Episode 9: Gold, Bitcoin, and current Macro Outlook with Rob Price, CFA

Ben Lakoff, CFA
September 28, 2020
Listen to this episode on your favorite platform!

Interview with Rob Price, CFA, head of asset allocation at Alexander Forbes Investments in South Africa.

Rob is a very interesting South African. He advises Pensions on their asset allocation and is a big fan of sound money.

Rob is an asset allocator and has a keen insight in the global macro backdrop. We talk about the markets in general, gold, bitcoin and why investors should be paying attention to these asset classes now more than ever.

Enjoy this conversation with Rob Price!

Show Notes

0:00:00   Welcome and context

0:00:45   Who is Rob Price and what do you do?

0:04:10   Periods of time in History that might explain the current situation

0:09:05   What is your global macro outlook?

0:18:30   What is the optimal asset allocation strategy?

0:24:41   The potential of public markets

0:30:10   The risks that you want to take

0:31:53   What makes gold so valuable?

0:40:00   Saving in currency vs saving in assets

0:43:13   Similarities of Gold and Bitcoin

0:45:05   How to get Gold on your portfolio?

0:48:30   Why invest in gold miners?

0:50:01   What are some of the key risks for gold?

0:57:35   What is your feeling for the future of the value of gold?

1:02:25   How did you get into Bitcoin?

1:05:46   Risks of government-issued cryptocurrency?

1:09:45   What are the key risks for Bitcoin?

1:22:01   Any other cryptocurrencies that you are following?

1:27:02   What is your advice for asset allocation?

1:32:11   Where can people find out more about you?

Show Links

The Fourth Turning

The gold stock-to-flow model

Episode Transcript

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment

opportunities available to the everyday investor. Here’s your host Ben Lakoff

Welcome to the show alt asset allocation podcast. Today’s interview is with Rob Price. Who’s the head of asset allocation at Alexander Forbes investments in South Africa.

Rob is a very interesting South African he advises pensions on their total asset allocation and also is a big fan of sound money, Robinson asset allocator, and has keen insight in the global macro picture. We talk about markets in general, gold Bitcoin, and why investors should be paying attention to these.

Oh, so important asset classes. Before we start, please, don’t forget to like, or subscribe to the podcast. It really, really helps without further ado. Please enjoy this conversation with mr. Rob Price.

Good afternoon, Rob.

Rob: [00:01:01] Good to be here Ben

Ben: [00:01:03] I’m here with Rob price. He’s the head of asset allocation at Alexander Forbes investments in South Africa.

Glad to have you.

Rob: [00:01:10] Yeah, it’s really good to be here as I was saying briefly offline. I mean, yeah, I guess most of the comments are from my personal perspective, but I will make comments here, here, or there. I think it is quite interesting sometimes to think about the context from an institutional asset manager and the constraints and, Yeah, just some of these kind of thoughts, but, definitely.

Yeah, we obviously I’d try and we tried to be as aligned as possible on the portfolios. yeah, my, my, my views are probably a little bit stronger than our portfolios for understandable reasons.

Ben: [00:01:41] So why don’t you start off a little background on you and what you’re doing?

Rob: [00:01:45] I mean, my background is I studied economics back in the day and I was lucky enough when I left university.

To go to a company, a small company that did a lot of, financial market research investments, but they had a, a good freedom background. They learnt a lot about Austrian economics, sound money. I kind of fall down that rabbit hole, you know, many, many years ago. And so, I mean, I, yeah, I worked for that company for a while and then moved into institutional asset management because I wanted to work more specifically on portfolio management.

So I still do kind of economic research, but I just never want it to be a. Economist making economic cost. so yeah, that’s why I worked for, you know, institutional asset manager and enjoy it. They’re very much making decisions on photos, but yeah, I see the world very much through that sound money lens.

it’s yeah. It’s infiltrated a lot of my thinking. I’m very interested in kind of philosophy and politics and culture, these things. I think I’m kind of, they’re merged together in the way that I. See the world and also CDC investments. Definitely. Has we just a brief background? I’m from South Africa recently moved to America, in December to Los Angeles.

yeah, joining it over here and I’m lucky enough to still work. You’re working remotely for my, my employer back in South Africa.

Ben: [00:03:01] That was probably a little new in December to decide to go remote for your South African company all the way here. Right now. It’s the norm.

Rob: [00:03:10] It worked out really well. And I left a pen actually, you know, actually resigned.

And my, my boss just came back three weeks later and said, listen, why don’t you move over here? Kind of works out well for both parties. and it was meant to only be kind of a six month contract. It could have it hit. And I was networking again, looking for a jump that invest in, based into others. And of course, more tricky around COVID-19.

Yes, but luckily, and also they hadn’t made much progress with finding replacement. So. Extended the contract still working for them. so it’s a good arrangement. I would like to move into U S based employment as soon as possible, but very grateful for what I’ve got and don’t speak up. They’re out of employment,

Ben: [00:03:50] South African Rand. Isn’t so strong right now.

Rob: [00:03:53] That is certainly a challenge. but I also say I am very grateful, not just for the employment, but I mean, to be engaged in the markets fully at this stage, you know, I still have my Bloomberg and to be able to do all the research, because. Yeah to be out of the markets, in, in March and April would have been, would have been really frustrating them so much going on.

It was a incredible time. Oh yeah. And still is now I’m invested in it

Ben: [00:04:14] every day is just wild, right?

Rob: [00:04:16] Yeah. It’s funny. You almost use that word. I’m president. It did. And it’s like I say, I’m president at every week. I’ve had to start. Yeah. Let me know when you find a new one, as I keep using it as

well, because it is right.

Ben: [00:04:28] So actually you touched on a good point. I checked out your website and I’ll link it in the show notes, but you have this broad,

This breadth of interests around history and economics and, and sound money and all of these sorts of bits. So I’d be curious. It looks like you do a fair amount of reading and analysis of different historical periods.

are there, like we keep saying unprecedented, but are there, you know, the Mark Twain history doesn’t repeat, but it rhymes sort of thing. Are there different periods of time in history that we can look to, to. Help explain a little bit

of what’s going on now and get some insight from

those periods of time.

Rob: [00:05:09] Yeah. Two approaches. I would take to answer that question from the ones that I see most obviously, and I’ve looked at more recently is it’s the first one that actually, a book that I’d highly recommend called the fourth, turning, by a guys called a Strauss and how that those straps actually passed away now.

But, they, they, Look at the actually demographer, isn’t it. Look the world, look at the world through what they call like a speculum it’s like 80 to a hundred year cycle, of how history is so heavily defined by history and also people. And. Groups of people. So generations are so heavily impacted by certain events in history and how these events tend to repeat over these long cycles.

It sounds almost a little mystical when I try and explain it clearly. And I’m the type of person that you know, this and I’m interested in all sorts of things, but hard data and facts are important to me. I’m not just going to believe in Sabrina’s tickle cycle, but if you think about it as an example, like world war two, Is impacted different generations.

In a very different way. So if you were at world war two, you were impacted by world war two and obviously a very intense word, but in a certain type of way, if you were an old person, then you were impacted by it in a certain way. And if you were a person, you were a child, you were impacted in a certain type of way.

And then if you were born straight afterwards, there was a different type of impact. And that creates this. Characteristic type of generation. Hm. And what’s interesting is that they said these things seem to repeat in these 80 to a hundred year cycles and kind of divide it up into 20 yeah. 20 to 25 year cycles in between.

And that the world tends to. I have that full cycle within a period, 80 to a hundred years. And if you look back at Western society, you know, things like the, the war of independence, the second world war, these are like the crisis moments of the end of the cycle. Just like the second world war words. And from, you know, their analysis, that’s the period that the world is entering into at the moment.

And, it sounds, first of all, it sounds, mr. Cool. Second of all, it sounds a little bit depressing. I appreciate that. But also I think it’s credibly useful lens to the world because when you see it through that lens, you understand why the world is actually faced with a lot of challenges at the moment.

It doesn’t mean that we can’t be positive about the future. I saw relationships that with all sorts of things, Different types of people or businesses, but the macro context is it very challenging at, and that’s just the truth. And it’s very easy to kind of prove that from my perspective, we can just look at very simple variables like interest rates and debt.

So global debt levels are the highest they’ve been since the second world war and global interest rates are basically the lowest they’ve ever been. So we’re at some sort of period of recovery. I’m not saying it’s today. I’m not saying it’s tomorrow. I’m not saying it’s next year

clearly where the end of this cycle, somehow

it actually provides a very strong evidence to me that there’s a lot of weight and their analysis, obviously everything they’re saying is not correct.

Ben: [00:08:21] Right.

Rob: [00:08:22] Nobody knows the future. Right. I’m trying to be Nostradamus or anything like that, but it creates a fantastic context to think about. We are entering now enter this period of greater challenges, right. And we need to prepare ourselves, from a business perspective or an investment perspective. And for me, I almost say sometimes the most important from a, like a mental perspective.

Ben: [00:08:44] No, I meant the world’s going to change and this isn’t the way it’s always going to be.

