a good shape here. >> I I I think sort of all of it can be true. And that's the the interesting part about you know whenever you go through phases like this and you know the late '9s the dotcom bubble was was no exception in that you know there were huge amounts of money made in that time huge amounts of money lost. There was a huge amount of money that was burnt uh in terms of capital expenditure on building what we now obviously know as the internet. But the results of that were clearly the the content companies just for one that everybody knows and loves today and the Mag 7 uh players which are largely created out of the back of that. So I think that today is no different. We're talking about AI in the context of being the fourth industrial revolution >> and I think your starting place is you have to obviously come to a conclusion whether you're a believer in the AI story or not. There is absolutely no doubt, everybody can see it, that there are hundreds of billions of dollars being spent on building the AI infrastructure of the future. Not everybody will be a winner. Not everybody is going to come out smelling like roses uh in this. And there's no doubt that this will create winners and losers just like it did before. But I think everybody that's in this game right now is of the belief that the opportunity is too big to stand on the sidelines and therefore people must invest. They must try and build to take advantage of this potentially once in a generation opportunity. But of course within that there is a cautionary uh you know piece of information just like there always is which is again this is not going to be something that benefits everybody uniformally. >> Yeah. and the you know this AI buildout will obviously require a biblical amount of power and raw materials like copper you know data centers are driving a massive capital expenditure cycle is the most durable I mean outside of that we can take the risk on the S&P and some of those meg 7 but what about the picks and shovels I mean is that a way to invest in this revolution not through the tech stocks themselves but through the commodities that physically power it >> yeah I mean there there are different ways of looking at what that actually means because I think this standout company within the space is Nvidia which people would point to as being the manufacturer of the picks and shovels so to speak for the AI industry. People now also talking about Tesla in the same way that in terms of physical AI that the two leading companies out there arguably Nvidia and Tesla. Tesla obviously being the the company that will hopefully deliver the autonomous vehicles and potentially robots that that people talk about so much with or synonymously with AI. But you're absolutely right. There's also the power. Where does this power come from? That will power the AI data centers, the hyperscalers, etc. That power has to come from somewhere. And that's why there's a race you've seen with nuclear stocks with all sorts of energy providers all the way through the ecosystem and again massive wranglings between the US and China over the provision of rare earth minerals which are you know critical for the production of of some of these new technologies. So this is something that really is not just about mag 7 tech companies that the ecosystem around AI extends way further and way beyond that to you know traditional power players uh as well as you know utility companies and other perhaps less um sexy and well-known parts of the industry. >> Yeah, well said. And I mean it brings up the core you know core risk too. I mean the rise of passive investing has fueled the growth of these mega cap firms creating that kind of feedback loop where the weight on the index just continues to get bigger. No, I mean the top 10 stocks now make up a record 39% of the S&P 500. What does that concentration do in terms of risk? I mean if if any bubble pops there, I mean what happens to the millions of investors in in simple index funds? well that they their perspective shares of that index um would go down just like anybody else because the index is the market, the market is the index whichever way you want to look at it. I think one thing I would say or would point out just regarding the valuations that yes the valuations are high and you can look at the the context of you know today's valuations with for example the late '9s etc. But I would point out that you know the companies today are a lot higher quality than they were in the late '9s. So while people can look at just numbers in a vacuum and say ah you know the PE is this and that and you know there it's analogous with it. Yes. But looking beyond just the raw numbers the quality of the companies is just very very different. So you could argue just right there that you know where we are today does deserve a premium in terms of the market because the the companies are just not the same as the pets.coms and things of the parts that you know these are are massive corporations that have proved themselves in many cases over a decade. I mean clearly you go back to Microsoft Amazon these were companies that were were here in the late '9s um and have not just survived to tell the tale but have thrived and gone on to be some of the largest companies in the world. Yeah, some of them continuing to just, you know, beat expectations. I mean, what are your thoughts on investors being more selective kind of in this market? I mean, your career tells a story about evolution. You helped build that the passive revolution, but now you're also creating these highly active kind of tactical tools for for what you call the high conviction investor. Uh, is the era of, you know, simple passive buy and hold investing over? >> I don't think it's over, but it's definitely evolving, Jeremy. I think what we're seeing is with the, you know, advancements in technology, you know, that this extends to not just the the companies that we know and love, but it extends to areas of the market that we exist in, for example. And so with the advancements of technology, we're able to bring new products to market, which were not possible a few years ago. And that