June 20, 2024 • 52 mins
Could China's gold buying strategies be reshaping the global economy? Join us as we sit down with Jan Nieuwenhuijs, a leading expert in the Chinese gold market, to unpack this fascinating question. Jan shares his unique journey from the glitz of the movie industry to the world of economics and gold analysis, offering a deep dive into China's complex relationship with gold. From the days when gold ownership was banned under strict communism to the rise of the Shanghai Gold Exchange in 2002, we explore the cultural and economic shifts that have led to significant gold accumulation by Chinese citizens and the People's Bank of China.
In our conversation, Jan reveals some startling insights into China's strategic gold acquisitions. Could the People's Bank of China be underreporting its gold purchases to maintain lower prices? Jan discusses this intriguing hypothesis, supported by discrepancies between official figures and estimates from the World Gold Council. We also delve into the broader implications of China's gold demand on its holdings in US Treasuries and the shifting global reserves landscape, emphasizing the historical and present-day significance of gold as a counterparty risk-free asset, especially in the face of global uncertainty.
Finally, we tackle some enduring myths and truths about the gold market. Jan debunks the notion that traditional supply and demand dictate gold prices and dispels conspiracy theories about price suppression by a nefarious cartel. We also explore the potential for a gold-backed BRICS currency and its implications for the US dollar's dominance. Whether you're considering investing in gold through ETFs or physical ownership, Jan offers valuable insights into the pros and cons of each method. Tune in to gain a comprehensive understanding of the intricate dynamics at play in the global gold market, with a special focus on China's pivotal role.
The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
My name is Michael Guyot, publisher of the Lead Lag
Report.
Join me for the rough hours.
Jan Nieuwenhuis, I apologize ifI put your last name there.
Jan, introduce yourself to theaudience and to me.
Who are you, what's yourbackground, what have you done
throughout your career and whereare you currently?
Speaker 2 (00:25):
I'm currently in the Netherlands, in Amsterdam.
I'm about to move to theCaribbean, by the way, so I'm
very excited.
The 1st of July I will bemoving to Bonaire, a tropical
island.
It's very rainy here, so I'moff to hopefully a better place,
but anyway, yeah, my name isJan Nieuwenhuis hard to
pronounce in English, but itmeans new house, so just saying
(00:48):
Nieuwenhuis.
I started my career in the movieindustry.
I did a sound engineering.
Then I worked myself up in themovie industry and became a
sound mixer, Did a couple offeature films.
I think it was in 2012 or 2013that I got a knee surgery and I
(01:09):
got a rare pain syndrome afterthe surgery.
So I couldn't do my regularwork and my hobby was economics
after the great financial crisis.
So, while being homebound with asore leg, I did a lot of
studying uh, studying, readingand I started a blog on the
chinese gold market.
Uh, I became an expert actuallyon the chinese gold market.
(01:32):
Um, uh, I was writing on thename kuz jensen, by the way, at
the time, so maybe some peoplestill remember me under that
name.
Um, I gained some popularity onthe internet through my work on
the Chinese gold market.
I worked for a company inSingapore first and for a
company in Finland.
Now I'm working for GainesvilleCoins, writing about still gold
(01:57):
, but also economics, financialmarkets.
I do a lot on what centralbanks are doing and, yeah,
that's basically it I do a loton what central banks are doing
and yeah, that's basically it.
Speaker 1 (02:11):
There's an instinct that you say the Chinese gold
market.
I am in the US and theperception of gold is, I think,
perhaps different than the wayother cultures view gold.
We know with India.
Obviously it's very importantfrom a wealth generation
perspective and from adepository perspective because
of their banking system there.
But what makes China unique asa country culturally when it
(02:34):
comes to their way of looking atgold?
Speaker 2 (02:38):
Well, I would first say that when the Communist
Party, when it was strictlycommunism in China so from 1994
until 1979, sorry, 1949 until1979, the country was strictly
(02:59):
communist under Mao right, soholding gold or silver was
forbidden.
And then came Deng Xiaoping, hetook over and then they shifted
their economic policy and theystarted allowing people to own
gold and that developed, ofcourse, and it gave China a lot
(03:21):
of economic growth, this model,and so they wanted to take that
a step further andinternationalize more and boost
their exports and and all that.
And so in 2002 they also theyalso liberated their gold market
and they actually thought itwas very important for their
financial system to have adeveloped gold market, a a
(03:42):
sophisticated gold market.
So they liberalized the goldmarket.
They launched the Shanghai GoldExchange, which is, you know,
in terms of physical gold inChina, it's just the centerpiece
of the entire Chinese goldmarket.
You have also the ShanghaiFutures Exchange that does the
futures, but all the physicalgoes through the Shanghai Gold
(04:02):
Exchange and, in terms of China,they actually motivated,
supported, stimulated the peopleto own precious metals,
especially gold, because theyknew to have a robust economy
but also be able to absorbshocks from abroad.
(04:24):
You need to have this neutralinternational asset, not only at
the central bank but also amongthe people.
So they really had a look athow many people own some gold,
what was the grams per capitafor China?
And they have been buyingthousands and thousands of tons
(04:47):
of gold ever since 2002, butespecially after 2013, when the
price started going down.
It was just crazy.
And, let's say, they have beenimporting about 1,500 tons a
year, plus their own miningoutput, which is, let's say, 400
tons.
(05:07):
So that's a lot of new goldevery year being added to the
Chinese private sector.
What we don't see in importnumbers and this is my analysis.
Some people may differ what wedon't see in import numbers and
also the mining stuff thedomestic mining which is going
to the private sector is whatthe People's Bank of China is
(05:29):
buying.
Now I have some sources, andthis is from people that worked
at ICBC, which is one of thelargest Chinese banks.
Chinese banks ICBC and a fewother state-owned Chinese banks
are the ones that buy gold forthe People's Bank of China as
(05:51):
proxy banks abroad.
They do that refineries inSouth Africa, switzerland, also
in London, and that's how theydo.
So we don't see that in importnumbers.
So there's a mass accumulationof gold and there's really this
you know they're really choosingfor gold as a bet.
You know, I don't think it's abet, actually.
(06:11):
You just you know gold is aninsurance on your savings.
But where was I?
It's not only what we see andit's also a lot of it is also
done by the central bank inChina and they buy.
It's hard to estimate, ofcourse, this is the best kept
(06:33):
secret on the planet, butthey're buying a lot of gold,
also after the war has broke outin Ukraine, but also before,
and I think they have at leasttwice as much as what they say.
So people think of China saythey have like 2,500 tons and I
think they have at least 5,000tons.
So that's a little introductionon the Chinese gold market.
(06:55):
And what's really interesting isthat previously, before the war
in Ukraine, many nations inAsia and in the East were price
sensitive.
So the price was set in theWest.
Every time the West was buying,you know, the price went up and
the East became a seller,dampening volatility and vice
(07:15):
versa.
So if the West was selling, theEast was a heavy buyer, and now
that has been reversed.
So China is leading the dancein the gold market, so to say,
being reversed.
So China is leading the dancein the gold market, so to say.
They're the ones who are buyingvery aggressively, driving the
price up.
You can see this by the importnumbers in China.
What you also can see is thatinvestment demand in the West is
(07:42):
nowhere.
Etfs are declining.
London and Switzerland are notimporting gold.
Forget about all the consumerdemand, because those are not
the marginal buyers.
The price is now set in China.
Yeah.
Speaker 1 (07:58):
I actually find this whole dynamic fascinating.
I would think and this is myown naivete, I would think that
because China has been trying topush their own CBCs Central
Bank Digital Currencies that thefocus would be to create demand
for that, as opposed to gold,which is obviously outside of
(08:23):
the digital economy.
How do you square that circle?
How is it that there's thissort of push for gold within
China?
At the same time, there's maybethis desire for CBDCs?
Speaker 2 (08:36):
Well, I think that the Chinese Communist Party
knows, of course they want topush their CBDC, but they also
know, at the same time, thattheir fiat money is not
risk-free.
So you have that.
And then there's anotherelement.
I was just writing an articleabout this, by the way, what
China is doing?
I'm looking at Enbridge.
(08:57):
I don't know if you've everheard of this.
Enbridge is a project.
It was first started at theBank for International
Settlements innovation hub inHong Kong in 2021.
The first participants wereChina, hong Kong, thailand and
the UAE.
What they're trying to do andthis is about de-dollarization.
(09:19):
Of course China wants tode-dollarize, especially after
the war.
What they're trying to do iscreate a technological system
that connects their CBDCs soit's much easier for them to
trade in their local currencieswithout dollars, and this is
where gold comes in.
(09:40):
They can do that throughEnbridge in.
They can do that throughEnbridge.
Enbridge, on the 5th of June,has reached its first pilot
stage, so to say, its minimumviable product stage, I believe
it's called.
But what these countries, ofcourse, have is trade imbalances
.
If they trade with each other,you have a little imbalance.
(10:01):
One country is a surpluscountry or a deficit country,
and then they can storesurpluses not in Chinese
renminbi, because the Chinesealso know they have capital
controls, they haveunderdeveloped financial markets
, but the surpluses can bestored in gold, and gold is a
neutral asset, and so that'swhat the East is clearly
(10:23):
choosing for Europe also.
By the way, I mean Europe neversold its gold.
The US didn't sell all theirgold either, but it has been
very.
You know, it's kind of obviousthat the US has always been
against gold.
You know, all through bread andwoods they wanted to ditch gold
(10:43):
out of the system and promotethe dollar and have the world
use dollars.
So they had more power.
But Europe wasn't actually thatfan of this whole dollar system
.
So they kept the gold, and inrecent years Europe has become
quite vocal about gold again,and the funny thing is that they
(11:04):
also started repatriating gold.
For example, I know thatGermany and France also refined
all their monetary gold tocurrent wholesale industry
standards.