Rob: [00:08:48] And, and, and, and extending what you’re saying is yeah. It’s, you know, it’s, sometimes it can, particularly over the last few months, people, I’m sure must’ve been very depressed. Not only about the coronavirus, but the cultural rifts and these frustrations that people were dealing with, which understandably very stressful.

But to try and remember that in, won’t be like this for, it might be for the next few quarters or even years, but hopefully we’re strong enough to be able to look through the act and say in five years, 10 years, 15 years, things actually could be remarkably be different to the way that they are today. So that’s, that’s kind of wine, historical perspective, I think is, is critical.


Ben: [00:09:30] Well, as a human species, right? This is just a small blip. Like we’ve certainly got through a lot or catastrophes global

Rob: [00:09:37] catastrophes, but it is, it is tough

Ben: [00:09:40] not to get stuck in this downward cycle of like doom and gloom. Everything’s burning around us sort of thing, especially in these times.

So I’d be curious. What does. Like, what is your global macro at outlet part of your job and your interests? Obviously you’re looking at all financial markets, different asset classes, but just if you could zoom out and kind of paint, the macro picture, how you see it now and how you see it kind of playing out over the next couple of years.

Rob: [00:10:07] So I would say, I mean, what we just spoke about is actually a critical component that we are at, at the, at Pete global debt. I’m not saying it’s actually at its peak and it’s still going up, but we in a cycle where it’s reaching its peak, we’ve we’ve or authorities have used that. Every tool at their disposal to basically try and paper over all the cracks of our prominence.

So whatever it might be and whatever authority it might be, they’ve always turned to this, they’ve returned to this policy and I just turned out a tournament. Short-termism right. You’re consistently favoring the short term at the expense of the long term. Absolutely. And, you know, If you think about, if you do that, you know, if you have large amounts of debt, what does that imply?

It means you’ve borrowed from the future and you’ve brought it forward permanently will eventually you reach that future. And you’ve exhausted a lot of that, those opportunities. Once again, I know that sounds like a little bit negative, but you just have to understand that context. The idea that there’s going to be a V-shaped recovery is absolutely nonsense.

And second of all, I think it’s even even more so than that. I mean, people who focus on the Corona virus as the cause of our current challenges are completely missing the point. I mean, it

Ben: [00:11:33] wasn’t just the virus

Rob: [00:11:34] it’s, I mean, it’s, you know, if there’s just so much more to that or to it than that, w w w when you follow these policies, you are eroding capital accumulation.

You’re eroding the ability of the economy to regenerate itself. I mean, when you go into an economic recession, what should happen is a recession should be a economic healing process where a bad debts get written off. But when you get central authorities and it’s not just America, it’s all the thirties around the world, they jump in so quickly.

And that seems like it’s a good thing, but conversely, it’s not the quicker that you come in. The less adjustment there is. So as a result, the weekend, you should expect the resulting outcomes to be. So I do. I mean, I was approached kind of my global macro perspective. Yeah. From kind of like a philosophical big picture, like that, understanding that what these guys are doing central authorities is, is very happy to actually work.

It works in so far. Has it. Has an impact on the day, you know, like the, you know, equity markets rebounded into April, so to be successful, but it delays all sorts of other inevitable outcomes and it has consequences. I think that’s what people also under appreciate. It’s not just a net delay. Dang it. It’s actually making those, those things worst on the future.

So, I mean, I know you particularly wanted to speak about kind of, you know, gold and Bitcoin store of value type assets, right? I mean, my goal, a macro perspective is that. The center of a lot of our concerns and lies in the way we approach the policy and that easiest way to see that isn’t monetary policy, low interest rates, high levels of debt.

We have completely corrupted not using corruption. And the terms of a case this individual is stealing from this individual. I mean, we have uninterrupted the concept. Of money. And as a result, I think that the, the store of value and sound money and the ability to trust in a source of financial truth has been taken away from society

Ben: [00:13:51] completely torpedoed.

Rob: [00:13:53] And that has. Untold number of consequences. I mean, yeah, so, you know, my, my kind of learnings over the last few years, and as I said, I’ve always been interested in this stuff, but I just become, I mean, I always, I would look for people to critique, but I just get more and more convicted that. These policies are not only bad for financial markets, but I’ve explained it bad for the economy.

We can go into more detail about it, but they’re bad for kind of societal harmony, societal progression. The people completely underestimate the pernicious consequences of money. I mean, think about money as part of every transaction. So when you manipulate money and monetary policy, you are impacting every transaction.

Maybe in an infant testimony, small amount, but that obviously builds

Ben: [00:14:48] up. It’s not that infant decimal right now. I’m saying

Rob: [00:14:51] each one, we do a sale yet. We might not be thinking about money, but that’s what, you know, at the masks, the incredibly large consequences. and once again, it starts to sound like a little bit mystical and esoteric, but, you know, when you look, we use it, when you see the evidence.

and you, you talk through the relationships, like it’s an easy example. Inequality is course obviously caused by numerous different factors, but the federal reserve chair to set, there’s nothing. The relationship between inequality and monetary policy is ridiculous.

Ben: [00:15:29] All the data’s pointing to it. Right.

Rob: [00:15:31] Exactly. You know, if you decide to inflate the assets. When

Ben: [00:15:36] the lower, lower class doesn’t own assets, then obviously it’s going to drive up that Gabby bigger

Rob: [00:15:43] inherently. There’s

Ben: [00:15:44] no correlation.

Rob: [00:15:45] And so, I mean, yeah. So not only is that policy ridiculous, but I mean, increasingly these, these people, these positions of policy power are.

They’re calling into question people’s trust of them, right? Because I mean, I mean, obviously we are well educated and we do understand these relationships, but I don’t even think that’s, that’s not that difficult. The relationship to explain to. A number of people and I think slowly but surely people will have people starting to get these things.

I will. I mean, certainly the market is the market wins out over the long term. it can take a long time for that to

Ben: [00:16:23] happen. It’s very scary

Rob: [00:16:24] and has taken a long time, but, yeah, the market does find out, you know, bad policies, bad decisions eventually. Yeah. So, I mean, yeah, we’ve touched on a few different aspects there, but yeah, the global macro perspective is that we are in a difficult, challenging times that, you know, the idea of wonderful growth into the future needs to be called into question.

And that, that, you know, then that beater will just drive returns and portfolio that normality will just drive kind of returns. If we all business.

Ben: [00:16:55] Professional growth. That 3% that’s totally feasible.

Rob: [00:16:59] Right. So we have to unfortunately ask some very difficult search questions about those foundational principles, right.

Which is tough. It’s just tough. But, it has to be done, unfortunately.

Ben: [00:17:13] Yeah. I mean, you definitely a lot of things that I don’t want to go to tangent, but like one analogy that I’ve heard is it can do a forest fire. Right. And if you let a small forest fire go every once in a while, it clears out the underbrush and it like it’s natural.

Some pine cones actually need fire to like release their seeds. It’s it’s part of the process. But if you prevent those forest fires ever from coming, then whenever there is a gigantic forest fire, there’s a ton of kindling and it, it just burns out of control. And if I find that a very useful analogy with what’s what’s happening with all of the short term thinking short term ism, right?

So it’s, we’re, we’re keeping, keeping down the preventing the small forest fires at the detriment of the longer term, this gigantic fire that takes out everything.

Rob: [00:17:59] So exactly, it’s a wonderful analogy and it. It’s it makes one, once again, when you turn to these authorities, they will specifically talk about trying to read recession from the economy.

How foolhardy and not only foolhardy, but how, I mean, this is it’s,

Ben: [00:18:20] you’re getting elected every four years, right? Like, I mean, you need to prevent this recession from happening so you can be reelected

Rob: [00:18:29] and particularly political perspective. And I completely agree with you. I mean, these guys that are appointed into positions of authority, you have the federal reserve and the treasury are meant to be a little bit less.

A little bit more immune to the political pressure to get there. Not to not, I mean, I agree with you that at the end of the day, they are actually a lot of people disputed and think it’s controversial, but they all politicians. Yeah. So of course they’ll appreciate the same forces maybe to a lesser degree, at the moment, maybe to the same degree.

Yeah, that’s, it’s traveling with the day.

Ben: [00:19:02] So, I mean, clearly there’s some issues structurally globally, but how does one position their portfolios accordingly? So obviously you touched a little, but on hard money and these things, but equities, any place in a investors’ allocation,

I mean, what’s kind of your view total asset allocation, for somebody.

Rob: [00:19:24] I think, I mean, I think it’s, it’s very much dependent of course, in the individual, what their risk tolerance is, or the, the, the time horizon is. and you know, what type of clients you’re talking to, what type of institution you’re talking to. So, I mean, equity is clearly have a place within a portfolio.

Undoubtedly. I mean, they, you know, companies will still be able to generate returns and numerous different types of environments. and you know, corporates companies are very resilient. and of course you talking here about co corporates and companies across economies. So, You know, the, the Corp is a company they do well, the next 10 years might be different to the ones that are doing well now, but they will be corporate to companies that do well over the next 10 years.