means new types of investment strategies. And so we're seeing an evolution where the market is going to more precise investment exposures that meet people's specific needs. So perhaps put simply, we're producing the tools that investors can use for very specific jobs as opposed to maybe going to generic solutions um as they might have done in the past. So whether that's you know specific leverage solutions, whether it's income solutions, whether it's commodity solutions, you know that now you can find something very specific that fulfills your investment objectives in whatever market environment. What what does that look like? I mean is it is it you know dividend investing? I mean you talked about a shift in retail behavior kind of a move towards what you're calling financial independence where people want to generate active income streams. Is that what's fueling the explosive demand for your leveraged ETFs which which have seen billions in inflows? >> Yes, in part. So what we're talking about and what we're seeing I think is the biggest trend in investing um certainly today and I think over the next you know 10 20 years at least is more and more of the market going self-directed and so you can call it the empowerment of the retail investor you can call it self-directed um but one thing we know to be true is that the the size or the share of retail or self-directed investing in the market is getting bigger and bigger. And that's a combination of you know advancement in technologies again allowing better easier access to markets that's you know more wealth being created that allows investors to participate in markets and that's a higher level of education that is enabling investors and giving them the confidence to start investing in the market earlier and earlier. And the confluence of all of those factors means that you've got a larger investing population going self-directed and within that have different investment needs. Whether, like you said, whether that's high income, whether it's, you know, outsized risk profiles, whether it's more conservative investing. Um, it's it's really dependent on the end investor, but we're seeing more investors doing it and doing it from a younger age. >> Yeah, it's been fascinating to watch. And of course, there's those leverage plays, too. I mean, where does the responsibility begin and end? Should there be stricter suitability screens for someone that can trade two times or kind of these option linked ETFs? >> I mean, there are for brokers. I mean, that's that's really, you know, the at the end of the day, it comes down to the broker and the suitability of the customer to buy any investment. >> However, you know, we live in a market where, you know, we are a free market. We give investors access to investments and ultimately whether it's the broker, whether it's the investor, you know, it's up to them to decide what investment objective they have and whether these are the right tools um to fulfill that and whether that's you know leverage ETFs or investments, whether it's options, whether it's other forms of of derivatives um you know that's the market that we live in and you know depending on your investment objective these tools may or may not be the right fit for you. >> Yeah. I got to ask you about investor behavior because it seems to differ globally. I mean, you're in what, the US, Europe, and Asia, I believe. Right. Well, I mean, you said that there's a there's a greater appetite for risk in Asia compared to the nanny state mentality in Europe. How do those cultural differences kind of shape the products you create and and what do you see as the future of global investing then? Yeah, I mean I I think it's always dangerous dangerous perhaps to like overgeneralize, but um my observation has been that in markets where you have strong economic growth where the demographics are in your favor i.e. skew towards a younger population and you have upward mobility. Those are the markets where we see the most activity from an investment perspective. those are vibrant you know retail markets which are typically enabled by you know the regulatory structure as well. Now to over oversimplify, we see that in North America, we see that in Asian countries, but less so in Europe. And I think that that is a you know just a difference in sometimes in culture, sometimes uh in terms of where the economies are that you know people perhaps have you know less money to spend are perhaps more risk averse and that translates through to the investment fabric. >> I wanted to ask you I mean it's kind of funny. I mean, we established a bit of a playbook for that more active selective kind of investing, but I wanted to ask about these high beta plays for the audience because usually we think of of mining stocks, right? I mean, at least for this audience and a major producer like Numont can report huge cost savings and solid results, yet the stock seems to sell off here and then that's been a reoccurring theme across the the mining space this year. Is is this simply a buy the dip opportunity? What are your thoughts? cuz I know again you're kind of the foremost gold experts but you don't have any I mean shares has no ETFs on the mining side only physical exposure. Um was that a clear deliberate decision? I mean what's the structural flaw here on those equities? Um, I don't think it's um I don't think it's necessarily a flaw with the the companies themselves or the idea of investing in say something like gold mining or gold as a proxy through through gold mining stocks. >> You know, for us it wasn't a deliberate decision not to do that. Um, I think it's just something that we have been so active in the physical gold and physical commodity space for so long. That was the first natural move for us and you know at least when it comes to gold uh the gold companies you have tended to underperform gold but I think part of the reason for that um has been that in previous bull cycles it's always been difficult for the companies to ultimately control costs in other words that the costs have been rising inflationary pressures uh on costs have been rising faster than you know the growth of the