So Europe is also pretty muchpro-gold, and Asia is too.
So it's a very interestingdevelopment.
Speaker 1 (11:25):
It's a question from Gene Wexler.
I was actually looking this upto verify it and it looks like
it's true.
Would you agree that Chinastopping gold purchases during
the month of May is, overallinsignificant?
I just looked this up as wewere chatting, but apparently
the holdings were unchanged.
I saw some headlines that saidgold is getting so expensive
that that's why China is nolonger buying, or at least in
(11:45):
that one month.
Any thoughts on that?
Speaker 2 (11:48):
Yeah, I don't think that what the People's Bank of
China is reporting it buys istrue.
I mean, you know, they havestill like three trillion in
foreign exchange reserves andthey only have a few percent.
They say in gold Now, given thecircumstances, and they have
been few percent.
They say in gold now, given thecircumstances, and they have
been.
You know, it's been like thisfor, let's say, 10 years now,
(12:12):
given the circumstances.
Of course they it's not hard toto imagine, uh, that they would
have bought um, a lot more um,but if they would be honest
about buying so much, you knowthey would even drive up, it
would create maybe a panic onthe market and the whole world
would buy more gold and thenthey could buy less, you know.
(12:36):
So their strategy is they onlytell us what they want us to
know and in that process theycan buy more gold with the
dollars they have.
So I think this is justpolitics by saying, well, we
didn't buy anything this month.
Maybe they will stay silent fora couple of months.
(12:59):
But I also know that fromindustry insiders that they are
buying a lot more than what theysay, and you can calculate this
yourself, or people that arewatching, listening and are
interested, because everyquarter the World Gold Council
comes out with their estimate onwhat central banks have bought.
(13:20):
They compile these numberstogether with Metals Focus
that's another consultancy firm,and that number is let's say,
every quarter is about twice ashigh as what all countries
combined report to the IMF tohave bought.
So there's a big gap betweenthose numbers and that's what we
(13:44):
call unreported buying.
That's what the World GoldCouncil and everybody calls
unreported buying.
Now the people in the industrytell me the unreported buying is
mostly the People's Bank ofChina, so they are buying 200,
250 tons, sometimes a quarter,instead of the tiny numbers they
(14:05):
publish.
So I don't think so yeah, maybeit works.
They say we stop buying, theprice goes down.
Excellent, they get more goldfor their dollars.
Speaker 1 (14:22):
Is there any possibility that the demand for
gold from China is somewhatcorrelated or related to
concerns around US treasuries,just given how much of a big
buyer China is when it comes toUS government debt?
Speaker 2 (14:37):
I haven't done that.
This is a good thing toresearch, but I do know, of
course, if you make a chart ofwhat percentage of US public
debt is held by foreigners,that's going down.
So I think what foreigners arebuying in terms of US treasuries
nominally is staying steady.
(15:01):
Of course the debt is going up.
So what foreigners are owningin terms of share of the US boat
is going down and, of course,gold reserves as a percentage of
international reserves globallyis going up.
So I think that trend is veryclear.
I also I just told you that Ihave my own numbers for how much
(15:23):
the PBOC is buying.
I also have my from that.
I have my own numbers of whatworld official gold reserves are
and I, yeah, make my own chartsand you can really see that you
know the dollar in terms ofbecause it's funny always when
economists or also other peopleon Twitter compare you know,
(15:46):
okay, so let's, they say, let'sinvestigate this
de-dollarization, and then theymap out all the foreign exchange
components of COFR from the IMFand you know de-dollarization
is declining.
You know the dollar isdeclining very slowly in terms
of all foreign exchange.
But if you add gold, you get atotally different picture and
(16:08):
it's very clear that gold isgoing up and most fiat
currencies are losing groundrelative to gold.
And actually, according to mynumbers, a couple of months ago
gold overtook the euro in termsof international reserves, and
let's see if it can take up thedollar next.
(16:31):
Don't forget that gold, untilthe 1980s, was the largest share
of international reserves.
So only from, let's say, 1984,the dollar has been the largest
share of international reserves,which is a relative small time,
now that a fiat currency, acredit asset with counterparty
(16:52):
risk, is the largest share ofinternational reserves, the
backbone of the internationalmonetary system.
All in previous history it wasgold or silver without
counterparty risk.
And of course now, withgeopolitical tensions and with
inflation, and with the sky-highdebt levels and high equity
(17:14):
valuations, I don't think creditassets like the dollar and
national currency are going totake up.
The are going to stay, uh, thelargest share of of these
international reserves.
So I think gold is going togain more ground and and the
dollar will uh, to the detrimentof the dollar uh, you had made
(17:39):
that point that in the west, youknow, nobody's that excited
about gold.
Speaker 1 (17:42):
Um, I'm going to put the comment up just to create
some conversation around withsomebody.
You had made that point that inthe West, nobody's that excited
about gold.
I'm going to put the comment upjust to create some
conversation around it.
Somebody saying, by the way,gold is dead, which is a pretty
strong statement.
Rumors of my death have beengreatly exaggerated.
I go back to that quote 13years and nothing.
Now, there's some degree oftruth around that, although
(18:02):
obviously it's pushed highersince.
But I'd remind viewers thatlost decades are common in all
asset classes, includingequities.
So just because somethinghasn't worked for the last 10,
11, 12, 13 years doesn't meanthat the next decade can't be
totally different.
So let's make the argument forwhy, from a long-term, very
(18:26):
long-term perspective, this timeis different than maybe we go
from this, you know, seven yearsof famine to seven years of
feast, 13 years, 14 years offamine to you know, a better
time period ahead.
Speaker 2 (18:39):
Yeah.
So what I just touched upon, Ihave a fairly basic framework
for how I see gold.
I use uh extras inverse pyramid.
I think most people will knowit, but I will explain it in a
bit.
First, back to.
Let's go back to uh, 500 yearsago, not not too long.
500 years ago, let's say at theend of the Dark Ages, most
(19:04):
money was gold and silver andthat gold and silver didn't have
counterparty risk.
Of course the kings coulddevalue it.
But let's say, you know, ingeneral, gold if you just hold
it in your hand doesn't havecounterparty risk.
Okay, then came credit assets.
So you know, banking developedbanking deposits.
You got a lot of equity was.
(19:27):
You know that was actuallydeveloped in my country.
But VOC, the stock market, thebond market, all derivatives
came a lot of credit assets.
And credit assets are great,you know.
I mean they stimulate growth,they are very efficient in doing
things, pulling capitaltogether.
People get dividends on theinterest rates, excellent, you
(19:49):
know it's all.
Everybody loves it.
But this so.
But I see the economy.
You know, especially now,because it's so interesting now
between the ratio between creditassets.
You know, on the one hand, sothat's national currencies, bank
deposits, equity bonds andmoney, a financial asset,
(20:12):
without counterparty risk.
So if you look at the ratiobetween the two and you can make
charts about this I made a fewcharts that go back I don't know
140 years about the ratio, forexample, between the value of
the US monetary gold versus USM2, or the value of all the gold
(20:35):
which is above ground andglobal financial assets, and
then you can see how much trustthere is in credit assets by
looking at those ratios.
And it's actually sky high, thetrust in credit assets.
So national currencies, equitybonds, everything is sky high.
(20:59):
It's just coming off of the,let's say, the valuation of gold
.
In terms of the model I justdescribed, it's just coming off
of a very low bottom which wasformed in 2015.
And now, if you look at theworld, with, again, with the war
(21:21):
and geopolitical stress andinflation, asset bubbles,
inequality, social unrest,political instability, you know,
look at the US.
We have a little bit of thesame here in the Netherlands
Everything Is this the pointthat we think all credit assets
will have a very good run forthe next 10 years.
(21:41):
I think that gold will have ahave a very good run for the
next 10 years.
I think that gold will have abetter run.
But so that's my uh simpleframework you think it's just
gonna be oh sorry, I couldn'thear you.
Can you go back five seconds?
Speaker 1 (21:59):
yeah, no thing is that?
Yeah, the um, aside from fromgold, do you think that's a gold
specific and gold isolated uhtheme or is it a broader
statement around commodities,you know silver also
participating other industrials?
Speaker 2 (22:15):
I, I I have to say I think other commodities as well.
I think you know uranium, Ivery much like uranium.
Um, copper, you know, becauseof also there is obviously is a
trend towards more green, uh,energy and thing and things like
that.
Um, oil can be, you know,because it's it's about
geopolitics.
Other commodities are veryimportant as well silver, I own
(22:39):
silver.
Um, to be honest, I'm not asilver fan.
Maybe it's because so manypeople on Twitter are absolutely
infatuated with silver and I,just the thing is, with silver.
You know, I have looked atprecious metals, like for going
back thousands of years, and inthe beginning, in ancient Sumer,
(23:02):
silver was actually morevaluable than gold.
But and then, you know, acouple of centuries later, gold
became more valuable becauseit's more scarce and silver was
always used as a medium ofexchange.
(23:22):
But we, of course, when itcomes to precious metals, we
will never use gold and silvercoins as a medium of exchange.
So the whole monetary idea ofsilver is gone right.
So we don't have to pay withsilver coins, we don't have to
pay with gold coins, only with,you know, we just keep it as a
store of value.
We pay with digital, with zerosand ones.
So I actually think that, um,you, you, we can see this
(23:45):
happening.
Since the what was it?
The 19th century, gold hasbecome more of an industrial uh
metal and not so much a monetarymetal anymore.
It's it's about 50, 50 now, butfor gold it's it's like 95 to
5% in terms of monetary use andindustrial use.
For silver it's 50-50.
So I'm much more focused ongold in terms of everything that
(24:09):
I'm saying about monetarydevelopments in the whole world.