So, yes, I mean, equity is certainly have an important place within a portfolio. Yeah, undoubtedly, the admin, my role I find is, is often trying to, I mean, it’s obviously talking about portfolio construction often to like educate and poke holes against the conventional understandings. When I said, when I think about equities, It’s less about trying to argue.

They have a replacement portfolio. It’s more about what plays within the portfolio, because I mean, the default on most institutional pension fund portfolios is to say that, you know, for instance, a young person should be. 100% allocated to equities, and I could see the, I can certainly see the merits of

Ben: [00:20:53] time

Rob: [00:20:54] arguments and definitely has merit in that argument.

But when you look at the global macro perspective, The milk of the global macro conditions and the risks that exist. I think that that currently is actually an it’s at, is an imprudent advice, that there are opportunities and risks out there that need to be mitigated against that. Wouldn’t be surely by equity.

And once again, you’ve also even going to talk about which equities, I mean, some people would say, okay, well it’s equity. It just buy the 6,500. Okay. You know what risks are in the S and P 500. I mean, this gets us into the scene that inactive as passive debate. I think people often under appreciate the risks.

I know the, the active decision that you are making by investing in index. Yeah.

Ben: [00:21:46] You’re just momentum stocks, like all of these things, right.

Rob: [00:21:50] And at the moment, I mean, there’s a hundred is more than it’s more, more than 21% concentration in tech stocks. No. I mean, if these have to have these contacts, meaning

Ben: [00:22:00] like five big companies.

Rob: [00:22:02] Yeah, it’s fine. I mean the pop five companies in  come from more than 21%. Yeah. Now, listen, I’m not stuck. I’ve got not much negative to say about these companies whatsoever either. But the idea that that type of concentration is healthy history just tells you it’s

Ben: [00:22:20] not well in that at Rutgers represents. Stocks,

Rob: [00:22:24] right? Yeah. Well, the economy, indicated dozens, so gave called some great work last year, sometime they looked at, you know, the, that the turn of each, you know, kind of century and looking at the, the companies that made up kind of global equity, the big companies and global equity each and every cycle in retail.

Yes. It was like a group thing. In a certain often in a sector, often in a country. And at each stage, there was always a narrative about why that would continue indefinitely. In 1980, the Japanese companies would, would just rule the world and, and, and, you know, in 2010, you know, emerging markets and China were where the thing, but he, every 10 years changes and some of those companies remain, but most don’t.

So the idea that you know, that these five stocks have and remain as the top five S and P 500 stocks over the next 10 years is very high. And that’s it. There’s nothing about the stocks. That’s just history tells you,

Ben: [00:23:35] things like nifty 50, right? Couldn’t go down. Couldn’t couldn’t go wrong. It happens all the time.

Rob: [00:23:41] Yeah.

Ben: [00:23:41] But that’s also like making the assumption that corporations and publicly traded companies will continue on definitely the way they are without major reform or change.

Rob: [00:23:51] people, I mean, like as an example, I mean, I don’t even know exactly what the probability, but it’s a non, a non Sierra probably, but it’s the probability that when’s the democratic.

W what wins the wins, the presidency, and implement some sort of change in financial planning. Let’s see that’s a non zero probability, but it doesn’t seem to be at all factored in by the month. because yeah, I mean, they’ve talked about things like this before. I mean, they are not a U S politics expert, but daily, there are components within the Democrat party that would favor that outcome.

Ben: [00:24:25] So you touched on something that, that I always, I, with myself is, you know, we’re young, we have longer time horizon. So we know from finance that we should have a higher weighting of. Equities, but like you said, every investment is, there’s an opportunity cost of where else you can put it, you know? And I know that you you’re.

A buy and hold. You know, if you miss the top, days of the market, your return is so much lower than had you just like consistently bought in sort of thing. But I just find myself terrified of the public markets at just how overstretched they are, how.

Little upside potential, in my opinion. And you know, some, some others that I respect in the space, so it just feels insane to deploy a new capital into publicly traded markets.

But at the same time you have this, that printing and like, yeah. The sky’s the limit for these things. I mean, it just doesn’t seem to stop. So I mean, how you grappled with these sorts of things?

Rob: [00:25:34] Yes. It’s very difficult. sorry. Maybe sympathizing mostly up with it all the time, because I see, you know, I see both arguments and on one hand it just seemsridiculous.

Why don’t you want to deploy capital into these markets? But that makes it, you can look at kind of evaluation measures and then start to get more of a bullish perspective. You know, if you look at, you know, one simple thing that I look at is, you know, the market cap of equities, just relative to money supply.

By the idea of being that, I mean, of course, all, all prices, consumer prices or equity prices of property prices, they process, and they are impacted by inflation. And of course an overvalued market is in flooded market. So that new money that’s being pumped into the financial system can find expression somewhere.

As, as we know, good financial question and equities, we can find exploration property. And yet. So if you, if you, if you loading up on new money supply, how much higher could those equities go right at the absolute, absolute extreme. I mean, I remember my, my old boss used to get, make this example and it’s a very good one.

I mean it, when, when countries go into hyperinflation, It’s not very well, right? Because companies, they protect well against inflation and they are doing business. They can, they can mitigate against the inflation. Of course, developed markets are not in hyperinflation. I’m not saying they’re going into hyperinflation, but what they are experiencing is that hyper monitoring session it’s it is hyper managing inflation.

The amount of money that central banks are pumping into financial markets is. Extreme. Right. So that cause can find expression in equity markets. So, I mean, for, from our institutional venture firm perspective, we’re very well aware of that. We tend to sit slightly behind benchmark on equity allocation.

That’s the way that I kind of manage the risk. I say to myself, and it’s an, I struggled to. take off plants Capitol and be hugely overweight this market because it’s, there’s just a huge amount of risk and an uncertainty. but that being said, and we cannot get much to cash.

Ben: [00:27:49] I was curious

Rob: [00:27:51] into South Africa, so.

Even a medium in South Africa that we were following the same global trend for a period of time. I say cash was quite attractive as was used cash for a period of time, we made good returns on five portfolios, kind of 20, 18, 19 allocating to some years cash, but very quickly an opportunity closed the door.

And, and so African cash was actually had a nice, real yield for a period of time. But this African reserve bank is lowered interest rates, not down. So. About 3% for an emerging market. That’s absolutely nuts, but that’s just, I mean, inflation is that low that they feel like they can get away with it.

Anyway. So the point being that, you know, when you compliment much of the cash, this is what investors get forced to have more equity exposure. They might even be comfortable with that. But yes, that’s the kind of the way I summarize it, we sit from an institutional asset, a cash perspective. We’ve caused any occasion take equity, but we’re not willing to be, you know, hugely overweight.

And then below the surface, we think to ourselves, okay, well, what other risks can we mitigate? And we like asset management a lot during these kinds of conditions, to the point that we just briefly spoke about it is not that we all know stationed imagination have a negative view on tech stocks, but we try and mitigate against.

Risks to concentration risk. That concerns. Yeah. At least if we, we make our equity exposure into active managers, you know, they have a responsibility to mitigate those risks for the surface. I think it’s innocent 20, 20, still being quite tough, active management. But I do think that these conditions will increasingly.

Be good for, for active managers. there’s a lot of volatility. so that’s one way with an equity. And then of course you can look at geographic concentration and you can look at sectors. I mean, as you probably want to get onto it a little bit more for conversation, but you know, Africa, the, our resource shares are quite heavily exposed into gold miners, right?

So, I mean, that’s something that we have quite reasonable exposure because. We like that look for, for gold, gold mining stocks are giving us some of that exposure within the portfolio. So yeah, high level don’t want to be overly. Overweight, and see where we can find risks and opportunities kind of below the surface.

Is that from a personal perspective? Yeah, I know you hold a huge amount of equity because I think that from a personal perspective, I’m willing to take other, cool.

Ben: [00:30:22] Do you want to go into those other risks?

Rob: [00:30:23] Yeah. Sure. So it’s speaking very much to the, it’s speaking to, you know, a store of value sound money.

I think that they. I think that the opportunities presented by, you know, precious metals and Bitcoin are pretty incredible, so incredibly volatile assets that, the future is uncertain and the regulatory uncertainty, of course, with crypto one needs to take into account. I mean, some people would think it’s absolutely.

Crazy. And that might be their perspective. So, I mean, what I’m saying is the one has to obviously be aware of those risks, but where the macro outlook is at the moment with central banks, reaching the absolute Zenith. I know we’re probably going to go further, but of, of mandatory madness, complete monetary corruption.

I strongly believe that the market will find value in stores of value and. Gold and Bitcoin Bitcoin is the digital store of value gold as the historic store of value. And we are now, I mean, it’s not great timing, right? The last couple of weeks, we started to see that and we’re seeing the market even finding value in silver and silver as the.

The second, most precious metal. I mean, if you want, we can get into kind of the reasons.

Ben: [00:31:42] Well, I mean, I’d like to hear overall, like, as you know, I’m bullish from golden Bitcoin. I don’t own any silver just because I’ve never fully understood it. I mean, I know it has some industrial use cases, cheaper version of gold, but I guess what, what is your bull case for gold, other than it’s this historical store of value?

