00:00Must we?
00:01Yes.
00:02I think we must say that everyone expects us to talk about gold, right?
00:04We would like it if we didn't yet.
00:05Everyone wants us to talk about gold.
00:0710% of the portfolio still, it's your biggest holding, but you have sold down quite a lot.
00:11We have sold down quite a lot.
00:13I think it's more a question of tempering our enthusiasm.
00:18We have done very well in gold, going right the way back to when we met.
00:21I think we first bought gold for the Trojan Fund back in 2004, so over 20 years ago.
00:27The gold price was $424 back then.
00:30We've held it uninterrupted all of that time.
00:32We haven't been in and out and in and out.
00:33We've held it a long time.
00:35Since after the financial crisis, we've held between about 10% and 12%.
00:42When I met you three years ago, sitting on this stage, I think, the price was around just over $2
00:48,000, $2,200, something like that.
00:50Today, it's $5,000 plus or minus.
00:53It's been a hell of a run.
00:54We know the reasons as to why that has been, that are well-exercised, particularly interesting,
01:01and not about consumers or institutional investors particularly adding to gold.
01:05It's been much more about central banks diversifying their portfolios.
01:09And that has continued, and that's been of great support to the market.
01:12So I'm not overly pessimistic about gold at these levels.
01:16However, they have had a great run, and we need to get our risks proportionally correct.
01:20We allowed gold to run up to 14% at the end of last year within the portfolio.
01:26In January, the price spiked above $5,500.
01:30We sold some just over about $5,100, $5,200.
01:36And we brought it down to 10%.
01:37So we've cut our goal holding by 30% in a day.
01:41Which is how liquid it is.
01:42Yeah.
01:43But 10% is still expressing quite a lot of confidence.
01:45Well, 10% I think expresses long-term confidence.
01:49In the short term, I think it's going to be quite bumpy.
01:51It's travelled, you know, a long way very quickly.
01:55And I think it's not necessarily going to protect in a way that it has done in the past from
02:02volatility within markets because of that high level.
02:05So it's just not going to be necessarily that portfolio insurance.
02:10And we've seen that in the last two, three weeks.
02:13We've seen the bombing of Iran at a time the gold price actually hasn't done anything.
02:17Yeah.
02:18In sterling, it's up a little bit because the dollar's strengthened.
02:21But really, it's done nothing.
02:22And you would have expected it.
02:23If you were to say to me, right, okay, the US is going to bomb Iran with Israel tomorrow morning,
02:29what do you expect the gold price to do?
02:30You would naturally expect it as a flight to quality for the gold price to go up.
02:35It hasn't.
02:36And I think that when eventually, whenever it is, the US steps back from the war, then it'll be interesting
02:47to see what happens to the gold price then.
02:49I wouldn't be surprised if it has a correction.
02:53But I would view that as a long-term opportunity.
02:55I think with everything that we've talked about in terms of sovereign debt risk, that is not going away.
03:01Yeah.
03:01And that will be very positive for gold, both from the point of view of weaker currencies and debasement, but
03:06also from the point of view of owning another asset other than fixed income.
03:10So I don't think the bull market is over, but I think we have had a very strong run.
03:17And I think there's reason to be a little bit more circumspect from these levels.
03:20And just there is no right answer about how to size this thing.
03:25I've got friends who've got 50% in gold.
03:29I've got friends who've got 1% in gold.
03:30I've got friends who've got no gold.
03:32So it is not necessarily easy to size.
03:36What I've always felt is that you've got to have enough to make a difference, but not so much that
03:41the tail wags the dog.
03:43So I've always felt between 8% and 12% is about right.
03:46We're allowed to get to 14%.
03:48We came back to 10%.
03:49But I think that's the right sort of level for the environment that we're in.
03:52And it is an educated guess, frankly.
03:54Yeah, always, of course.
03:55But you would expect investor demand for gold to go up if you think that for many decades until relatively
04:01recently,
04:02everyone had 4%, 5%, 6%, 7% of their portfolio in gold.
04:05And now the average person still has maybe 0% in gold.
04:08So you would expect as people start to build up gold holdings again in response to the conversation we've had
04:13about bonds and diversifiers and balances,
04:15you would expect there to be a big level of retail demand coming through.
04:19Yes, and I think that a lot of the diversifiers that people hope were going to work, let's say in
04:242022, didn't work.
04:27And so gold has worked for the right reasons.
04:31And many people would say that Bitcoin has worked, to a degree.
04:33To a degree, perhaps.
04:35But you've gone out of that.
04:36No, I'm afraid there are some times, I admire the works of Mr Buffett and Mr Munger,
04:42and sometimes they say it goes into the too hard bucket.
04:46And I know it's a cop-out, Meryl.
04:48It is a cop-out.
04:48But I'll take it.
04:49But Bitcoin definitely goes into the too hard bucket.
04:51And I believe that's a far, far, clever of people than me.
04:53Let's talk about that.
04:54Or more speculative people than me.
04:55In fact, when Bitcoin was in return.
04:55And when Bitcoin was in return, they were in return.
04:55And if Bitcoin was in return.