If you look at the big guys,investors like Ray Dalio or
Druckenmiller, they're all intogold, not silver.
Central banks all have gold,not silver, not Bitcoin.
It's the gold.
Also because gold is equallydistributed across the globe
(24:31):
right, and money only works ifeverybody has a little, so you
can trade with each other.
If only one country or oneperson has all the gold or the
Bitcoins, it's very difficult tomake it function like money.
So I'm not much of a silver bug.
I own it because you know,indeed it has shown in history
(24:52):
that if gold goes up a lot, thensilver does too.
But I think then in the end butmaybe I have too much of a
macro view, you know, zoomed outview In the end silver maybe I
have too much of a macro view, azoomed out view.
In the end, silver will loseits monetary status.
Speaker 1 (25:10):
I will say that the thing with Twitter slash X is
that everybody gets infatuatedfor a moment in time and
everybody's an expert for amoment in time.
Speaker 2 (25:18):
Yeah, true, yeah, but the silver crowd is quite
aggressive.
So I'm, uh, I just wanna, Idon't know, and I shouldn't be
bothered by it, because you knowwho cares, but uh, I still know
.
Regardless of that, I, that'smy opinion now.
I, I do think that silver willbecome purely industrial metal,
(25:55):
but I'm bullish on it.
Speaker 1 (25:57):
2011, when the same sentiment you would have around
bitcoin being the new worldorder and the confidence with
which people say it on socialmedia that was the gold bugs
right over a decade ago, but youdon't see any of that, uh,
today no, no, I'm just.
Speaker 2 (26:14):
I'm reading a comment by alexis uh, gold is dead for
13 years, right?
So excellent, yeah, no, uh, Ithink that's a good thing.
Maybe, uh, maybe they'll, theywill come up, uh, again, and
then maybe that's time to sell.
I don't know.
But, um, um, yeah, regardingbitcoin, I have, you know, I, I
(26:36):
think, just to be a maxi in anyasset class.
Why would you bet on one horse?
Why not just diversify?
And you know I'm, I like, Ilike to stay humble, you know I
like to tell myself, I justdon't know what's going to
happen in the future.
So I diversify and I feelcomfortable with that.
Speaker 1 (26:53):
But so every now and then there are these uh
headlines that pop up around uh,uh, golded BRICS currency.
Right, you hit on China there,and I see this on the periphery.
I'm aware of it.
It sounds like it's more fringethan anything else when I
(27:13):
initially look at it, but maybeexplain to those that are
listening what this direction isabout when it comes to Brazil,
russia, india, china and ifthere is any real viable threat
to the dollar if the BRICS areable to really get their own
gold-backed currency in that way.
Speaker 2 (27:34):
Well, the thing is that gold in itself, you don't
need to launch a new currency.
Gold in itself is the newcurrency, right?
So the BRICS could embrace that.
Uh, I hope they do.
Uh, maybe they're, they are inthe process of doing that.
I'm a little bit, uh, skepticaltowards this topic of bricks
because you know, uh, I've beenhearing this all this bricks,
(27:57):
you know when?
When the bottom line is thatthe BRICS produce very little.
I see, you know, I've beenhearing about a BRICS new
gold-backed.
There's a friend of mine askingme about the bold index.
I will tell you, charlie, okay,the bricks are all this talk
(28:20):
about a new bricks currency andif you look at all the documents
and there is just nothing theyhave.
You know, I mean, if you lookat, for example, the euro, they
have been working on the eurofor 30 years.
There were 30 years of researchand all sorts of documents and
work and thinking, and there isnothing on a bricks currency.
You know, I mean, maybe they doit all in hiding, but you know,
(28:42):
and it's also quite obvious,that only Russia is really
putting out all this news aboutoh, we're working on it, we're
trying and we have a blockchainand we have this and that All
the other countries, yeah, okay.
Sometimes they say you know,sometimes the president of
Brazil says I don't like dollarsor whatever, but to tell you
(29:03):
the truth, I don't think theyhave a lot.
You know, if you can make adiagram right with a bar, and
this tiny end is there is noBRICS currency.
And this tiny end is there is aBRICS currency.
This is black, this is white.
This whole gray area can be weare working on it.
You know so every time they saywe are working on it.
You know so every time they saywe are working on it.
Yeah, can be.
(29:24):
So where are they?
You know?
Are they at the?
We still basically have nothing, or we're nearly there.
It's hard to say.
Um, I I spent, like I said inthe beginning, I I I spent more
attention to um, to embridge,because you, you can see
documents, you can see umcontracts being signed, a
(29:45):
cooperation, uh, everything, uh,it's much and maybe it's the,
the bricks will uh, embraceembridge, um, but it has no
point in for me to chase this,this bricks, um ghost, no, no I
actually had, uh, charlie morrison a spaces, uh like a year ago
(30:10):
or so.
Speaker 1 (30:11):
Uh and uh, he's doing what he always, uh, what
everybody should do.
When you have your own product,you want to get people to talk
about it on the next, uh,charlie could see it in this.
Okay, so this gets intodiscussion around how do you
position for this multi-yearcycle?
The easiest answer is just buygold, but there's a lot of
(30:31):
different ways of buying gold.
There's ETFs, there's theactual bars, there's insuring
them in vaults, there's all thisstuff.
So talk about the pros and consof doing it through an exchange
traded fund versus holding thephysical, because, just in the
same way that you mentioned, youhave these sort of extremists
on the silver side, on theBitcoin side, you do have
(30:53):
extremists in terms of saying,paper gold versus physical.
Speaker 2 (30:59):
Yeah, I think.
First of all, there's a lot ofmisunderstandings on X about
paper gold.
A lot of people think that ahundred times more paper gold
has been sold than there is goldbacking it up and that, let's
say, 99 of the gold buyers whohave paper gold are being fooled
(31:22):
that they own physical goldwhile they own a paper contract.
That's not what's going on.
I mean, if people, for example,buy a futures contract, they
know they don't own physicalgold and it says in the LBMA
brochure.
If big investors go to Londonand they sign up with JP Morgan
(31:43):
in an account and they say wewant to buy some unallocated
gold, it says very clearly inthe brochure that unallocated
gold has counterparty risk.
It's not the same as physicalgold, et cetera, et cetera.
Physical gold, et cetera, etcetera.
And still people use it not asphysical gold but as a trading
(32:09):
part in the London bullionmarket.
Now about the difference betweenowning physical gold outright
and ETFs I think ETFs are veryeasily traded.
You can go to your broker, youcan buy some GLD, the storage
fees are low, you pay storagefees, you don't have to pay it,
(32:34):
but the amount of gold backingeach GLD share is declining
every day.
Actually yeah, so that's howyou pay storage fees.
They actually, yeah, so that'show you pay storage fees.
But the downside, of course, iswhat I said earlier Gold has no
counterparty risk.
You want to ride on thatfeature having no counterparty
risk.
Etfs have counterparty risk.
For GLD, for example, there's atrustee and a sponsor and there
(33:00):
are authorized participants andet cetera, et cetera.
If the financial system goeshaywire and it happens all the
time there's a trustee and asponsor and they're authorized
participants and et cetera, etcetera.
If the financial system goeshaywire, you know, and it
happens all the time.
Last, you know, in this on thiscontinent, last couple of times
it was Cyprus and Greece andthey closed the banks.
You never know how, how longthe banks are closed for.
And maybe you, you know if thosebanks, um, or or a bank goes
(33:23):
belly up like, uh, lehmanbrother did, and if, if those
banks that go belly up are, um,are, are connected to to your
ETF, maybe your ETF is halted oris seized by a curator or
whatever.
So so I wouldn't take the riskand buy ETFs only for short-term
(33:44):
trades.
I would store it outside thebanking system in physical form
and be secured, because gold asa physical element is completely
independent of the financialsystem.
Only when you put it in an ETFand et cetera, it becomes part
of the financial system and itstops serving as an insurance
(34:09):
against the financial system.
Speaker 1 (34:13):
There are these constant headlines around Costco
in the States selling gold barsand then running out, so
clearly there's some demandthere, but maybe this is a
little bit too nuanced.
But why gold bars versus goldcoins?
I mean, I want you to talkabout the company that you're a
(34:34):
part of, because there was anearlier question which I'm
trying to find, asking aboutGainesville coins.
So bars versus coins, why coins?
Speaker 2 (34:47):
Any real difference there.
Well, bars, you know, thesmaller the physical amount of
gold you buy your gold in, thehigher the premium on the gold,
so the more money you pay extrafor the gold.
So, if you buy a very large bar, a 12 and a half kg gold bar,
(35:07):
the premium is basically nothing, also because it's the largest
bar around and that's the pricefor you know, it's the benchmark
.
So, and if you go to a one kgbar, the premium is, I believe,
$60 an ounce or whatever, no,$60 for the kg bar, the kg bar
anyway.
If you go to coins, I believeon coins, the average premium is
(35:27):
five percent.
Now you can also, if you sell,um, if you sell the, the coins,
you can get the premium back.
But I'm just more of um, youknow, also because of technology
.
I don't, you know, I don'tstore uh segregated physical
coins or bars in my house or ina vault.
I just have it somewhere inswitzerland.
(35:50):
To be honest, uh and uh, I, um,I make sure that the, the
company that I buy gold throughis, is not a bank, you know, and
and and the vault that whereit's stored is is not a bank,
you know, and the vault whereit's stored is not a bank either
, so it's a bit shielded fromthe financial system, and I just
buy it per gram.
You know why the hassle of allthese?
(36:12):
I'm just not a coin collector,but that's me so, uh, but every
some people you know like to buycoins also because they think
that, um, when there's anarmageddon scenario, they can go
to the supermarkets and paytheir groceries with, uh, with
gold or whatever.
Um, I think, um, that could be,but maybe also paper money will
(36:36):
do um, so that's my view on it.