What is kind of the perfect. Scenario playing out to, to really have gold, you know, go to $3,000 per ounce or whatever.

Rob: [00:32:11] So from us, I mean, we’ll get into the reasons, but scenario I have perspective just to answer answering upfront is now, and then not explain the reasons why, and maybe just start with just detecting, you know, pulling back the lens on gold, because it’s such a misunderstood as a class and becomes, you know, very.

Difficult cause there’s so many misconceptions about it. I think to start with one is to just appreciate that, you know, metallurgically geologically goal is not a complex thing. It’s a, it’s a, it’s a, it’s a piece of metal. That’s difficult to find hard to mine. And it is it doesn’t erode doesn’t corrode.

And because it is so little of it, it doesn’t erode it, it doesn’t correct. It doesn’t make sense to use it in industrial purposes. So you could, that you could make like, You could make your kitchen out of gold, but it would be expensive. It wouldn’t make sense. Right? So you use it very sparingly and sciency gravitated towards what society gravitates towards using.

Those type of assets as stores of value. I mean, you only need almost to go back to like the manager, the history, the human societies use all sorts of assets share store evaluation. Exactly. And the reason why shells would you use in some societies is because in that society, the shelves were very red.

But of course there was, once you, you know, there was more global trade and people started doing mining. I mean, there would be lots of things that would be superior to the shelves. Maybe some other type of metal, maybe, maybe even copper would be more superior, but of course, as you get more global trade people gravitate towards the commodities, which have the best store value and the most simple way actually to look at it as the ratio of.

Stop the flow, which is something that’s been made very popular by safety, net, moose, and a fan Bitcoin community.

Ben: [00:34:14] You cracked me up on like on your Twitter feed, actually just Googling it. You can’t find anything about stock to flow for actual precious messaged pedals anymore, or facts

Rob: [00:34:23] dominate the I’m sure.

Precious metals and there’s probably did speak about it, but it’s phenomenal. Huh? Safety plan. We have raised the interest. All of that, but anyways, it’s been, yeah.

Ben: [00:34:37] Explain it a little bit that, so it has been misconstrued, it lays like this perfect way of forecasting price because the supply is coming down.

So like obviously the increase in price will go up

Rob: [00:34:49] through maybe like highlights. Yeah. We can get to those, but yeah, just the, so the stock, the stock to, it’s just saying how much of the acids. The stock above ground, is there relative to the new flow which has created every year. So coming to the goal example, it’s nice to talk about goal, and it’s nice to have an understanding of gold and Bitcoin.

often there’s too much conflict between these communities, but they’re actually, there’s a lot of cross pollinating ideas, which are hugely valuable. But anyway, so the goal, because it is rare, difficult to find. Not used in industry. We don’t destroy it. So every time we create a little bit more ads, so we have a large, and it’s all incremental flows, relatively speaking each year.

Now, of course, that’s in complete contrast to almost every other commodity in the world. You create coal. So the stock is very learn and you making more of an oil. You make it, you burn agricultural commodities, you make it, you don’t store this thing. Gold is, is very rare. Did you actually store a lot of it?

And some of the amount of new supply that’s created of goal every year. Is never above 2%. Is it a little bit, because of course, if you’re comparing it to a great stock, so even if gold prices go acid through the CNA, Goldmine is concept a need, not just create tons and tons of new. Yeah. The goal is if oil prices going to $200 a barrel, we’ll get on board and they’ll create a lot of oil and the price will come back down.

Ben: [00:36:30] But then there’s still a bit of that, right? If gold triples from here, more people are opening golden nines. They’re expanding to trying to pull out more.

Rob: [00:36:39] So the dynamic exists, but it’s a lot more difficult, right? It’s difficult to find the gold is different. Cool. To get it to gold. Is that fine? It’s crossed.

This is dangerous. You know, people die on coal mining operation. so then dynamics still exists. But if you look back in history of th that, that the growth in supply. It’s more even when the press box. So maybe the growth goes up a tiny bit, but I think I’m right, that the number never goes above 2% year on year.

So if you compare that drive, that’s basically saying that’s your money supply growth goals. Is never above 2%, whereas used money split up at 30%, I think it’s gone up to like 50% year on year. So that’s the, that’s what you, that’s the, you know, the story of that suppose many alternative money. and I mean the Bitcoin example is obviously that’s hard climate, right?

That’s why, you know, the Bitcoin community is more convicted about Bitcoin than there are of God, because they’re like, well, Asteroid

Ben: [00:37:45] my name or something. Some jolt to supply somehow. Right? Totally wreck the gold.

Rob: [00:37:52] Oh, risk. Yeah. But possible of course. Were there other risks with Bitcoin? You can’t cook.

Ben: [00:37:58] Bug or something.

Rob: [00:37:59] Yeah. I just want, I mean that, and that’s something I’m not too concerned about, but I mean, there are things like 51% attacks on these aren’t that no probability advanced, but still things to be concerned about. But, anyway, that’s, that’s this idea of stock to flow and, and then another nice example, which allows one to understand the concept a little bit better is that silver.

So, so there’s the second precious metal. Second, most precious metal. Why? Well, it’s just got the second lowest, second highest stop. The flood. It’s nothing like a magical mystical about these commodities. They just have certain geological and metallurgical properties. That’s just, silver is got it. Hi, it’s dr.

Flow. So to start to flow, I think on goals about 60 the stock to flow on silver, correct. Be critical. I think it’s about 20. They can live, but then if you go down to other commodities, it’s like that one. So that’s why silver is the second, most precious commodity it’s still used in some. Industry. Cause it makes economic sense, but it doesn’t make sense to you.

And I want to back to the example, you don’t make your whole kitchen and it, you make some bits of facility because it’s just not economical. So it still is able to function as a store effect. And once that’s what I mean, the price rise at the moment is just ms. Silver’s like your high beater. Value. Right.

So this is like, it’s now in a gold was moving, gets a new record high and people are like, Oh, well, like we’ll have some silver sell this bank catch on. The silver, mine is playing catch up. You know, these are the different elements of the risk spectrum in precious metal markets. Right.

Ben: [00:39:47] So it sounds like, I mean, as long as.

Monetary policy continues to be, you know, mess with the way that it is. You will continue to get more and more bullish on hard money assets such as gold, silver Bitcoin, right?

Rob: [00:40:03] Yeah. So, I mean, I mean, almost done, we’ll get us in a bit into like the valuation, questions. so, and you asked the question about environment yet.

So the environment of the moment is perfect. Why? Well, because central banks. Trying almost explicitly, certainly implicitly, but to destroy the value of cash or they’re taking rates to zero, I’d say there’s no ability to store your value in cash, you know, historically. People when, when, when currencies were connected to you, commodities and people use to store a value, they would save in a currency, but today people don’t save in currencies.

What they do is they keep very low amounts of liquidity for safety measures and currency, and then store all of their money and assets. So that concept of store of value has been almost like. Eroded from the investment lexicon. and that’s why I make the argument that we are rediscovering this concept.

I mean, obviously some people have more of, no, no, it’s been on board all the time, but I think the investment community is rediscovering, through this process. but yeah, coming back to the conditions central banks are trying the utmost to. Destroy the value of currency and over and above that the pseudo alternative stores of value that people were using because of course, in equity and property and bonds shouldn’t really be a store of value in the investments, but those assets.

Aren’t particularly attractive. I’m listening. We’ve made the argument. They could go out further. I’m not denying that, but you know, from a historical perspective, there aren’t at hugely attractive levels. So, you know, from an investment management perspective, you got your suite of opportunities out there.

Where do you invest? Your money is in cash. Not so much bonds. Yeah. Maybe listen, the yields can fall more, but they’re not great equities because we can have some equities, but they’re not cheap. Okay. What else have we got? You know, private equity, hedge funds, hedge funds a lot. I, and I like Brown good equity, but you’re gonna have to actually, again, these things at the right price and also do really wanting, be exposed to ultra long term time horizons and this type of uncertainty to be cognizant of that.

Right. So then. And what are the other alternatives out there, hence her. So then that’s why eventually people started looking at things like precious metals, right? The historic store of Valley. Yeah. The environment is, yeah, it’s very difficult to kind of predict the future on an asset class is so much uncertainty out there, but this is the ideal environment, right?

Zero interest rates, quantitative using massive amounts of debt. yeah, and I actually,

Ben: [00:43:05] I, I’m starting to realize that the narrative is the same for Bitcoin and gold, right. Is like gold is familiar. It’s been around forever and crypto is more of the younger generation, like realizing, you know, I want some store of value, but you know, I’m not interested in gold.

So I’ll. By this digital new gold sort of thing.

Rob: [00:43:26] Yeah. So I mean, this, obviously I’ve, I’ve commented very much this angle and I, and I think it’s very valuable to see the, the similarities between these two, of course, the other major narrative to Bitcoin. And then crypto more generally is, you know, just money for the internet money of the digital age.

There’s these components are undoubtedly very interesting. And I mean, they are certain advantages that. I do think Bitcoin has over, over golden. It’s just, I mean, Bitcoin is a, is an incredible invention. I mean, the idea that Satoshi Nakamoto, whoever he, she, they might be, we created a digitally scarce asset is incredible.

