Gold: How Much More Upside?

Published on
August 29th, 2019
15 minutes

Gold: How Much More Upside?

Trade Ideas ·
Featuring Ankit Sahni

Published on: August 29th, 2019 • Duration: 15 minutes

Ankit Sahni, president and head of research at Exante Data, makes his Real Vision debut to break down gold's recent rally. In this interview with Alex Rosenberg, Sahni explains the yellow metal's relationship with real interest rates, examines how investors are currently positioned, and notes how much more upside he expects over the coming months. Filmed on August 27, 2019.



  • SS
    Simeon S.
    10 September 2019 @ 04:23
    Gold has no inflation... hmm.. so 1000oz would buy you the same amount of houses in 1850 than now?
    • NI
      Nate I.
      6 October 2019 @ 22:38
      Gold doesn't move. It's the benchmark. Fiat declines. 1 oz of gold buys exactly the same number of hot dogs in 2019 as it did in 1919.
  • JK
    Jay K.
    9 September 2019 @ 16:12
    Gold prices are manipulated...
  • SB
    Stewart B.
    3 September 2019 @ 18:51
    I'm a little puzzled over the negative responses to Ankit's equating one person's to debt to being another person's savings. Let's discuss two examples; bonds and fractional reserve banking. In the case of bonds, if the bond defaults, one party's debt has gone, and one party's savings has gone (in equal measure). In the case of fractional reserve banking, if a bank loan is defaulted on, one party's debt has gone, and the bank's 'savings' have gone (in equal measure). Should this be large enough, the bank's reserve's will be insufficient and their customer's savings may also be haircut (one again resulting in loss of 'savings'). Perhaps this is best summed up as: * Every debt instrument is someone else's asset. * But, not every asset is debt (eg Gold is not).
  • ML
    30 August 2019 @ 03:34
    Ankit Sahni's proposition that; global debt = 'too much savings' is not so, due to the Alchemy of banks actually "creating credit" am backed by the fractional-reserve model.
    • BM
      Beat M.
      30 August 2019 @ 07:45
      He went to business school, graduated, found a job,and got president of research. Then he got this call from Real Vision, made a full of himself and we never heard of him again...
    • JO
      Johnny O.
      3 September 2019 @ 07:39
      You can study Economics for years, including all the intricacies of M1,2,3,4, and not once discuss where money comes from and how it is created. I wish it was from savings and equal to savings but it isn't.
  • DW
    Desmond W.
    29 August 2019 @ 12:11
    Since when has debt been saving. I thought debt was created by banks leveraging up 30+ times more than the capital (investors savings) that they have. Or, money printing by central banks buying everything from government debt, corporate debt and ETFs, I seriously have some massive deficiencies in my understanding.
    • WM
      Will M.
      31 August 2019 @ 18:06
      Sorry Des, if you buy Government bonds with your hard earned cash in pension or Its you are investing your savings into debt. What am I missing here?
    • WM
      Will M.
      31 August 2019 @ 18:07
      sorry not "its" but IRAs.
    • rg
      richard g.
      1 September 2019 @ 18:34
      Since the vast majority of debt is held by central banks, it seems frankly absurd to characterize that as savings. While its true that in order for a borrower to borrow, there must be a lender to lend, however its highly flawed logic to link the two
  • SA
    Stephen A.
    29 August 2019 @ 17:47
    This guy has absolutely no idea what he is talking about. Real rates were negative from 2010 to 2016 and yet gold tanked went from 2000 to 1100. Straight down for 6 years.
    • WG
      Wade G.
      29 August 2019 @ 19:17
      I struggled with this discussion when at around 7:30 he made the remark that one person's credit is anothers's savings. That view is common to neoclassical economic thought and completely divorced from the reality of modern banking. Fractional reserve lending--money loaned into existence, at interest, by commercial banks--by its very structure, falsifies his claim. Everything that flows from that incorrect premise is thereby baseless. I do think one should take great care when relating Gold to real rates. S.A., your assertion it not exactly right, thou it obviously depends on your calculation of real rates. First, working w/ real rates from 10 year TIPS markets (, it is false to claim real rates were negative over that time frame. More importantly though, it appears to me that gold cares a lot more about the change in real rates, than in the absolute level. And by change, I mean trend, and changes to trend. The real rate chart helped identify the gold sell off in 3/08, and its return to increasing prices beginning 11/08. While gold peaked in 11 well before real rates turned, the subsequent lower high (and last time to reasonably exit gold in that cycle in late 12) was marked well by an upturn in real rates. Perhaps gold anticipated that turn in 11, and got its objective confirmation in 2012. In addition, the swoon in real rates commencing in 2016 and lasting until 8/16 was tradable. I'm not defending the presentation, in part because I struggled to follow all of it. I'm just advocating that folks don't discard real rates as important to gold.
    • WM
      Will M.
      31 August 2019 @ 18:10
      Yes this is not straightforward. While I do not dispute real rate comparisons, I am buying gold because once I have it out out the banking system it has no counterparty risking cannot be inflated away. It is a store of value during very uncertain times. I don't care about real rates.
  • SN
    Sammy N.
    30 August 2019 @ 22:51
    He is current for the "shop talk of the day". Start doing the OPPOSITE and dollar cost average.
  • IP
    IDA P.
    30 August 2019 @ 13:04