Speaker 1 (36:41):
So that's my view on it.
There's a question here whatdoes Jan think about Pax Gold,
tether Gold, these kind ofblockchain-backed ways of
getting gold?
Because, just to your pointabout the counterparty risk, you
can argue that gets eliminatedwith a blockchain sort of
protocol.
Speaker 2 (37:02):
Any thoughts there?
Yeah, as far as I know, pa goldand uh, tether gold don't, uh,
you don't pay storage fees, uh,on that.
So, um, they I don't knowactually how they do it.
Um.
So, and whenever I see a goldproduct that, uh, and the gold
is stored somewhere, but youdon't pay storage fees, then I
(37:23):
don't trust it, because who paysthe storage fees?
Just like Kinesis, that's somekind of blockchain system and
they issue tokens and you canbuy the tokens.
Those are backed by gold, andthen you don't pay storage fees.
But every time you pay withwith gold, you can use these
(37:43):
tokens actually to, you have adebit card and you can pay with
the gold in stores.
Well, I really like that idea.
You know, to uh, to, to, to, tocreate that, um, but then every
, every time somebody pays withkikinesis, a fraction of that is
being taken and is beingdistributed among all the
(38:05):
participants, all the holders ofthe Kinesis tokens, and in that
way, again, you don't paystorage fees.
But then, of course, people needto pay with gold in
supermarkets or there isn't anyincome.
So I wouldn't buy thoseproducts myself.
Also, because I see gold as astore of value and and not as a
(38:28):
medium of exchange.
I just, you know, own gold asas uh, as yeah, as a store of
value and and for daily purchaseI use euros at the moment.
Um, so that's my view on PoxGold and also Tether Gold.
Yeah, I'm quite sure they don'thave storage fees.
Speaker 1 (38:47):
Yeah, I mean, your natural place of skepticism is
like mine.
If it's too good to be true, itprobably is.
Yeah, I had never actually comeacross either of those, but
when that I think it was whenthe first missile went off
between Iran and Israel that Ithink it was Pax Gold went like
(39:09):
vertical overnight.
There was some crazy pricingthat was going on, so everyone
thought that this was the momentfor gold.
Speaker 2 (39:17):
Speaking of that, I had that was in a weekend, right
or not?
Speaker 1 (39:20):
Yeah, exactly right, and nothing was really kind of
trading.
So everyone looks at that andsaid, oh, gold's going to open
up huge.
Yeah.
Which actually is interesting,because I myself have made the
argument that, because I tend tolook at market prices more from
the standpoint of signalingthan anything else, I've argued
that gold has been sending awarning in terms of the
(39:40):
short-term movement, because oneof the more unusual dynamics of
gold movement here is that it'sactually performing very well
when you don't have negativereal interest rates.
Usually gold is very inverselycorrelated to negative real
rates.
This time you have positivereal rates and gold is doing
really well.
Is there anything historicallythat suggests that money goes
(40:06):
into gold when there's there'sfear that something's coming,
that it's it's sort of youmentioned the term insurance
hedge more than just sort ofstory, value arguments, things
like that but that there'ssomething more imminent, there's
like an event that is causingsome kind of rush into gold yeah
, well, I think what you firstsaid was, uh, of course, a
correlation between gold andreal rates, right?
Speaker 2 (40:28):
So from 2006 until 2021, gold was very tightly
inversely correlated to realrates as measured by the 10-year
tips yield.
So you know, if the tips yieldwould go up, gold would go down,
Because if you get more realrates, it's less interesting to
(40:50):
own gold.
That was the very tightcorrelation and that has broken
down since the war and nowactually, you often see when
long-term rates 10-year treasuryrate goes up, gold goes up as
well.
Treasury rate goes up, goldgoes up as well.
(41:11):
And you can look at the 1970s.
Actually, all through you know,I think you know that.
You know gold in the 1970sstarted at, let's say, $35.
And at the end, in 1980, it was$850.
And all through the 1970s,long-term interest rates of the
(41:36):
US went up.
So and of course, if there's alot of, let's say, lack of
confidence in your currency,people will dump your currency
and the interest rate can go up,right.
So it can also mean you knowthat that inverse relationship
has also changed because ofthere's now a lack of confidence
in the dollar.
Speaker 1 (41:54):
You can, you can look at it at that let's talk about,
um, what, uh, people get mostright and most wrong about gold
and the perceptions of gold, toyour point, about people being
experts on Twitter, slash X,what are some of the things that
(42:15):
when you see people talkingabout gold, you just kind of
shake your head and you want tokind of say you're blatantly
wrong and naive for sticking inthose terms.
Speaker 2 (42:25):
Well, there are a lot of myths about gold.
First, I would like to pointout uh and that's something I uh
have written about extensivelyis about gold supply and demand.
It's, it's impossible to tomeasure gold supply and demand
basically.
Uh, I have a framework for itand blah, blah, blah.
We can talk about it, but, uh,the basic thing is that you know
(42:46):
some people, when it wasdemonetized in the 1970s and the
world was slowly being pushedon the dollar standard, some
companies, mining companies,started making gold supply and
demand balances.
So we mine so much.
Demand is jewelry, demand isthis, industrial demand is that.
(43:07):
And then there's a surplus ordeficit, and some people make
reports about this and they soldthose reports and but the thing
is, I mean, gold is a currency,so how do you measure supply
and demand with it, with adeficit and a surplus of a
currency?
Well, I've never seen you can'tmake a supply and demand
balance of the dollar or ofbitcoin and and state that, well
(43:28):
, there's a.
You know, if there is, therecan't be a surplus in in
bitcoins, the price just goesdown.
So same same with gold.
Um, you know, forget aboutsupply and demand.
I mean in.
In essence, it's about supplyand demand.
But this gold supply and demandbalance just doesn't make sense
.
And you can do this yourself.
(43:49):
You can go to the World GoldCouncil or people that you know,
I don't.
The World Gold Council is greatin terms of putting out a lot
of great useful data and they'veactually changed their supply
and demand statistics now theydon't say a surplus or deficit
(44:10):
statistics.
Now they don't say a surplus ordeficit.
But if you go back in timeyou'll find all those surpluses
and deficits and you can justmake an excel sheet and write.
You know in every year ifthere's a surplus or a deficit
and what the direction of theprice is, and there's just no
correlation.
While if you do this with,let's say, soft commodities
coffee, sugar, corn, pork,bellies, whatever there's always
(44:31):
a correlation A surplus meansthe price goes down and a
deficit means the price goes up.
So one of the biggest mythsaround there is about supply and
demand and I think it's veryharmful because there's just so
much misinformation andmisunderstanding about gold and
this part feeds into it, becausea lot of people you know that
(44:53):
are obsessed with the comics andprice suppression.
They start with this or theytake this and they say you see,
it doesn't work.
That's the evidence that thegold price is suppressed.
Now, maybe the gold price issuppressed, but I don't think
actually that it is.
(45:13):
But you can't.
That's another myth.
An evil cartel cannot suppressthe price of gold through just
futures contracts for decades.
Right, just futures contractsfor decades.
Right.
(45:33):
Of course you can short sellfutures.
But suppose the Fed or JPMorgan or some entity of the
evil cartel shorts gold formillions and millions of dollars
or ounces or whatever.
Now then what?
Either they have to roll theirshort position or they have to
deliver the medal, which is, ofcourse, they might as well just
(45:54):
sell the medal outright tosuppress the prize or they have
to close their position and thegold price then goes up, because
if you close a short, you golong and you know your action is
undone.
Now about the rolling.
If there's a massive short outthere suppressing the price of
(46:16):
gold, we would see this in theroll data, because then, if that
massive short would roll, thenduring the roll, one contract is
pushed up and the other push isdown.
If you look at this, there areno fingerprints.
It just doesn't happen in themarket.
So I think the other myth isthat gold is not suppressed on
(46:39):
the COMEX.
Another myth, for example, isthat coin demand drives the
price of gold.
You know, sometimes in 2020,during COVID, you saw premiums
on gold coins going to 50percent and everybody would say
you know, how is it possiblethat the gold price is not, you
know, tripling or whatever?
Sometimes we just do nothingfor a while, and while premiums
(47:01):
on gold coins were 50 percent,and so, of course, gold coins
are just a tiny part of themarket, maybe just a few percent
of the entire trading volume,and saying that gold coins would
drive the prices like sayingthat a bag of chips drives the
(47:23):
price of potatoes.
Of course doesn't happen likethat.
The premium on gold coins isset by supply and demand of
coins and how mints can react tothat.
The gold coin demand is veryvolatile.
It's sometimes very high,sometimes very low.
The United States mint doesn'tincrease its production capacity
(47:46):
times 10, you know, one monthand then decreases its decreases
it by 10 the next month.
So if you have a a panic buyinghappening, then the premiums
will rise, and but it doesn'tmean much actually about the
market.
You have always look at uh Imostly look at uh customs
(48:11):
statistics.
So import numbers from the uk,switzerland, india, china,
whatever the us.
And then it becomes apparentwhat drives the price of gold,
and it's's mostly institutionaldemand.
And it used to be the West thatwould drive the price of gold,
and now it's the East, becausenow you see Chinese imports
(48:35):
going up concurrently with theprice going up, and that's, yeah
how I look at it.
So those are a few myths aboutgold.
Speaker 1 (48:49):
Jan, as we wrap up, how should people track more of
your thoughts for your work?
The comments have been gettingvery positive.
I mean your approach toexplaining things, especially
when it comes to China.
I think it's a reallyinformative education, so thank
you for that.
But where should people look toto find you?
Speaker 2 (49:06):
On the X just maybe you can drop a link.
I believe it's uh jan goldunderscore on uh.
On x, you can also go.
You know I work for gainsvillecoins, which is a coin dealer in
um in florida.