I mean, that in of itself is actually a wonderful innovation. Yeah. That is a hugely exciting, and is, you know, Almost valuable, no matter what, but that being said, central authorities ran manual monetary policy as well. We wouldn’t really need Bitcoin. You wouldn’t really need gold. These assets are insurance mechanisms against the mandatory madness.

That is taking place.

Ben: [00:44:45] Right? So before we move on from goal, there’s a number of different ways to have gold exposure for an investor. I mean, In the doomsday scenario that everybody’s thinking like, Gold’s not really going to have much fruit hell anyways, right? You need guns and ammo and medicine, but like a GLD exposure, like ETFs what’s, what’s kind of your preferred method of getting gold exposure into a portfolio.

Rob: [00:45:13] It, once again, it depends on the type of, individual institution that you are. I do think that there’s, you know, benefit and. Understanding the risks to ETS. I hold gold ETFs, but there certainly are risks to go ETFs. There, there appears to be a lot more paper, money, paper gold than there is actually physical gold.

So it is possible to envisage a day with the gold prices, you know, moved to such a degree. If there’s a squeeze on this paper goals and that these ETFs aren’t able to pay out to, you know, in the ways of the day, say that one needs to be one should be cognizant of those risks. If you’re going to be, you know, true investor and investigate all your risks is a risk.

and as a result, it is. Interesting to look at the ways that one can invest into physical gold and one doesn’t this one doesn’t have to just buy the physical coins and then take the obligation of storing it myself. You can do that, but you don’t have to, it also our Institute does that allow you to, Buy it and they will store store it and they evolve.

And then some of these companies have volts in different jurisdictions around the world. So you can try and overcome the jurisdictional risks that people are cognizant of. Like, as an example, you know, people are aware of like the risk. If you buy them golf from a U S bank and you’re a us citizen and then.

For some reason, the U S government decides to ban gold and they can barely get hold of it. Have exactly I’ve done it before, but they could get a call of your goal very easily if it’s sitting in the bank. Right.

So, yeah. So some of these companies. Yeah. So this is like buying this physical gold yourself and storing it, which a lot of people do and one should be aware of, but there’s also lists, there are organizations that buy it. You actually don’t hold onto the physical, but there is a physical allotment in right.

And involved somewhere around the world.

Ben: [00:47:16] If that’s technically what GLD is supposed to be.

Rob: [00:47:18] Yes. Yes. But Shalonda just needs to go down the audit trail. and then of course there, the ETFs, I mean, from a institutional perspective, I mean, most of them do get, it’s just much easier to get Paul and then it’s also getting exposure to the.

To the minus, right. Which are a much higher Bita. Right. but they do get one exposed to the theme, actually.

Ben: [00:47:47] I mean, talking about this, so the, the monetary supply relative to market cap, analogy or ratio, I really liked, but thinking more about this, maybe it makes more sense to pile into gold miners because they’d benefit from, you know, high beta. Stocks stocks are going up because money is flowing into the publicly traded markets, as well as the gold narrative of, you know, sound money. Gold is going up in price. So, you know, it goes up by five gold miners go up by 10 sort of thing. yeah. Do you think, is that part of the narrative that you’re using to invest in minors?

Rob: [00:48:22] Are you bullish still gold miners? Yeah, I do all the little bit of golf minors. I also just wanted to kind of learn about them and, yeah, just be kind of involved in a different part of the markets. But given my thesis, I’m much more interested in buying, buying the underlying assets. And you can, it’s a, it’s interesting once again, or you can make the same analogy with, with Bitcoin and Bitcoin mining, because I mean, a lot of people got into, you know, Bitcoin.

Mining. And only to realize that, you know, throughout history, it’s actually been far more profitable to hold Bitcoin than it is to buy, to be involved by the exam.

So if you think that, you know, it depends once again, what your investment thesis is. If it’s very much on the. Yeah, on the, on the adoption of, of, of, of that asset, it might be more prudent it just, and easier to get exposure to the underlying assets.

but yeah, it’s a, I mean, it’s interesting to investigate what the possibilities are with,  volatile. They might have, you know, a lot of it could have even stronger returns for a shorter period of time. yeah. So interesting. Yeah. Not something that I know as much about as the

Ben: [00:49:39] winner. I know nothing about Colton.

so I’m curious. obviously very bullish and gold, the underlying, what are, you’ve talked briefly about, you know, analyzing different risks.

What are the key risks you see to like the bull thesis for crypto go? What do you do? What key breasts do you see it to your bullish gold thesis?

Rob: [00:50:04] Yeah. I mean, I think that, I mean, the first one is, is, is more of a short term one, I think, you know, just that the market gets ahead of itself and that’s, and I think that this is

Ben: [00:50:13] unless the Robinson trip.

Rob: [00:50:16] Yeah. But I mean that in of itself also will then be another, and it’s a risk both with, you know, Bitcoin gold, this and these, these assets. Because of the type of asset that they are being a store of value, they own hesitantly speculative. No, I think it’s important not to be fearful of the word speculative because.

I think all investments are speculation because you are making an inference about the future. You’re speaking about the future. I mean, even value investors, they always try through their analysis to reduce the idea of speculation, but they’re still speaking.

Ben: [00:50:55] take out more of them.

Rob: [00:50:56] Yeah, but failure with the store of value type assets like gold and Bitcoin, it is purely speculative.

There’s no yield, there’s no growth. There are assets that are, they are more tricky to value. So do you know the price targets that people make? Press dog was in general, have a fool’s errand, but they, they tend to be like big round. Now. It’s not very precise. Yeah. They have not a very precise science, you know, valuing these assets.

I look, I look at like relative value. Between different asset classes, things like that. I look good. Of course, you know, real interest rates across the, across the globe. And then the ratios that I mentioned, you know, looking relative to the money supply. And then I just, my approach is just to assess the others and to look when they’re stuck in a stretch, to, to think about when the market might get, Might be starting to get kind of stretched of a value.

I mean, the biggest risk of course, is to see a change in management policy change.

Ben: [00:52:05] Meaning what, like, I guess what would be the red flag factors that suddenly it’s I need to go back to the drawing board and reassess this bull position on gold because the facts have

Rob: [00:52:16] changed. Yeah. The biggest one is that central bankers.

You start to realize the consequences of what they’re doing and exactly. So, I mean, that’s, I mean, I,

Ben: [00:52:29] but that would be a risk to go because they’d scale back to the monetary, they reel it in and it’d be more of a sound money at

Rob: [00:52:36] that point. Yes. Listen, there would be of course consequences along the path.

So one would have to think those three, but I mean, that is the, that is the biggest risk scratches. Cause I mean, with, with money, it’s all about, you know, it’s, it’s a relative game, you know. Do you want to have daughters or do you want to have euros or do you want to have yen or do you want to have goals?

Do you want to have Bitcoin? It’s all relative, you know, and relative to the monetary policy and that, that. Network or central bank is providing you a sort of global central banks provide a monetary regime that is more attractive relative to golden and Bitcoin. Well, that is the biggest risk. And as I said, I hate to be such a.

you know, it’s almost a sound a bit like dogmatic sometimes in the view, but it’s just, it just seems like that is a very low risk probability at this stage because I mean, I mean maybe four years, I, I would almost, I would have, been more concerned about those risks over the last five years, but every, you know, every step that we, we take every year, The little bit of volatility that arises the answer is to inflate and lower interest rates.

I mean, what is it another potential risk? I mean, something like, you know, the federal reserve is running into some constraints with their interest rate policies. So they’re not sure they can take rates negative. You know, that is a potential because that can make us real rates positive. If you get large deflation and like zero rates that you do get positive.

real rates in the us. That’s, you know, that’s makes us real red, somewhat attractive. and I mean, maybe to that point, if you saw a launch liquidity squeeze, you know, during March, we saw a sharp liquidity squeeze in financial markets. Which causes investors to liquidate all sorts of assets and often have margin calls on their leverage positions.

And when people have leveraged position, when they have margin calls, what they tend to do is they liquidate the most liquid positions in the portfolios, which are, tend to be called a Bitcoin because. Those are usually not done on leverage. so that is a reasonably big risk, but once again, that seems to be a temporary because central banks have shown themselves to be ready to provide liquidity as soon as possible.

So I don’t discount the fact that we could have another. liquidity episode, that, that the whole kind of global Eurodollar market is something that concerns me. It’s a, a big dark way that I’ve tried to learn about a lot over recent years, but I’m still not sure properly. All I know is that there are problems in the way that that market functions, and I’ve gone to scant the fact that those.

Prominence could rear their heads again. And if they were to do that, you know, if we saw tiredness in mobile banking markets, into interbank market, it’s like those types of things, those could very much cause a tightness and Quincy and cause people to liquidate, rush for dollars basically, and liquidate some gold exposure.

That is something that I’m cognizant of. Gotcha. so I think those would be the main ones. Yes. I said, actually the valuation is sound point. The market will become overvalued. it’s central bank changing the tack and, getting a tighter liquidity event and a rough dollars, which I don’t, I don’t completely rule out yet.