companies or the revenues of the companies themselves and that's always created this this sort of you know disconnect between the price of whatever the mining company is and the price of the commodity itself. And so you know that philosophically that doesn't mean that we are uh against or or you know not willing to invest or bring products that are involved in underlying mining companies. It's more just an explanation for your direct question around pneumont and perhaps why some gold companies don't seem to participate uh in the gold price movement as much as gold itself. >> Yeah. Yeah. And I mean it brings up a crucial point of of trust for our audience, right? I mean you were at the helm of the sponsor for the world's largest gold ETF. In your experience for physically backed products like like your bar or PLTM ETFs, I mean is the metal really there? I mean, h how does an investor get comfortable that the paper they own is fully backed by the physical asset in a vault somewhere? >> Great question. So, at least when it comes to us, I can tell you that the underlying gold platinum in our case is really just the two that we have. they're physically backed and not just physically backed which means that they have you know physical bars or platin ingot um in a vault but they're allocated which means that they are the property of the trust that's the ETF vehicle and that ETF vehicle is owned directly by the shareholders they're not the property of a bank or a third party and they're not what we call unallocated or they're not in simple terms able to be lent out into the market, which is the great concern I think when it comes to investing in gold from a lot of gold investors. So, at least the the ETFs that we sponsor, the Granite Shares Bar ETF and Platinum, which is our PLTN, they're physically backed, don't have counterparty or credit risk of a respective custodian, and can't be lent out. And I think the other thing that's worth pointing out is, of course, these are highly regulated financial products. They of course law by regulation have to be regulated, have to go through um financial audits just like any fund. But we go one step um further than that and actually have a third-party independent metal inspector come into the vaults two times a year and do a audit of the metal that's in the custodian's vault against the records that have been held by the fund just to make sure that your investors get that sort of ultimate um confidence or trust that the actual metal is there. So that's beyond even the the statutory financial audits. Yeah, I want to have a little bit of fun. Look beyond gold because you just brought up platinum. I mean, you've said in the past that this platinum run could be significant. It's often an overlooked story. I mean, it's an industrial metal with precious metal qualities and it's still facing supply deficits. I mean, what's the case for your platinum ETF PL PLTM today? >> Yeah, it's a great great question and something that I think we've been big believers in the platinum story for quite some time. uh just hasn't worked out. And this year maybe is the final time we say that this was the year that platinum broke out. Of course, for for everybody watching the show, I think that everyone would be familiar with the fact that once upon a time platinum used to trade at a premium to gold. That was the the gold platinum premium. Uh platinum was so much known for this that in the English language we created a word that was synonymous with above gold. In other words, platinum was a platinum credit card was superior to a gold credit card, etc. Um, such as this prem this premium sort of baked into law. Um, but of course, platinum ended up trading at a discount to gold particularly after the financial crisis and really remained that way um, ever since. So, as we sit today, could $1,600, you know, platinum turn into $4,000 platinum or plus? then maybe that um that sounds difficult to comprehend at the moment, but as you said, this is a market that's 30 times rarer than gold. So, we're talking about a lot smaller market. It has some of the same properties as gold in terms of being used for jewelry. It's used for investment and of course, it has a vibrant uh demand in industry, not just in terms of traditional industries, but also perhaps the industries of the future. talking about uh the potential for platinum's use in the production of hydrogen uh production of green hydrogen which of course plays a part in the new or the electrification uh of everything argument. >> Is it just a supply and demand story? I mean we got the constrained South African output which we know about the the record automotive demand and these tightening inventories. I mean do you see do do you see that gap closing will and and what would it take for platinum to reclaim any kind of premium valuation? I I think that's what you're seeing at the moment, Jeremy. Is supply and demand driven because it's a it's a smaller market. But in the same way as it is for gold, you know, that the central banks have been, you know, strong bid in the gold market. Now the investors have jumped in um really, you know, helping to move that price. I think platinum's a similar thing that you've got the supply and demand imbalance. You have strong demand. Um but it would take you know for platinum to go a lot higher. If investors really started to em embrace platinum uh at the moment then you could see the price going higher. >> Okay. Well we can't talk about metals without talking about silver. It's facing a massive multi-year uh supply deficit. I mean we've been covering it quite a bit here at Kiko News and it's driven by that soaring industrial supply and then of course we've had these comx inventory losses happening a little bit too. It seems like it's working itself up, but some banks are forecasting prices as high as $65 by 2026. I mean, I know you can't give us a price outlook here, but what's your take on the silver story? I I I think so similar to platinum um in that it was inconceivable and and maybe you know people will say that of course these things are always easy to say within with hindsight but it was perhaps