You can also look on on theirblog.
So go to the gainsville coinswebsite and with at the blog
page you can see my uh articles.
(49:27):
But but I also put out myarticles on X and that's where I
see X as sort of a bar.
I share my thoughts on X, Ishare things I'm interested in
and I speculate on X and Iengage a lot with people on X.
So yeah, you can follow methere.
Speaker 1 (49:48):
Everybody.
Please make sure you follow Jan.
Again, this was a greatconversation.
Appreciate those that watchedthis live.
I'm now going to go do anothermorning few video, but given the
time difference, I need to dothis podcast first with Leadlag
Live.
Jan, I appreciate you,appreciate those that watched
and hopefully I'll see you allon the next episode of Leadlag
Live.
Thank you, jan.
Thank you.
My name is Michael Guyot, publisher of the Lead Lag
Report.
Join me for the rough hours.
Jan Nieuwenhuis, I apologize ifI put your last name there.
Jan, introduce yourself to theaudience and to me.
Who are you, what's yourbackground, what have you done
throughout your career and whereare you currently?
Speaker 2 (00:25):
I'm currently in the Netherlands, in Amsterdam.
I'm about to move to theCaribbean, by the way, so I'm
very excited.
The 1st of July I will bemoving to Bonaire, a tropical
island.
It's very rainy here, so I'moff to hopefully a better place,
but anyway, yeah, my name isJan Nieuwenhuis hard to
pronounce in English, but itmeans new house, so just saying
(00:48):
Nieuwenhuis.
I started my career in the movieindustry.
I did a sound engineering.
Then I worked myself up in themovie industry and became a
sound mixer, Did a couple offeature films.
I think it was in 2012 or 2013that I got a knee surgery and I
(01:09):
got a rare pain syndrome afterthe surgery.
So I couldn't do my regularwork and my hobby was economics
after the great financial crisis.
So, while being homebound with asore leg, I did a lot of
studying uh, studying, readingand I started a blog on the
chinese gold market.
Uh, I became an expert actuallyon the chinese gold market.
(01:32):
Um, uh, I was writing on thename kuz jensen, by the way, at
the time, so maybe some peoplestill remember me under that
name.
Um, I gained some popularity onthe internet through my work on
the Chinese gold market.
I worked for a company inSingapore first and for a
company in Finland.
Now I'm working for GainesvilleCoins, writing about still gold
(01:57):
, but also economics, financialmarkets.
I do a lot on what centralbanks are doing and, yeah,
that's basically it I do a loton what central banks are doing
and yeah, that's basically it.
Speaker 1 (02:11):
There's an instinct that you say the Chinese gold
market.
I am in the US and theperception of gold is, I think,
perhaps different than the wayother cultures view gold.
We know with India.
Obviously it's very importantfrom a wealth generation
perspective and from adepository perspective because
of their banking system there.
But what makes China unique asa country culturally when it
(02:34):
comes to their way of looking atgold?
Speaker 2 (02:38):
Well, I would first say that when the Communist
Party, when it was strictlycommunism in China so from 1994
until 1979, sorry, 1949 until1979, the country was strictly
(02:59):
communist under Mao right, soholding gold or silver was
forbidden.
And then came Deng Xiaoping, hetook over and then they shifted
their economic policy and theystarted allowing people to own
gold and that developed, ofcourse, and it gave China a lot
(03:21):
of economic growth, this model,and so they wanted to take that
a step further andinternationalize more and boost
their exports and and all that.
And so in 2002 they also theyalso liberated their gold market
and they actually thought itwas very important for their
financial system to have adeveloped gold market, a a
(03:42):
sophisticated gold market.
So they liberalized the goldmarket.
They launched the Shanghai GoldExchange, which is, you know,
in terms of physical gold inChina, it's just the centerpiece
of the entire Chinese goldmarket.
You have also the ShanghaiFutures Exchange that does the
futures, but all the physicalgoes through the Shanghai Gold
(04:02):
Exchange and, in terms of China,they actually motivated,
supported, stimulated the peopleto own precious metals,
especially gold, because theyknew to have a robust economy
but also be able to absorbshocks from abroad.
(04:24):
You need to have this neutralinternational asset, not only at
the central bank but also amongthe people.
So they really had a look athow many people own some gold,
what was the grams per capitafor China?
And they have been buyingthousands and thousands of tons
(04:47):
of gold ever since 2002, butespecially after 2013, when the
price started going down.
It was just crazy.
And, let's say, they have beenimporting about 1,500 tons a
year, plus their own miningoutput, which is, let's say, 400
tons.
(05:07):
So that's a lot of new goldevery year being added to the
Chinese private sector.
What we don't see in importnumbers and this is my analysis.
Some people may differ what wedon't see in import numbers and
also the mining stuff thedomestic mining which is going
to the private sector is whatthe People's Bank of China is
(05:29):
buying.
Now I have some sources, andthis is from people that worked
at ICBC, which is one of thelargest Chinese banks.
Chinese banks ICBC and a fewother state-owned Chinese banks
are the ones that buy gold forthe People's Bank of China as
(05:51):
proxy banks abroad.
They do that refineries inSouth Africa, switzerland, also
in London, and that's how theydo.
So we don't see that in importnumbers.
So there's a mass accumulationof gold and there's really this
you know they're really choosingfor gold as a bet.
You know, I don't think it's abet, actually.
(06:11):
You just you know gold is aninsurance on your savings.
But where was I?
It's not only what we see andit's also a lot of it is also
done by the central bank inChina and they buy.
It's hard to estimate, ofcourse, this is the best kept
(06:33):
secret on the planet, butthey're buying a lot of gold,
also after the war has broke outin Ukraine, but also before,
and I think they have at leasttwice as much as what they say.
So people think of China saythey have like 2,500 tons and I
think they have at least 5,000tons.
So that's a little introductionon the Chinese gold market.
(06:55):
And what's really interesting isthat previously, before the war
in Ukraine, many nations inAsia and in the East were price
sensitive.
So the price was set in theWest.
Every time the West was buying,you know, the price went up and
the East became a seller,dampening volatility and vice
(07:15):
versa.
So if the West was selling, theEast was a heavy buyer, and now
that has been reversed.
So China is leading the dancein the gold market, so to say,
being reversed.
So China is leading the dancein the gold market, so to say.
They're the ones who are buyingvery aggressively, driving the
price up.
You can see this by the importnumbers in China.
What you also can see is thatinvestment demand in the West is
(07:42):
nowhere.
Etfs are declining.
London and Switzerland are notimporting gold.
Forget about all the consumerdemand, because those are not
the marginal buyers.
The price is now set in China.
Yeah.
Speaker 1 (07:58):
I actually find this whole dynamic fascinating.
I would think and this is myown naivete, I would think that
because China has been trying topush their own CBCs Central
Bank Digital Currencies that thefocus would be to create demand
for that, as opposed to gold,which is obviously outside of
(08:23):
the digital economy.
How do you square that circle?
How is it that there's thissort of push for gold within
China?
At the same time, there's maybethis desire for CBDCs?
Speaker 2 (08:36):
Well, I think that the Chinese Communist Party
knows, of course they want topush their CBDC, but they also
know, at the same time, thattheir fiat money is not
risk-free.
So you have that.
And then there's anotherelement.
I was just writing an articleabout this, by the way, what
China is doing?
I'm looking at Enbridge.
(08:57):
I don't know if you've everheard of this.
Enbridge is a project.
It was first started at theBank for International
Settlements innovation hub inHong Kong in 2021.
The first participants wereChina, hong Kong, thailand and
the UAE.
What they're trying to do andthis is about de-dollarization.
(09:19):
Of course China wants tode-dollarize, especially after
the war.
What they're trying to do iscreate a technological system
that connects their CBDCs soit's much easier for them to
trade in their local currencieswithout dollars, and this is
where gold comes in.
(09:40):
They can do that throughEnbridge in.
They can do that throughEnbridge.
Enbridge, on the 5th of June,has reached its first pilot
stage, so to say, its minimumviable product stage, I believe
it's called.
But what these countries, ofcourse, have is trade imbalances
.
If they trade with each other,you have a little imbalance.
(10:01):
One country is a surpluscountry or a deficit country,
and then they can storesurpluses not in Chinese
renminbi, because the Chinesealso know they have capital
controls, they haveunderdeveloped financial markets
, but the surpluses can bestored in gold, and gold is a
neutral asset, and so that'swhat the East is clearly
(10:23):
choosing for Europe also.
By the way, I mean Europe neversold its gold.
The US didn't sell all theirgold either, but it has been
very.
You know, it's kind of obviousthat the US has always been
against gold.
You know, all through bread andwoods they wanted to ditch gold
(10:43):
out of the system and promotethe dollar and have the world
use dollars.
So they had more power.
But Europe wasn't actually thatfan of this whole dollar system
.
So they kept the gold, and inrecent years Europe has become
quite vocal about gold again,and the funny thing is that they
(11:04):
also started repatriating gold.
For example, I know thatGermany and France also refined
all their monetary gold tocurrent wholesale industry
standards.
So Europe is also pretty muchpro-gold, and Asia is too.
So it's a very interestingdevelopment.
Speaker 1 (11:25):
It's a question from Gene Wexler.
I was actually looking this upto verify it and it looks like
it's true.
Would you agree that Chinastopping gold purchases during
the month of May is, overallinsignificant?
I just looked this up as wewere chatting, but apparently
the holdings were unchanged.
I saw some headlines that saidgold is getting so expensive
that that's why China is nolonger buying, or at least in
(11:45):
that one month.
Any thoughts on that?
Speaker 2 (11:48):
Yeah, I don't think that what the People's Bank of
China is reporting it buys istrue.
I mean, you know, they havestill like three trillion in
foreign exchange reserves andthey only have a few percent.