I mean, people at the moment, the data is looking like it’s entering into a, more of a bear markets, certainly on the technical charts. I definitely see it as possible, but, it I’m positioned for that, but I’m also not throwing in the towel yeah. On the dollar all together.

Ben: [00:56:29] Right. So, and, and then the bull case is basically that it continues on the way that it is, but at some point you’ll reassess your position and start thinking about scaling back.And as, as you said, like a price target doesn’t make any sense, but, Do you like, what’s your gut feeling from here? Like we still have a lot of room to grow a girl. So right now, this being recorded on that 27th of, 27th. Yeah. And gold has gone up five, 10% over the past, like two months, like it’s been nuts. 5% in the past week probably. Right. So I mean, your gut feel is we still have room to go.

Rob: [00:57:07] Yeah. So I try and not make it too many price targets, but obviously you’ve got to have a view for the future. as I said, I’ve got, I’ve got my valuation matrix. Not because those be providing the Pacific price target, but.

I look at relative value between the gold and other asset classes between golden like money. And then I look at central bank, rail rates, and those kind of metrics I believe would give me enough of an indication to suggest, okay, at least we were moving into the other side at the moment, despite the massive run up that we’ve seen in gold over the last six to 12 months, those metrics are not showing me a huge amount of concern here.

so, I mean, we’ve hit new record highs on gold and that’s something obviously to take notes off. And once again, I’ve looked back at the previous times when market hit new record highs, it does tend to kind of shoot a bit more. It often has a pullback correction phases and colds volatile. You shouldn’t expect it to go in one direction, but the potential upside thereafter is still large.

I mean, one of the most, Interesting matrix. They’re not, once again, that’s not very complex that I’ve looked at recently is to look at the length of historical bull markets in gold. and now obviously we’ve moved more, but the, so historically, you know, gold, it’s been through, you know, like four bull markets over the last, you know, 70 years.

And those bull markets tend to be about. 300 to 500% gains in the price of gold. And the current bull market has been slightly less than a hundred percent. So it’s still obviously a big game, but relatively speaking, it’s actually smaller than its previous markets and another. Indicator is the, is the, the ratio of performance between gold and equities.

Okay. And usually Goldmark gold, gold bull markets are not only marked by strong gains in gold, but strong relative gains to equity. Now that’s on just getting a bit more complex. I have links into the previous part of our conversation and. I’m not saying that I’m making some massive bedtime where equities are going, as I’ve told you, but I do think that’s very interesting to be aware of that most historical gold boom.

It’s very rare to have a gold bull market where it doesn’t gain and huge amount of equity. And at the moment gold is. Probably 10 to 20% versus equity in this bull market, which is nothing it’s basically flat. And those historical bull markets gold game. Like once again, it was about 300 to 500% versus SMP, about a hundred.

So. I I’m not, I’m not trying to make a prediction. I’m not trying to make a prediction on equity. I’m not trying to make a prediction on price targets. But when I look at all of those indicators, none of them are telling me to be that the market is actually got frothy. Right. This has moved a lot over the last two weeks.

Who backup should be expected. Anybody you expects expect to know what the price is going to be tomorrow, but

Ben: [01:00:17] if you’re a longterm bull, I mean, it’s like, it just has the macro picture changed. No. So like, it will pull back. Yes. It’s overheated, but like, am I still bullish on it perhaps, right. Yeah. The problem with, I think looking back is.

Just how, how much the picture has changed, right? Like we’d never had this, this amount of monetary supply inflation, this amount of, you know, inequality in the world. There’s so many pieces, the classic this time it’s different, but it’s it’s whenever I look back at previous. All of this. It just seems like I’m trying to cherry pick to find something that fits the thesis that I already agree with.


Rob: [01:00:56] I agree. And I mean, listen to you. The historical analysis is always flawed. That makes it, it’s what we’ve got. So the way I approach it as I do the historical analysis and then poke holes in it, like you’re saying, and given that we are actually, we were in more extreme energy conditions, then there’s previous bull markets, right?

Those make me reasonably comfortable with using those as is it not price targets, but they provide me with confidence that the market has not overheated yet because historically we’ve made a lot more than us before.

Ben: [01:01:28] So, Shifting gears a little bit. so gold, silver. I get those, we’ve talked about equities. you’re bullish on Bitcoin. So perhaps how did you get into Bitcoin and what are the core foundational? Principles for your bullish thesis on it.

Rob: [01:01:44] So it’s very similar from a, from a foundational perspective. I mean, it’s how I got into it. so instead of the start, I always had an interest in Sohn money.

I’ve always going to venture, had an interest in gold. you know, I started buying small amounts of gold when I first started working, And I mean, I can’t remember exactly where it was that I first heard about Bitcoin really, but I know that the I’m just know that my interest kind of took off in 2016.

you know, I think that how was lucky enough to go to a couple of meetups? And I met a few people in Johannesburg where I was at the time who had a few conversations with me, you know, one or two of those guys had a good understanding of sound money. And I read the Bitcoin white paper and it just kind of, yeah, set it off to me that I was at, was about with that.

I already was convinced on the sun money, the central banking, but then. I realize this idea that digital scarcity has never happened before. Okay. That’s pretty incredible. And so, yeah, I bought some Bitcoin and then of course, opening and seeing the price go up then starts to of course, create that.

Feeling and getting you go down the rabbit down to that level, you find out all sorts of information about, and you, you know, try and you poke holes in that, trying to understand the tech. And I’m not, not, not a technical expert at all, but you try and poke the holes and you speak to. Programming guys, you know, who do they’re bullish on Bitcoin and you’d listen to whenever you tasted the code and have you looked at this and they’re like, listen, they’ll be fulfilled.

Then you pulled your extra bit of confidence. But as this, I mean, the defendant, that’s the, how I got into the, how I got into it. but the, the investment thesis. Yeah. It’s kind of exactly the same. I just think that the world. It’s crying out for a store of value sound money and that over and above that Bitcoin is digital scarcity.

Right. And that is, and it’s not only digital scarcity, but it’s, once again, thought de-centralized immutable digital scarcity, which is just absolutely phenomenal. So, I mean, I’m bullish on gold. I just think that the, you know, the upside in Bitcoin is, I mean, mostly the risks. Are there too. And the risks understanding and the difficulty understanding of potentially even bigger, because it’s trying to get your head around the tick is, is tough.

but I do think that the upside is high as a result. but yeah, I don’t, I try not to think too much as compete. Of course they do compete with each other, but I do think that there’s a space for both. but yeah, based on the. The monitoring dynamics. certainly.

Ben: [01:04:31] Yeah. So, something that I was just thinking is if like globally, Governments get together issue a sound money, you know, backed a new government, backed cryptocurrency.

This is a risk both to Bitcoin and gold basis that you would have this new sound money equivalent, that it has the backing of multiple governments. and it could kind of torpedo both of those. Right.

Rob: [01:05:01] Completely. So once again, it’s something to think through. but. Governments have shown themselves with almost zero appetite for either

Ben: [01:05:11] their lever that they can pull to do all of these things.

Right. If it’s baked into the code.

Rob: [01:05:16] Yeah. I mean, one potential risks competition. There is of course something. Yeah. Like Libra, cause that would not compete on the soundness, but it could compete in saying, okay, well we have a. This, you know, just, just, yeah, they’ve got the distribution, they’ve got the legit, Missy, and then they kind of, you know, they say, you know, well now this is you.

Here’s a legitimate crypto that we really like. And we’d back that of course could create some competition and difficulty for Bitcoin. But I, I’m not too concerned about that because, because of the point that we’ve just spoken about is that that coin and equivocally. Well at this stage, the way I’d advise that make sense for it to be that way.

It’s just a basket of global currency. Right? So those would be just as inflationary as the ones that we’ve got now. it would be some middle ground preen them, you know, maybe, but. It would be very easy for the market to show that those aren’t a good store of value. so from that perspective, yes. Okay.

You know, Libra coin could create some competition. It also could be an accelerator cause it could get more people interested in cryptocurrency. So it’s, you know, it’s not clear that it would be a. Talk to Peter. I did. In fact, I’m, I certainly don’t think it would be a torpedo, but just trying to think through whether it would be a temporary negative, maybe, maybe, maybe not.

And it certainly can’t compete on, on, on store of value in this there’s a philosophical change. and I mean, maybe that’s also probably, that’s why, I guess my conviction is growing so much over time. Once again, I have to be careful that try and second guess my conviction, but. Doing the, kind of the philosophical work and the political work.

And you see these politicians and you just see that it’s just, it’s ingrained the ability for them to change their mind and said that they’ve made mistakes and they want to not inflate the way and find short term solutions. And to say that they are the problem, we need to take the pain. I mean, for a society to say, listen, we’re going to take the pain.

We’re going to volunteer and they do, it’s easier

Ben: [01:07:42] just to kick it down the road a little bit.