inconceivable that we were in an environment where we were hitting $4,000 gold or certainly north $35,000 gold and we weren't seeing much of a equivalent move in the likes of silver in the likes of platinum. Now that's starting to change. Um, and as you rightly said, you've got supply favorable supply demand conditions in both silver and in platinum. >> But I think, you know, in ordinary market environments, we would have expected this to happen. You know, price of gold moves up almost always, you're talking about a lock step movement in the price of silver, albeit with a bit more volatility. So it was perhaps unusual that we were seeing such a rally in gold and not the kind of equivalent response from the silver market. So maybe now it's a it's more of a question of catching up. You know the gold silver ratio I think got to sort of alltime extremes. Um and now it's more probably a question of of silver prices catching up to gold as opposed to anything else. >> Yeah. Did you I mean were you worried there for a minute when we saw this this backradation happening in in COMX? We were hearing about this supply squeeze. I mean, were you worried at all about that? I mean perhaps worried is is maybe a bit a bit step too far in terms of um I think that you know again these these things whether it be natural supply demand conditions squeezes and different parts of the market. We've seen tariffs play a role in terms of interrupting flows and you know demand for certain types of of flows at different times from where the US and UK other markets. So it wasn't necessarily a question of of worry, but I think it just exacerbates an already stretched situation when you're talking about some of these markets where they are under supplied and you know small demand distortions can have an outsized impact on the underlying market. >> Mhm. Yeah. I want to ask you I mean we could get to that frontier when we talk about alternatives to fiat currency and that debasement trade. We got to talk about Bitcoin as well. I mean how do you view the relationship between gold and Bitcoin in a portfolio today? I mean, obviously it's a touchy subject. We know that they're different, but are they competitors? Do they serve different roles? What what are your clients telling you? >> I mean, I think now um we have to view them as competitors in the sense that they're competing for investment capital. >> And one can choose to invest in gold, invest in Bitcoin or do both. But I think >> one thing is clear that there is now demand. And I think the Bitcoin story has actually helped the story for gold um and vice versa. But with, you know, people being concerned about markets at all-time highs, concerned about the level of government debt around the world, concerned about inflation more or less, still being, you know, a little bit more stubborn than perhaps central banks would like, that this demand for uh alternatives to traditional assets is something that's very much in demand. I don't think is going away. So clearly gold has always played a part in that story for for hundreds or thousands of years as we know. >> But Bitcoin I think is also playing a role in that now. >> Yeah. I'm so curious. I mean why do we see capital flow out of crypto and into gold every time this risk spikes like we saw the last time? I mean obviously just central bank. >> Yeah. Look, I mean, I think when it comes to risk, my personal view, and I don't think this is necessarily a unique view by any means, but to me, Bitcoin is firmly and cryptocurrencies more broadly are firmly risk assets at this stage. And so therefore, they're much more speculative, much more volatile than gold. So the the the thread that joins them together is view or a demand for something that is not traditional assets, something that is independent from the traditional financial systems. But in terms of how they react, they are different assets. Of course, gold much more defensive, much less volatile than something like Bitcoin or broadly cryptocurrencies. >> Yeah, well said. Uh okay, well let's end with this. I mean, for an investor and some of our viewers at home who started with the simple promise of kind of passive investing, but now they're faced with this incredibly complex and kind of volatile world. I mean, what's your single most important piece of advice for building a portfolio that can kind of well, not kind of, but actually survive and thrive in this, you know, in the in the decade to come. Well, I think the the the word today is the same word that it perhaps should have been through all the time when it comes to investing, which is diversification and the the importance of having diversified portfolio that has different risks in there, uncorrelated or less correlated risks. Um, so whether that's combination of stocks, bonds, commodities, gold, etc. or other asset classes, I think it's important to diversify. But at the same time, you know, let's also be optimistic. There's never been a better time to be an investor. There's never been, you know, more products available, more investment choices, and more access to education. You know, you can put a product perspectus into chat GPT and get a simple explanation of a 5 600 page worth very heavy legal document. And so there's no excuses really now for people not being able to understand the basic concepts of of the investments. And therefore, it's never been easier to tailor a portfolio to whatever your financial goals or objectives are. >> Yeah, well said. And uh do your research. That's what I heard from you. All right. From pioneering the the passive revolution, which you really have to building those tools for this new hyperactive market, fascinating look at investing, Will Run, founder and CEO of Granite Shares. Will, thanks for your time today. Uh very unique perspective and I mean 11 billion, man. Keep crushing it. >> Thank you, Jeremy. Much appreciated. >> Thanks. Well, appreciate your time. All right, we're going to have more coming up here on Kicko News. Of course, we're watching the markets and we have some fantastic guests. So, hit that subscribe button. Stay tuned. I'm Jeremy Saffer. We'll see you next time. Heat. Heat.