They say in gold Now, given thecircumstances, and they have
been few percent.
They say in gold now, given thecircumstances, and they have
been.
You know, it's been like thisfor, let's say, 10 years now,
(12:12):
given the circumstances.
Of course they it's not hard toto imagine, uh, that they would
have bought um, a lot more um,but if they would be honest
about buying so much, you knowthey would even drive up, it
would create maybe a panic onthe market and the whole world
would buy more gold and thenthey could buy less, you know.
(12:36):
So their strategy is they onlytell us what they want us to
know and in that process theycan buy more gold with the
dollars they have.
So I think this is justpolitics by saying, well, we
didn't buy anything this month.
Maybe they will stay silent fora couple of months.
(12:59):
But I also know that fromindustry insiders that they are
buying a lot more than what theysay, and you can calculate this
yourself, or people that arewatching, listening and are
interested, because everyquarter the World Gold Council
comes out with their estimate onwhat central banks have bought.
(13:20):
They compile these numberstogether with Metals Focus
that's another consultancy firm,and that number is let's say,
every quarter is about twice ashigh as what all countries
combined report to the IMF tohave bought.
So there's a big gap betweenthose numbers and that's what we
(13:44):
call unreported buying.
That's what the World GoldCouncil and everybody calls
unreported buying.
Now the people in the industrytell me the unreported buying is
mostly the People's Bank ofChina, so they are buying 200,
250 tons, sometimes a quarter,instead of the tiny numbers they
(14:05):
publish.
So I don't think so yeah, maybeit works.
They say we stop buying, theprice goes down.
Excellent, they get more goldfor their dollars.
Speaker 1 (14:22):
Is there any possibility that the demand for
gold from China is somewhatcorrelated or related to
concerns around US treasuries,just given how much of a big
buyer China is when it comes toUS government debt?
Speaker 2 (14:37):
I haven't done that.
This is a good thing toresearch, but I do know, of
course, if you make a chart ofwhat percentage of US public
debt is held by foreigners,that's going down.
So I think what foreigners arebuying in terms of US treasuries
nominally is staying steady.
(15:01):
Of course the debt is going up.
So what foreigners are owningin terms of share of the US boat
is going down and, of course,gold reserves as a percentage of
international reserves globallyis going up.
So I think that trend is veryclear.
I also I just told you that Ihave my own numbers for how much
(15:23):
the PBOC is buying.
I also have my from that.
I have my own numbers of whatworld official gold reserves are
and I, yeah, make my own chartsand you can really see that you
know the dollar in terms ofbecause it's funny always when
economists or also other peopleon Twitter compare you know,
(15:46):
okay, so let's, they say, let'sinvestigate this
de-dollarization, and then theymap out all the foreign exchange
components of COFR from the IMFand you know de-dollarization
is declining.
You know the dollar isdeclining very slowly in terms
of all foreign exchange.
But if you add gold, you get atotally different picture and
(16:08):
it's very clear that gold isgoing up and most fiat
currencies are losing groundrelative to gold.
And actually, according to mynumbers, a couple of months ago
gold overtook the euro in termsof international reserves, and
let's see if it can take up thedollar next.
(16:31):
Don't forget that gold, untilthe 1980s, was the largest share
of international reserves.
So only from, let's say, 1984,the dollar has been the largest
share of international reserves,which is a relative small time,
now that a fiat currency, acredit asset with counterparty
(16:52):
risk, is the largest share ofinternational reserves, the
backbone of the internationalmonetary system.
All in previous history it wasgold or silver without
counterparty risk.
And of course now, withgeopolitical tensions and with
inflation, and with the sky-highdebt levels and high equity
(17:14):
valuations, I don't think creditassets like the dollar and
national currency are going totake up.
The are going to stay, uh, thelargest share of of these
international reserves.
So I think gold is going togain more ground and and the
dollar will uh, to the detrimentof the dollar uh, you had made
(17:39):
that point that in the west, youknow, nobody's that excited
about gold.
Speaker 1 (17:42):
Um, I'm going to put the comment up just to create
some conversation around withsomebody.
You had made that point that inthe West, nobody's that excited
about gold.
I'm going to put the comment upjust to create some
conversation around it.
Somebody saying, by the way,gold is dead, which is a pretty
strong statement.
Rumors of my death have beengreatly exaggerated.
I go back to that quote 13years and nothing.
Now, there's some degree oftruth around that, although
(18:02):
obviously it's pushed highersince.
But I'd remind viewers thatlost decades are common in all
asset classes, includingequities.
So just because somethinghasn't worked for the last 10,
11, 12, 13 years doesn't meanthat the next decade can't be
totally different.
So let's make the argument forwhy, from a long-term, very
(18:26):
long-term perspective, this timeis different than maybe we go
from this, you know, seven yearsof famine to seven years of
feast, 13 years, 14 years offamine to you know, a better
time period ahead.
Speaker 2 (18:39):
Yeah.
So what I just touched upon, Ihave a fairly basic framework
for how I see gold.
I use uh extras inverse pyramid.
I think most people will knowit, but I will explain it in a
bit.
First, back to.
Let's go back to uh, 500 yearsago, not not too long.
500 years ago, let's say at theend of the Dark Ages, most
(19:04):
money was gold and silver andthat gold and silver didn't have
counterparty risk.
Of course the kings coulddevalue it.
But let's say, you know, ingeneral, gold if you just hold
it in your hand doesn't havecounterparty risk.
Okay, then came credit assets.
So you know, banking developedbanking deposits.
You got a lot of equity was.
(19:27):
You know that was actuallydeveloped in my country.
But VOC, the stock market, thebond market, all derivatives
came a lot of credit assets.
And credit assets are great,you know.
I mean they stimulate growth,they are very efficient in doing
things, pulling capitaltogether.
People get dividends on theinterest rates, excellent, you
(19:49):
know it's all.
Everybody loves it.
But this so.
But I see the economy.
You know, especially now,because it's so interesting now
between the ratio between creditassets.
You know, on the one hand, sothat's national currencies, bank
deposits, equity bonds andmoney, a financial asset,
(20:12):
without counterparty risk.
So if you look at the ratiobetween the two and you can make
charts about this I made a fewcharts that go back I don't know
140 years about the ratio, forexample, between the value of
the US monetary gold versus USM2, or the value of all the gold
(20:35):
which is above ground andglobal financial assets, and
then you can see how much trustthere is in credit assets by
looking at those ratios.
And it's actually sky high, thetrust in credit assets.
So national currencies, equitybonds, everything is sky high.
(20:59):
It's just coming off of the,let's say, the valuation of gold
.
In terms of the model I justdescribed, it's just coming off
of a very low bottom which wasformed in 2015.
And now, if you look at theworld, with, again, with the war
(21:21):
and geopolitical stress andinflation, asset bubbles,
inequality, social unrest,political instability, you know,
look at the US.
We have a little bit of thesame here in the Netherlands
Everything Is this the pointthat we think all credit assets
will have a very good run forthe next 10 years.
(21:41):
I think that gold will have ahave a very good run for the
next 10 years.
I think that gold will have abetter run.
But so that's my uh simpleframework you think it's just
gonna be oh sorry, I couldn'thear you.
Can you go back five seconds?
Speaker 1 (21:59):
yeah, no thing is that?
Yeah, the um, aside from fromgold, do you think that's a gold
specific and gold isolated uhtheme or is it a broader
statement around commodities,you know silver also
participating other industrials?
Speaker 2 (22:15):
I, I I have to say I think other commodities as well.
I think you know uranium, Ivery much like uranium.
Um, copper, you know, becauseof also there is obviously is a
trend towards more green, uh,energy and thing and things like
that.
Um, oil can be, you know,because it's it's about
geopolitics.
Other commodities are veryimportant as well silver, I own
(22:39):
silver.
Um, to be honest, I'm not asilver fan.
Maybe it's because so manypeople on Twitter are absolutely
infatuated with silver and I,just the thing is, with silver.
You know, I have looked atprecious metals, like for going
back thousands of years, and inthe beginning, in ancient Sumer,
(23:02):
silver was actually morevaluable than gold.
But and then, you know, acouple of centuries later, gold
became more valuable becauseit's more scarce and silver was
always used as a medium ofexchange.
(23:22):
But we, of course, when itcomes to precious metals, we
will never use gold and silvercoins as a medium of exchange.
So the whole monetary idea ofsilver is gone right.
So we don't have to pay withsilver coins, we don't have to
pay with gold coins, only with,you know, we just keep it as a
store of value.
We pay with digital, with zerosand ones.
So I actually think that, um,you, you, we can see this
(23:45):
happening.
Since the what was it?
The 19th century, gold hasbecome more of an industrial uh
metal and not so much a monetarymetal anymore.
It's it's about 50, 50 now, butfor gold it's it's like 95 to
5% in terms of monetary use andindustrial use.
For silver it's 50-50.
So I'm much more focused ongold in terms of everything that
(24:09):
I'm saying about monetarydevelopments in the whole world.
If you look at the big guys,investors like Ray Dalio or
Druckenmiller, they're all intogold, not silver.
Central banks all have gold,not silver, not Bitcoin.
It's the gold.
Also because gold is equallydistributed across the globe
(24:31):
right, and money only works ifeverybody has a little, so you
can trade with each other.
If only one country or oneperson has all the gold or the
Bitcoins, it's very difficult tomake it function like money.
So I'm not much of a silver bug.
I own it because you know,indeed it has shown in history
(24:52):
that if gold goes up a lot, thensilver does too.
But I think then in the end butmaybe I have too much of a
macro view, you know, zoomed outview In the end silver maybe I
have too much of a macro view, azoomed out view.
In the end, silver will loseits monetary status.
Speaker 1 (25:10):
I will say that the thing with Twitter slash X is
that everybody gets infatuatedfor a moment in time and
everybody's an expert for amoment in time.