Rob: [01:07:44] So yeah, that’s a risk. The one is to think through, once again on that topic,

Ben: [01:07:54] change is not easy, right? So they’re going to fight like hell to, to not let something like Bitcoin become this new sound money. which is so when I, whenever I think through, crypto, I’m obviously very bullish as well, but. You know, the big fear is that Bitcoin isn’t sound money and it’s just another speculative asset. And this money supply has grown and it’s just been stuffed in every asset class imaginable, including these highly speculative. Cryptocurrencies such as Bitcoin that have these prints, that these, characteristics of sound money.

But in reality, once all the dust settles, it was just another speculative asset that was pumped full of easy money. But key, what main risks do you see to Bitcoin evolving, continuing to grow as this new source of soundbite?

Rob: [01:08:49] I mean, just quickly on that point. So you said, Another speculative asset. Yeah.

And there’s not doubt that Bitcoin is impacted monetary policy, but at the same time, it’s almost like, you know, global monetary policy is, is making the coin because they are doubling down on what they’re doing and highlighting the value of something that has a constrained supply. So. It’s it’s certainly true.

The global monetary policy and inflation of managed money supply lifts, the price of Bitcoin. Yeah. Yes. One should not argue against that point, but that’s. Yeah. I mean, there’s a reason why Bitcoin is basically the best performing assets over the last, you know, different timeframes of course. But over the last five years, I’m pretty sure that is the number one likely performing assets.

There’s a reason for that.

Ben: [01:09:53] So,

Rob: [01:09:54] To all the points that we’ve, but even, but even versus, you know, for instance, all the other cryptocurrencies start, they haven’t been able to keep compete. And there’s a, there’s a reason for that because there is. Some fundamental difference in the technology there. So I agree with you that we should critique will Bitcoin be the global reserve currency as an example, what we’ve done now, we can hypothesize that and strategized was that outcome.

But what we do know is that it is decentralized store event at the moment. It is that it’s not yet the global reserve currency, but it is decentralized store of value, no matter what that is actually true. So I think that is an important point to make, and it does work like if I want to. Well from South Africa to America, since they do it through Bitcoin, because that does work well, I think

Ben: [01:10:53] like me as an American, I mean, it appears to be more of a speculative asset because I haven’t lived in Argentina or Zimbabwe or Venezuela with hyperinflation and I haven’t had my, my. You know, zeros taken off my bank account. Didn’t realize that the potential of just memorizing 12 words walking across the border, everything’s been stripped of you and being able to start a life in a new country.

Rob: [01:11:20] That’s a great point to make. Yeah.

Ben: [01:11:21] So these are the characteristics that it’s like, Hey, even if this thing doesn’t end up being.

Everything it’s thing. And it provides a lot of value to people whose governments, their monetary policy is even worse than the rest of the world.

Rob: [01:11:37] Yeah. And what I heard of is that through, do you want to go into a question, but just what I do hope is that while your point is entirely valid, that it’s much more evident of to see Bitcoin’s value in Argentina, Venezuela.

I do hope that through having these conversations and three people discovering learning about Bitcoin and learning about current monetary system is that people should be able to see that in other economies too. So they are things about the way that the, the financial system runs in all kinds of news around the world that do actually.

Make Bitcoin an interesting idea, even for those people I agree with you is maybe less evident everybody, every human in the world should know, have the X access to a store of value. I firmly believe that that got an acid with, well, an educated person knows they can go buy this asset and it will score their value.

That’s what gold used to be. Yeah. So you could just, maybe it was a little tiny fraction of gold or whatever, but you bought that goal and you could save in your goal. That’s very difficult to do these days. If a poor person goes to put money in the bank account, well, it’s loses value relative to that healthcare food.

So anywhere that we get to that point, and that’s why, I guess we were having these conversations and we talk about these things because I do think that it also is evidence and other kind of a, country’s just not as good.

Ben: [01:13:17] I mean, for the vast majority of people, right? You don’t know, get your paycheck, you put it in your checking account, you go to the grocery and spend your money.

And everything’s fine on these little, so two year periods, you know, and it’s not until. 20 years later and you’re like, Holy crap. My grocery bill used to be a hundred bucks. Now it’s 700 and my rent was this. And now it’s eight X that I’m still making the same amount. Like if there’s a disconnect

Rob: [01:13:43] and unfortunately, Bitcoin’s not there yet because it’s because it’s so nascent, it’s volatile.

You don’t know it’s going to store it. You don’t, it’s not a good, it’s a great store of value, but it’s not clear that it’s a perfect store of value over timeframes yet because it’s so volatile.

Ben: [01:14:00] Edward track record.

Rob: [01:14:01] I mean, yeah, but I mean, listen, if you buy the coin of a like two year time horizon, as it starts to become it, But that’s the detail I was putting, making that point that, you know, that’s what we, that’s the world that I want to see us live in is that there’s a savings technology, people to store their value very simply.

Right. That I think that that would be great untold positive job comes for society, for people to be able to do that. Whereas at the moment, it’s very difficult for people to do that. But you were asking about the risks. I do. I mean, I do think that I still think regulation. Katie is, that’s okay. I mean, Bitcoin will run with it, spend on an office, so I don’t think it’s going to go away.

And I think it’s going to, how is your, in aside? Yeah, I think those kind of critiques are don’t fully understand the technology, but clearly if you ban something, it can have an impact on the adoption. To the point also, we were talking about labor. It’s not entirely sure how negative it will be. I mean, we have to be aware that there would be negativity, but at the same time for a government to go and ban something tends to implement that that government is so.


Ben: [01:15:21] threatened by it, perhaps when it comes to this sort of case.

Rob: [01:15:24] Right. And then you ask the question, why are they so threat? And what is it that they’ve done that makes them so threatened? And it tends to be that by at the time you get to that point, the people like, Oh, you batting this thing. Oh, let’s go buy I’m going to use it.

So. That. I mean it’s yeah. It’s, I mean, I love the thinking through the geopolitics. So Bitcoin is sort of, you know, we don’t know the answers, but that’s, that’s the way I think, through a little bit of that. And then the other component is that what’s interesting is that, I mean, most countries are slowly but surely making little bits and pieces of regulation, and that tends to imply a lower probability of band.

It doesn’t experience. Of course we’ve seen governments, bad things in the past. As you mentioned earlier, the us government is banned gold.

Ben: [01:16:22] Gold

Rob: [01:16:22] ownership.

Gold gold on a ship. but that’s in lots of people didn’t give up the gold. and when gold was convertible again, and the price went through the roof, I’m not sure exactly what the black market was like during that time,

Ben: [01:16:35] but in this thing find out

Rob: [01:16:36] actually.

Yeah. But anyway, I mean, I think that the, the, the point is that I think interesting in something like Bitcoin can go up if it’s banned and. Well, you know, many regulators aren’t that negative. So yeah, there’s lots to think through there. I mean, of course like the, you know, the deep state is not going to be hugely supportive of Bitcoin, but, you know, for instance, I have no of examples.

You know, some of this African regulators, you know, some of the younger guys are quite excited. About this new technology and this new money, and they’re quite supportive about making positive regulations, you know, they’re frustrated about their legacy systems and they do see a potential, and I wouldn’t be surprised if you see, as some of you see some of the dynamics, some of the.

Got countries around the world. So we certainly need to be aware of that risk guys that have that risk. You know, the here’s government bans, Bitcoin that reduces my optionality on using that Bitcoin. But I also wanted to myself, you almost need to see a globally coordinated, effort, because if, if I make the example said, it said the U S government bantered and nobody else does.

It doesn’t make sense. Then all the Americans at center ground to the government saying, what do you guys do? Right. And so it wouldn’t make sense because all those people who all Bitcoins, I would not probably see how quickly they can move somewhere else and move all the capital to another country. It’s a huge loss of

Ben: [01:18:13] game, theoretical modeling there.


Rob: [01:18:16] And then even in the scenario where you think through. Listen, it is like a global coordinated effort, which is, it seems unlikely. And con conditions intervene now the Chinese and the Americans aren’t good friends at the moment. So it’d be

Ben: [01:18:32] somebody that would raise their hand and say, actually, we’ll allow it come on over.

Rob: [01:18:36] That’s that’s that’s the way I, so I think in the work, even at that’s, basically for me, that was the worst case scenario. Well, that’s, what’s happening

Ben: [01:18:43] with crypto regulation, right? Like all these countries didn’t have anything in places like, you know, Malta or Estonia or, or, Singapore, just like, Hey, yeah, you can incorporate here. That’s, that’s fine here. And it gives them the chance to leapfrog these other countries and become this, you know, crypto Valley, this, this next Silicon Valley sort of thing

Rob: [01:19:05] completely. So that’s. I mean that’s for me is actually hot. I think that’s the worst case scenario is that, you know, there is a global coordinated effort, but there’s still a little pockets of leakage and who knows.

I mean, maybe all the crypto enthusiasts end up congregating in some, some Island countries somewhere at some point in the future with a huge amount of capital it’s

Ben: [01:19:27] happening in Puerto Rico. Right.

Rob: [01:19:29] Yeah. Yeah. Well, I mean, I guess that’s, and that’s been the way of the world for actually many years. I wasn’t always,

but yeah, maybe it’s, maybe that trend accelerated more. Yeah. We don’t exactly what the future holds. but thinking through those risks has certain limitations in one and the way that one might. I think about storing and securing one’s Bitcoin, right? I mean this and that. Also other permutations of why you might take different choices on writing a story on an exchange or in an article cuter or in a one or two, whatever it might be or, But that might be additional things to think through there from a regulation regulatory, right.