    Maybe I get what he means, in Italy the state has "too much debt", and this is possibile, not because there is too much savings per se, but because the savings (which are very high in Italy) go to finance the public debt and not productive investments. This also confirms that when a country has too much debt, the private sector tends 1) to save excessively instread of taking out debt to finance investments and 2) that country drains out the private sector period. So maybe this is what he is getting at? That if Italy can have so much public debt it is because there is too much unproductive savings?
  • JS
    John S.
    30 August 2019 @ 09:20
    One persons debt = anothers savings? Never heard of bank reserve ratios and the multiplier effect obviously. Not a zero sum.
  • GP
    Geoff P.
    29 August 2019 @ 12:00
    Yeah, not sure he understands how central banks work. When a central bank buys a bond, they don't have a pool of savings they dipped into to buy that bond. They just "take" it from the primary dealer and create a reserve entry at the bank. This reserve entry isn't a savings account. They can't spend those reserves. Likewise when one takes out a mortgage (or any other bank debt), the bank doesn't have a pool of savings they hand out. They use a portion of savings (capital requirements are far lower than 100% of assets) to fund the mortgage and create the rest (multiplier) out of thin air (money supply expansion). long story short debt != savings
    • MW
      Marcus W.
      29 August 2019 @ 12:37
      well put. Lehman Brothers was at 127x. Gotta love that fractional reserve banking but it's gone way beyond that.
    • CB
      Cyprian B.
      29 August 2019 @ 20:49
      The guy knows his stuff about the mechanics of macro statistics, but obviously is on thinner ice when venturing into the ambiguities of economics. Could be he got it mixed up with the accounting rule: one man's debt (liabiility) is another's asset, mistakenly assumgin "asset = saving."
  • KA
    Koka A.
    29 August 2019 @ 18:53
    Some fresh ideas! Always good to hear.
  • JM
    John M.
    29 August 2019 @ 17:52
    Apart from central bank purchases, I think at this point gold buyers are mostly hedging against an expected decline in equities. If you think there is a recession coming its logical to lighten up on equities and buy gold? I can see how lower nominal rates (even negative real rates) provide added support to gold prices since the opportunity cost of holding gold is lower but this driver is secondary. When stocks go higher people basically don't give a shit about gold (regardless of real rates).
  • AM
    Alonso M.
    29 August 2019 @ 16:38
    Did the Japanese central bank save the money it used to buy up 50% of Japan's Government Debt? I hope your answer is no, in which case the idea that debt equals savings doesn't sit well in an otherwise thoughtful presentation. Gold pullbacks are typically $100 in size. $1550 is a logical place for a pullback.
  • SW
    Scott W.
    29 August 2019 @ 14:03
    Very good comments about debt = saving and I'm piling on, but here goes. Debt DOES equal saving in some circumstances, but doesn't in others. That equivalence is severed in particular via money printing. Savings before fiat currency, was when you grew more corn than you consumed, or made more blankets that you needed to warm yourself... Savings was not acting as if you had in possession twice your excess corn. If one borrowed your physical excess corn, your savings was in fact their debt. However, if they "borrowed" your non-existent corn, they had engaged in sophisticated financial engineering - perhaps to good end. But there were no actual savings exchanged. The MMT folks by the way disavow that barter systems ever existed - that trade never occurred sans fiat currency. A classic case of when the facts don't fit your theory, change the facts. But the fundamental MMT sleight of hand is to cite cases where government debt equates to savings while ignoring cases where it doesn't.
  • AD
    Anna D.
    29 August 2019 @ 13:59
    When is Stanley Druckenmiller coming back?
  • LS
    Leigh S.
    29 August 2019 @ 10:39
    I have trouble with the view that debt and savings match. We have had years of credit growth being well in excess of gdp growth mostly from bank lending hence money creation. It would be good to have steve kean take this point up again.
    • MW
      Marcus W.
      29 August 2019 @ 12:38
      Yes, Steve Keen is simply the boss when it comes to explaining this stuff.
  • TM
    Timothy M.
    29 August 2019 @ 08:35
    Great interview. Please invite Ankit back for updates on his thesis.
  • MZ
    Martin Z.
    29 August 2019 @ 08:22
    "One man's debt is another man's savings."....If that were true, the debt would be no problem. But what happens when foreigners no longer agree to lend the U.S. their surplus savings and the debt is simply monetized? The U.S. has an enormous debt load, yet the savings rate is dismal. If the American people were required to finance the government's deficit spending, the consumer-driven economy would collapse overnight.
  • SS
    Shanthi S.
    29 August 2019 @ 07:59
    Enjoyed very much. But how is the secular trend of lower interest rates due to too much saving, as opposed to too much central bank manipulation, as a primary cause? And how is one man’s debt by definition another man’s savings, if the money supply is constantly being increased by state and private entities? Why else are we headed for MMT? Natural market forces have been overridden in favour of central banks trying to avoid natural market forces, haven’t they?? I don’t know, I’m pretty much an idiot, but that’s how I see it. Correct me if I’m wrong.
  • PB
    Pieter B.
    29 August 2019 @ 07:10
    Great conversation! Thank you!
    • PB
      Pieter B.
      29 August 2019 @ 07:23
      The 2&20 comment was funny!