Speaker 2 (25:18):
Yeah, true, yeah, but the silver crowd is quite
aggressive.
So I'm, uh, I just wanna, Idon't know, and I shouldn't be
bothered by it, because you knowwho cares, but uh, I still know
.
Regardless of that, I, that'smy opinion now.
I, I do think that silver willbecome purely industrial metal,
(25:55):
but I'm bullish on it.
Speaker 1 (25:57):
2011, when the same sentiment you would have around
bitcoin being the new worldorder and the confidence with
which people say it on socialmedia that was the gold bugs
right over a decade ago, but youdon't see any of that, uh,
today no, no, I'm just.
Speaker 2 (26:14):
I'm reading a comment by alexis uh, gold is dead for
13 years, right?
So excellent, yeah, no, uh, Ithink that's a good thing.
Maybe, uh, maybe they'll, theywill come up, uh, again, and
then maybe that's time to sell.
I don't know.
But, um, um, yeah, regardingbitcoin, I have, you know, I, I
(26:36):
think, just to be a maxi in anyasset class.
Why would you bet on one horse?
Why not just diversify?
And you know I'm, I like, Ilike to stay humble, you know I
like to tell myself, I justdon't know what's going to
happen in the future.
So I diversify and I feelcomfortable with that.
Speaker 1 (26:53):
But so every now and then there are these uh
headlines that pop up around uh,uh, golded BRICS currency.
Right, you hit on China there,and I see this on the periphery.
I'm aware of it.
It sounds like it's more fringethan anything else when I
(27:13):
initially look at it, but maybeexplain to those that are
listening what this direction isabout when it comes to Brazil,
russia, india, china and ifthere is any real viable threat
to the dollar if the BRICS areable to really get their own
gold-backed currency in that way.
Speaker 2 (27:34):
Well, the thing is that gold in itself, you don't
need to launch a new currency.
Gold in itself is the newcurrency, right?
So the BRICS could embrace that.
Uh, I hope they do.
Uh, maybe they're, they are inthe process of doing that.
I'm a little bit, uh, skepticaltowards this topic of bricks
because you know, uh, I've beenhearing this all this bricks,
(27:57):
you know when?
When the bottom line is thatthe BRICS produce very little.
I see, you know, I've beenhearing about a BRICS new
gold-backed.
There's a friend of mine askingme about the bold index.
I will tell you, charlie, okay,the bricks are all this talk
(28:20):
about a new bricks currency andif you look at all the documents
and there is just nothing theyhave.
You know, I mean, if you lookat, for example, the euro, they
have been working on the eurofor 30 years.
There were 30 years of researchand all sorts of documents and
work and thinking, and there isnothing on a bricks currency.
You know, I mean, maybe they doit all in hiding, but you know,
(28:42):
and it's also quite obvious,that only Russia is really
putting out all this news aboutoh, we're working on it, we're
trying and we have a blockchainand we have this and that All
the other countries, yeah, okay.
Sometimes they say you know,sometimes the president of
Brazil says I don't like dollarsor whatever, but to tell you
(29:03):
the truth, I don't think theyhave a lot.
You know, if you can make adiagram right with a bar, and
this tiny end is there is noBRICS currency.
And this tiny end is there is aBRICS currency.
This is black, this is white.
This whole gray area can be weare working on it.
You know so every time they saywe are working on it.
You know so every time they saywe are working on it.
Yeah, can be.
(29:24):
So where are they?
You know?
Are they at the?
We still basically have nothing, or we're nearly there.
It's hard to say.
Um, I I spent, like I said inthe beginning, I I I spent more
attention to um, to embridge,because you, you can see
documents, you can see umcontracts being signed, a
(29:45):
cooperation, uh, everything, uh,it's much and maybe it's the,
the bricks will uh, embraceembridge, um, but it has no
point in for me to chase this,this bricks, um ghost, no, no I
actually had, uh, charlie morrison a spaces, uh like a year ago
(30:10):
or so.
Speaker 1 (30:11):
Uh and uh, he's doing what he always, uh, what
everybody should do.
When you have your own product,you want to get people to talk
about it on the next, uh,charlie could see it in this.
Okay, so this gets intodiscussion around how do you
position for this multi-yearcycle?
The easiest answer is just buygold, but there's a lot of
(30:31):
different ways of buying gold.
There's ETFs, there's theactual bars, there's insuring
them in vaults, there's all thisstuff.
So talk about the pros and consof doing it through an exchange
traded fund versus holding thephysical, because, just in the
same way that you mentioned, youhave these sort of extremists
on the silver side, on theBitcoin side, you do have
(30:53):
extremists in terms of saying,paper gold versus physical.
Speaker 2 (30:59):
Yeah, I think.
First of all, there's a lot ofmisunderstandings on X about
paper gold.
A lot of people think that ahundred times more paper gold
has been sold than there is goldbacking it up and that, let's
say, 99 of the gold buyers whohave paper gold are being fooled
(31:22):
that they own physical goldwhile they own a paper contract.
That's not what's going on.
I mean, if people, for example,buy a futures contract, they
know they don't own physicalgold and it says in the LBMA
brochure.
If big investors go to Londonand they sign up with JP Morgan
(31:43):
in an account and they say wewant to buy some unallocated
gold, it says very clearly inthe brochure that unallocated
gold has counterparty risk.
It's not the same as physicalgold, et cetera, et cetera.
Physical gold, et cetera, etcetera.
And still people use it not asphysical gold but as a trading
(32:09):
part in the London bullionmarket.
Now about the difference betweenowning physical gold outright
and ETFs I think ETFs are veryeasily traded.
You can go to your broker, youcan buy some GLD, the storage
fees are low, you pay storagefees, you don't have to pay it,
(32:34):
but the amount of gold backingeach GLD share is declining
every day.
Actually yeah, so that's howyou pay storage fees.
They actually, yeah, so that'show you pay storage fees.
But the downside, of course, iswhat I said earlier Gold has no
counterparty risk.
You want to ride on thatfeature having no counterparty
risk.
Etfs have counterparty risk.
For GLD, for example, there's atrustee and a sponsor and there
(33:00):
are authorized participants andet cetera, et cetera.
If the financial system goeshaywire and it happens all the
time there's a trustee and asponsor and they're authorized
participants and et cetera, etcetera.
If the financial system goeshaywire, you know, and it
happens all the time.
Last, you know, in this on thiscontinent, last couple of times
it was Cyprus and Greece andthey closed the banks.
You never know how, how longthe banks are closed for.
And maybe you, you know if thosebanks, um, or or a bank goes
(33:23):
belly up like, uh, lehmanbrother did, and if, if those
banks that go belly up are, um,are, are connected to to your
ETF, maybe your ETF is halted oris seized by a curator or
whatever.
So so I wouldn't take the riskand buy ETFs only for short-term
(33:44):
trades.
I would store it outside thebanking system in physical form
and be secured, because gold asa physical element is completely
independent of the financialsystem.
Only when you put it in an ETFand et cetera, it becomes part
of the financial system and itstops serving as an insurance
(34:09):
against the financial system.
Speaker 1 (34:13):
There are these constant headlines around Costco
in the States selling gold barsand then running out, so
clearly there's some demandthere, but maybe this is a
little bit too nuanced.
But why gold bars versus goldcoins?
I mean, I want you to talkabout the company that you're a
(34:34):
part of, because there was anearlier question which I'm
trying to find, asking aboutGainesville coins.
So bars versus coins, why coins?
Speaker 2 (34:47):
Any real difference there.
Well, bars, you know, thesmaller the physical amount of
gold you buy your gold in, thehigher the premium on the gold,
so the more money you pay extrafor the gold.
So, if you buy a very large bar, a 12 and a half kg gold bar,
(35:07):
the premium is basically nothing, also because it's the largest
bar around and that's the pricefor you know, it's the benchmark
.
So, and if you go to a one kgbar, the premium is, I believe,
$60 an ounce or whatever, no,$60 for the kg bar, the kg bar
anyway.
If you go to coins, I believeon coins, the average premium is
(35:27):
five percent.
Now you can also, if you sell,um, if you sell the, the coins,
you can get the premium back.
But I'm just more of um, youknow, also because of technology
.
I don't, you know, I don'tstore uh segregated physical
coins or bars in my house or ina vault.
I just have it somewhere inswitzerland.
(35:50):
To be honest, uh and uh, I, um,I make sure that the, the
company that I buy gold throughis, is not a bank, you know, and
and and the vault that whereit's stored is is not a bank,
you know, and the vault whereit's stored is not a bank either
, so it's a bit shielded fromthe financial system, and I just
buy it per gram.
You know why the hassle of allthese?
(36:12):
I'm just not a coin collector,but that's me so, uh, but every
some people you know like to buycoins also because they think
that, um, when there's anarmageddon scenario, they can go
to the supermarkets and paytheir groceries with, uh, with
gold or whatever.
Um, I think, um, that could be,but maybe also paper money will
(36:36):
do um, so that's my view on it.
Speaker 1 (36:41):
So that's my view on it.
There's a question here whatdoes Jan think about Pax Gold,
tether Gold, these kind ofblockchain-backed ways of
getting gold?
Because, just to your pointabout the counterparty risk, you
can argue that gets eliminatedwith a blockchain sort of
protocol.
Speaker 2 (37:02):
Any thoughts there?
Yeah, as far as I know, pa goldand uh, tether gold don't, uh,
you don't pay storage fees, uh,on that.
So, um, they I don't knowactually how they do it.
Um.
So, and whenever I see a goldproduct that, uh, and the gold
is stored somewhere, but youdon't pay storage fees, then I
(37:23):
don't trust it, because who paysthe storage fees?