As example, it’s almost exactly the same as the gold example. Right. So if you want to call and store it in the U S bank and an abandoned. And wouldn’t it be great. It exactly. And similarly, if you bought your Bitcoin installed and stored in it, us exchange in that band, and that wouldn’t be great, right?

It’s probably a low probability event at this stage, but if that’s where you’re storing your, your wealth, you need to think through these, these risks.

Ben: [01:20:42] So. obviously bullish on Bitcoin bullish on any other cryptocurrencies within the, I mean, there’s over 2000 of them, right? A lot of them have the same characteristics of decentralized store of value, shorter track record, et cetera. any that, that you follow.

Rob: [01:21:00] So I, you look at, I do look at it theorem because I am, I think, I think the idea of having, you know, The money of the internet is of, of interest. so I keep an eye on there and I have a little bit of a therapeutic experiment with some of these things, because I think there’s a, the experimentation is interesting and valuable, you know, no matter what the outcome is, whether it works or not.

The people will learn things through that process. yeah, but I see it more. My perspective is that’s, that’s an experimentation approach, right? Thesis, as we’ve jotted down, it is very much about sound money and store of value. And I feel like I’m already taking large amounts of personal risk by having a reasonably concentrated personal investment portfolio.

and that, I mean, the results, it makes sense too, be focused on the most secure, lowest risk one. And that is the treatment Bitcoin. It it’s, it’s complex to understand, and there’s a lot to it, but also in essence, quite simple, it’s decentralized store of value and with a high amount of security, because it’s got a big name to it, the thing, right.

Lots of minors. and so the security there is unprecedented. So from that respect, You know, I feel, I feel like I’m taking lots of risks. And then in that context, I’m trying to mitigate my risk

Ben: [01:22:36] with all these investments. Right. It’s like the whole risk spectrum and like cryptocurrencies are very risky and then explode that out. And it’s like, Bitcoin’s the least risky of, of that tiny, very risky spectrum.

Rob: [01:22:50] Exactly. And so one can spend a lot of time and energy then, you know, looking at all the different altcoins and. see investment potential and maybe make wonderful returns. But for me, I rather allocate my time to thinking through basically this definitely spoken about kids today.

I just feel like it’s a better use of my time and energy and then Adam’s results. I’m happy to have more of a concentrated portfolio and manage that risk. and then yeah, you know, spend my time thinking through these other risks. But yeah, there’s a lot of interests. Yeah. And I do think that, I’m cautious.

I mean, I, I guess I kind of am a Bitcoin maximalist, but I am cautious of the hyper maximalism where people have, want to say everything else. I do think that’s a lot of positive will come out. People will learn all sorts of new tools and new ways of running these protocols because, you know, at the end of the day, We’re hoping here for a full kind of financial infrastructure that will incorporate all sorts of different components from, you know, from lending markets, for, you know, for internet main too.

So there’s all sorts of complexity, that will emerge at some stage done down the future, but with complexity comes risk. Yeah. So sit, when you’re thinking about making, you know, investing your capital one just has to be aware of what type of. Risk Western one wants to be exposed to me. So I’m heavily exposed to the store of value, risk, and I’m comfortable with that.

Whereas the other ones I’m a little bit, so it’s not my game. I’m not a technologist either. So for me to go and vet all these different, you know, I’m making a lot of trust. Whereas at the moment I’m still, I’m trusting. I’m trusting that the guys that visited the Bitcoin network, right. And are comfortable with that because it seems like there’s a lot of

Ben: [01:24:44] people trusting him. That

Rob: [01:24:45] self included is something that’s being popped up and Jan

Ben: [01:24:49] yeah. Good luck.

Rob: [01:24:50] Yeah. I mean, that’s just, that’s not mine. Yeah. I’m thinking of, it’s a bit of a

Ben: [01:24:54] tragedy of the commons, right? Like I’m not a developer, so it’s open source. So I assume somebody else has looked at it. They assume somebody else has looked at it.

Apparently nobody’s looked at the thing. Is not what we thought was right. But Bitcoin at least has been around for a longer period of time. So, thank you for all of that. That’s really good. If I have a few friends that got really worried out of the markets pulled a bunch of money out. So for somebody with a 10 year time horizon, A hundred thousand dollars of investible. Can you and say, you know, keep Cassius trash, so invest it into something. Some, some, some sort of story value would you go, you know, 50% gold, 30% Bitcoin, 20%. It’s silver. What’s kind of the rough location you would recommend.

Rob: [01:25:48] I do feel a little bit uncomfortable answering that question. Given the, the, the organization that I was there actually, and also that it just, it really is so dependent on the individual.

I I’m, I don’t want it. I’m not completely out of the question, you know? It’s so depend on the individual. I mean, that’s something that I so much, you know, for example, at JCFA three, I took a lot, actually by that final exam, I’m doing a lot of those investment policies that, and then, you know, working at an institution and working with the retail professionals and the advisors, th the, because they get a lot more exposure to this, the specific plant that makes such a difference, right.

If I’m constructing a portfolio for, you know, my father is 73.

Ben: [01:26:35] Completely risk averse versus financing. The thing go down by 20%. It’s a completely

Rob: [01:26:39] accompanied. Yeah. So it doesn’t mean like for instance, I should have not have exposure to, to call a Bitcoin. Actually. I think these assets are critical, but it’s, it’s so dependent on the individual, their tolerance for risk, because for an investment portfolio to work.

The individual themselves needs to understand the risks. They have to be able to stay the course because otherwise you’re going to construct them. Whatever, you know, some photo is, this says 25% gold, 35% Bitcoin, 50% equity, and this thing’s going to be used. And by the time Bitcoin is going to drop by 50% one day, and they’re going to fire you and they’re going to have somebody else.

And that’s not just careerists, but I’m saying that the client will use up because they’re not staying the course and they’re chopping and changes on different portfolios. So, Absolutely do critical that the point that I’m just making him is what I would say is that question, the question they start, right?

Our parents’ generation through generation of falling interest rates and rising debt know property prices went up, equity prices went up and, and, and, you know, over and above that, adding just a bit of like the cultural component. People went to university, got a job, earn a great income. Or the pension fund bought the property and life worked out pretty well.

If you followed that strategy. Absolutely. That strategy is not going to work the same way. I’m not saying that’s a bad thing strategy, but probabilistically wise, it’s not as high a probability strategy as it was 15 months ago.

Ben: [01:28:18] It’s going to pensions. There’s no safety in these corporations,

Rob: [01:28:21] right? So we’ve got to ask ourselves those questions, longterm investor, to be exposed to growth assets and a strong argument for holding.

Some degree of equity. My argument is making sure that it’s actively managed to mitigate against some concentration risks, and, in some indices, you know, get, get interested in like the global diversification that might exist and learn, but store of value as a concept. And as you grow your hair trust, you can think about growing your explanation because two position size, okay.

Rob says 20, I’m going to go with 20, but you get none of it. It’s going to be a horrible ride for you. You know,

Ben: [01:29:08] you’re not going to have any conviction if it goes down, right. It’s a record for any understanding of what the drivers are behind

Rob: [01:29:14] these. And on the other side, When it’s gonna go up, you’re gonna think you’re a hero, a genius, actually.

You’ll probably put more into it, you know? Cause your leverage and believe me, Bitcoin bull market, some of them are scary, scary.

Ben: [01:29:31] I’ve never owned an asset, but it went down by 70, 80%.

Rob: [01:29:35] So I hope I’ve learned a lot as an investor through those markets. It’s intense. Oh yeah. It’s intense. So yeah. Yeah. You know, do your research, do your homework.

these things are hugely risky, but in the world that we are in today, one needs to give thought to them because the old model is not going to work. It’s not going to be exactly the same that I’m sure.

Ben: [01:30:01] Yeah. Completely agree. It’s funny. The, the oscillations in the crypto market have made me.

Less reactive in the public markets. Right. They go down by 10%. It’s like, no, that’s like the daily move, you know? So I have, have gotten that Rob really appreciate it.

Yeah. Where can my listeners find out more website Twitter? W where would you like some of them?

Rob: [01:30:26] Yeah, I’m on Twitter at drug price. 58. And my blog is called priceless

Ben: [01:30:34] Perfect.

Not only both of those. So thanks for, I

Rob: [01:30:37] really appreciate it. Thank you.

Ben: [01:30:40] There you have it. Thank you for listening. I really appreciate your support show notes, transcript links, and more can be found on our [email protected]. If you’d be so kind, please share this with anyone you think might be interested or get some value from this conversation.

If you have any questions or comments, please reach out. I’m always happy to hear them. Lastly, if you’re on YouTube, please like the video or subscribe to the channel. If you’re listening to the audio version of this, please subscribe to the podcast and, or leave a review. This really helps more people find the podcast.

And I really appreciate it. Thanks again and hope you have a fantastic day. Happy investing.

Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.