00:00While the dollar is back negative against its major peers, despite these comments from Scott Bessent,
00:05yesterday, gold, copper and silver have all hit record highs.
00:09How much is that?
00:10The debasement trade and all the metals ripe for a nasty come down here.
00:15So, two questions there.
00:19One is,
00:20I think a chunk of this is definitely the debasement trade.
00:23I get a little bit nervous about it.
00:25I don't like that term, but it is valid to some extent.
00:27People are looking to diversify a way.
00:30This is not about the end of the US dollar as the world's main reserve currency.
00:35It's just about, they've been massively overexposed and they're looking to reduce that exposure.
00:39Now,
00:40there are the other fiat, major fiat currencies out there aren't looking.
00:45particularly attractive.
00:45In the mid-2000s,
00:47you know,
00:47when we went through a phase of trying to diversify it from the dollar.
00:50We were getting very excited by the Euro,
00:52which was kind of fresh and new and looked like it was...
00:55really uniting well.
00:56We were getting excited by the Yuan,
00:57which had joined the WTO.
00:59The Chinese market was...
01:00its assets were booming and we even were much more positive about the Yen.
01:04We didn't really...
01:05I realized it was still in the early stages of three decades of stagnation.
01:09So I think there are many...
01:10exciting options back then and we really got excited about emerging markets.
01:13It was the rise of BRIC.
01:15Today,
01:15people haven't been burned on these kind of narratives before or not as excited.
01:20by the counter narratives.
01:21So they're like,
01:21we can increase exposure to some of these other currencies,
01:24but they're not...
01:25you know,
01:25they're not great alternatives,
01:26which is why they're piling into real assets.
01:28They're basically worried by the fear...
01:30currency idea,
01:30which is where we got the debasement trade idea.
01:33So they're looking for real assets and...
01:35precious metals are both a benefit from being a kind of a real asset.
01:40but also by that idea that they are haven assets.
01:42They benefit from uncertainty,
01:44from risk...
01:45risk aversion.
01:45They've got a historical record of being sometimes stepping in as currencies.
01:50So absolutely what's happening in metals is about that.
01:53You ask whether they're ripe for a...
01:55drop that the...
01:56the rallies of the last couple of months have been truly extraordinary,
01:59particularly in SIL.
02:00silver,
02:00more so than gold.
02:01But you could have said they looked right for a collapse at any...
02:05point since December and they've,
02:06you know,
02:06they've got another 30,
02:0740 percent.
02:08Sorry,
02:08more than that.
02:09Apologies.
02:10I just think silver is actually about 60 percent year to date.
02:12The moves are happening so fast.
02:13I can't keep track.
02:14So...
02:15I think that...
02:15look,
02:16they look really overextended,
02:17but you know what?
02:18The people who have lost money here...
02:20between the people trying to pick the tops.
02:21I think we're in a frothy end game.
02:23That does not mean you start shorting...
02:25making it today.
Comments