Just like Kinesis, that's somekind of blockchain system and
they issue tokens and you canbuy the tokens.
Those are backed by gold, andthen you don't pay storage fees.
But every time you pay withwith gold, you can use these
(37:43):
tokens actually to, you have adebit card and you can pay with
the gold in stores.
Well, I really like that idea.
You know, to uh, to, to, to, tocreate that, um, but then every
, every time somebody pays withkikinesis, a fraction of that is
being taken and is beingdistributed among all the
(38:05):
participants, all the holders ofthe Kinesis tokens, and in that
way, again, you don't paystorage fees.
But then, of course, people needto pay with gold in
supermarkets or there isn't anyincome.
So I wouldn't buy thoseproducts myself.
Also, because I see gold as astore of value and and not as a
(38:28):
medium of exchange.
I just, you know, own gold asas uh, as yeah, as a store of
value and and for daily purchaseI use euros at the moment.
Um, so that's my view on PoxGold and also Tether Gold.
Yeah, I'm quite sure they don'thave storage fees.
Speaker 1 (38:47):
Yeah, I mean, your natural place of skepticism is
like mine.
If it's too good to be true, itprobably is.
Yeah, I had never actually comeacross either of those, but
when that I think it was whenthe first missile went off
between Iran and Israel that Ithink it was Pax Gold went like
(39:09):
vertical overnight.
There was some crazy pricingthat was going on, so everyone
thought that this was the momentfor gold.
Speaker 2 (39:17):
Speaking of that, I had that was in a weekend, right
or not?
Speaker 1 (39:20):
Yeah, exactly right, and nothing was really kind of
trading.
So everyone looks at that andsaid, oh, gold's going to open
up huge.
Yeah.
Which actually is interesting,because I myself have made the
argument that, because I tend tolook at market prices more from
the standpoint of signalingthan anything else, I've argued
that gold has been sending awarning in terms of the
(39:40):
short-term movement, because oneof the more unusual dynamics of
gold movement here is that it'sactually performing very well
when you don't have negativereal interest rates.
Usually gold is very inverselycorrelated to negative real
rates.
This time you have positivereal rates and gold is doing
really well.
Is there anything historicallythat suggests that money goes
(40:06):
into gold when there's there'sfear that something's coming,
that it's it's sort of youmentioned the term insurance
hedge more than just sort ofstory, value arguments, things
like that but that there'ssomething more imminent, there's
like an event that is causingsome kind of rush into gold yeah
, well, I think what you firstsaid was, uh, of course, a
correlation between gold andreal rates, right?
Speaker 2 (40:28):
So from 2006 until 2021, gold was very tightly
inversely correlated to realrates as measured by the 10-year
tips yield.
So you know, if the tips yieldwould go up, gold would go down,
Because if you get more realrates, it's less interesting to
(40:50):
own gold.
That was the very tightcorrelation and that has broken
down since the war and nowactually, you often see when
long-term rates 10-year treasuryrate goes up, gold goes up as
well.
Treasury rate goes up, goldgoes up as well.
(41:11):
And you can look at the 1970s.
Actually, all through you know,I think you know that.
You know gold in the 1970sstarted at, let's say, $35.
And at the end, in 1980, it was$850.
And all through the 1970s,long-term interest rates of the
(41:36):
US went up.
So and of course, if there's alot of, let's say, lack of
confidence in your currency,people will dump your currency
and the interest rate can go up,right.
So it can also mean you knowthat that inverse relationship
has also changed because ofthere's now a lack of confidence
in the dollar.
Speaker 1 (41:54):
You can, you can look at it at that let's talk about,
um, what, uh, people get mostright and most wrong about gold
and the perceptions of gold, toyour point, about people being
experts on Twitter, slash X,what are some of the things that
(42:15):
when you see people talkingabout gold, you just kind of
shake your head and you want tokind of say you're blatantly
wrong and naive for sticking inthose terms.
Speaker 2 (42:25):
Well, there are a lot of myths about gold.
First, I would like to pointout uh and that's something I uh
have written about extensivelyis about gold supply and demand.
It's, it's impossible to tomeasure gold supply and demand
basically.
Uh, I have a framework for itand blah, blah, blah.
We can talk about it, but, uh,the basic thing is that you know
(42:46):
some people, when it wasdemonetized in the 1970s and the
world was slowly being pushedon the dollar standard, some
companies, mining companies,started making gold supply and
demand balances.
So we mine so much.
Demand is jewelry, demand isthis, industrial demand is that.
(43:07):
And then there's a surplus ordeficit, and some people make
reports about this and they soldthose reports and but the thing
is, I mean, gold is a currency,so how do you measure supply
and demand with it, with adeficit and a surplus of a
currency?
Well, I've never seen you can'tmake a supply and demand
balance of the dollar or ofbitcoin and and state that, well
(43:28):
, there's a.
You know, if there is, therecan't be a surplus in in
bitcoins, the price just goesdown.
So same same with gold.
Um, you know, forget aboutsupply and demand.
I mean in.
In essence, it's about supplyand demand.
But this gold supply and demandbalance just doesn't make sense
.
And you can do this yourself.
(43:49):
You can go to the World GoldCouncil or people that you know,
I don't.
The World Gold Council is greatin terms of putting out a lot
of great useful data and they'veactually changed their supply
and demand statistics now theydon't say a surplus or deficit
(44:10):
statistics.
Now they don't say a surplus ordeficit.
But if you go back in timeyou'll find all those surpluses
and deficits and you can justmake an excel sheet and write.
You know in every year ifthere's a surplus or a deficit
and what the direction of theprice is, and there's just no
correlation.
While if you do this with,let's say, soft commodities
coffee, sugar, corn, pork,bellies, whatever there's always
(44:31):
a correlation A surplus meansthe price goes down and a
deficit means the price goes up.
So one of the biggest mythsaround there is about supply and
demand and I think it's veryharmful because there's just so
much misinformation andmisunderstanding about gold and
this part feeds into it, becausea lot of people you know that
(44:53):
are obsessed with the comics andprice suppression.
They start with this or theytake this and they say you see,
it doesn't work.
That's the evidence that thegold price is suppressed.
Now, maybe the gold price issuppressed, but I don't think
actually that it is.
(45:13):
But you can't.
That's another myth.
An evil cartel cannot suppressthe price of gold through just
futures contracts for decades.
Right, just futures contractsfor decades.
Right.
(45:33):
Of course you can short sellfutures.
But suppose the Fed or JPMorgan or some entity of the
evil cartel shorts gold formillions and millions of dollars
or ounces or whatever.
Now then what?
Either they have to roll theirshort position or they have to
deliver the medal, which is, ofcourse, they might as well just
(45:54):
sell the medal outright tosuppress the prize or they have
to close their position and thegold price then goes up, because
if you close a short, you golong and you know your action is
undone.
Now about the rolling.
If there's a massive short outthere suppressing the price of
(46:16):
gold, we would see this in theroll data, because then, if that
massive short would roll, thenduring the roll, one contract is
pushed up and the other push isdown.
If you look at this, there areno fingerprints.
It just doesn't happen in themarket.
So I think the other myth isthat gold is not suppressed on
(46:39):
the COMEX.
Another myth, for example, isthat coin demand drives the
price of gold.
You know, sometimes in 2020,during COVID, you saw premiums
on gold coins going to 50percent and everybody would say
you know, how is it possiblethat the gold price is not, you
know, tripling or whatever?
Sometimes we just do nothingfor a while, and while premiums
(47:01):
on gold coins were 50 percent,and so, of course, gold coins
are just a tiny part of themarket, maybe just a few percent
of the entire trading volume,and saying that gold coins would
drive the prices like sayingthat a bag of chips drives the
(47:23):
price of potatoes.
Of course doesn't happen likethat.
The premium on gold coins isset by supply and demand of
coins and how mints can react tothat.
The gold coin demand is veryvolatile.
It's sometimes very high,sometimes very low.
The United States mint doesn'tincrease its production capacity
(47:46):
times 10, you know, one monthand then decreases its decreases
it by 10 the next month.
So if you have a a panic buyinghappening, then the premiums
will rise, and but it doesn'tmean much actually about the
market.
You have always look at uh Imostly look at uh customs
(48:11):
statistics.
So import numbers from the uk,switzerland, india, china,
whatever the us.
And then it becomes apparentwhat drives the price of gold,
and it's's mostly institutionaldemand.
And it used to be the West thatwould drive the price of gold,
and now it's the East, becausenow you see Chinese imports
(48:35):
going up concurrently with theprice going up, and that's, yeah
how I look at it.
So those are a few myths aboutgold.
Speaker 1 (48:49):
Jan, as we wrap up, how should people track more of
your thoughts for your work?
The comments have been gettingvery positive.
I mean your approach toexplaining things, especially
when it comes to China.
I think it's a reallyinformative education, so thank
you for that.
But where should people look toto find you?
Speaker 2 (49:06):
On the X just maybe you can drop a link.
I believe it's uh jan goldunderscore on uh.
On x, you can also go.
You know I work for gainsvillecoins, which is a coin dealer in
um in florida.
You can also look on on theirblog.
So go to the gainsville coinswebsite and with at the blog
page you can see my uh articles.
(49:27):
But but I also put out myarticles on X and that's where I
see X as sort of a bar.
I share my thoughts on X, Ishare things I'm interested in
and I speculate on X and Iengage a lot with people on X.
So yeah, you can follow methere.
Speaker 1 (49:48):
Everybody.
Please make sure you follow Jan.
Again, this was a greatconversation.
Appreciate those that watchedthis live.
I'm now going to go do anothermorning few video, but given the
time difference, I need to dothis podcast first with Leadlag
Live.
Jan, I appreciate you,appreciate those that watched
and hopefully I'll see you allon the next episode of Leadlag
Live.
Thank you, jan.
Thank you.
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