Gold: The “Third Rail” of Capital Allocation

Published on
October 25th, 2019
Duration
50 minutes

Gold: The “Third Rail” of Capital Allocation

The Interview ·
Featuring John Hathaway and Dan Tapiero

Published on: October 25th, 2019 • Duration: 50 minutes

What are the best gold equities to own right now? Legendary investor John Hathaway of the Tocqueville Gold Fund sits down with Dan Tapiero of DTAP Capital to discuss gold’s recent breakout and to review his favorite companies in the space. Hathaway lays out the bullish macro environment for the yellow metal, walks through the difficulties of building new mines and the impact on global supply, and notes why he expects more M&A activity in the sector. He also expands on current opportunities for investors and explains just how inexpensive gold stocks are right now. Filmed on October 15, 2019 in New York.

Comments

Transcript

  • DD
    Daniel D.
    30 October 2019 @ 16:47
    Do you ever wonder why it's the Bitcoin crowd comparing it to Gold and not, the Gold crowd comparing it to Bitcoin? If I wall off my yard, start espousing that I have magical soil, get some unidentified, hooded, shrouded in mystery, mythical soil expert with a cool name to concur and start selling/handing it out by the spoonful to those who believe- I have my own version Bitcoin! It's finite (at least I say it is), you'll have to trust me-I promise they aren't making any more. All I need is some gullible (I mean early adopters) who believe it's the new thing and if I create enough hype and critical mass, I can say it's just like Gold. Rinse, wash, repeat. History is unkind to fools!
  • JS
    Joe S.
    29 October 2019 @ 03:59
    My credit card pays me 2-5% for each transaction. They protect me from fraud. My credit is denominated in dollars so a transaction is not a taxable event. Why in the world would I use bitcoin.
    • WA
      Wissam A.
      29 October 2019 @ 16:19
      I highly recommend the book "The Bitcoin Standard" and the "Internet of Money" books to get a full picture of the technology.
    • DS
      David S.
      30 October 2019 @ 09:07
      If there were no credit cards, the prices wouldn't be that much higher... The cash back you get is tless than the he extras that the stores charge to cover for the credit card fees.
  • rw
    rory w.
    28 October 2019 @ 19:55
    Only an idiot would compare gold to bitcoin. They are nothing alike. Gold is gold, and bitcoin is bitcoin.
  • KE
    Kathryn E.
    27 October 2019 @ 20:46
    Overall a good interview but very shallow. I would have prefer if they covered less ground with deeper analysis. He is worried about negative interests rates but see reasons to buy EUR against USD. That needs an explanation or it leaves the impression of just another gold bug who hates USD
  • TM
    The-First-James M.
    27 October 2019 @ 19:05
    DT: "John is probably the only person in the World who can talk about Gold Miners and Bitcoin at the same time". (Apologies if I've mildly misquoted, but think I've captured the gist of it). Dan, I think you may need to consider having a chat with Ronnie and his Crew round at Incrementum. Mark Yusko would also have strong opinions. ;)
  • MM
    M. M.
    27 October 2019 @ 16:51
    The fact that not many understand BTC is not a plus for it to be the next big thing. Some deeper discussion on that would be nice.
  • DC
    Daniel C.
    27 October 2019 @ 09:58
    He talked a lot about the miners trading on cheap multiple 4-5x ebitda. But they didn’t elaborate further. What are the best examples on a single stock basis?
    • DV
      Didier V.
      27 October 2019 @ 14:01
      Check out the holdings of the Toqueville etf and you'll know more or less.
  • JC
    Justin C.
    27 October 2019 @ 09:10
    Found it a bit disappointing that Dan T cast doubt around David Rosenberg's work without saying why. I have found Rosenberg to be one of the more prescient pundits out there. He was certainly one of the very first to see the current down-swing coming.
  • KJ
    Keith J.
    27 October 2019 @ 08:06
    Anyone know how to invest in the special situations fund? It is mentioned on the Sprott web site but no details of instrument codes etc.
  • SP
    SUNIL P.
    27 October 2019 @ 03:24
    Great discussion. Thank you
  • WM
    Will M.
    26 October 2019 @ 22:00
    John expressed measured comments on Bitcoin. Its is IMHO not "money" but a speculation, but a potential high risk high reward for sure. I absolutely agree with many below that it has loads of risks...
  • TM
    Tom M.
    26 October 2019 @ 20:59
    Bitcoin - artificial scarcity - illusion of value - attracting hoarders - very little inherent value - its value constantly clipped by new cryptocurrencies, imperfect security - vulnerable to state actors. Still I'm hopeful of cryptocurrencies going forward.
  • FR
    Fabian R.
    26 October 2019 @ 18:03
    Please do a 3h deep dive with Nick Szabo on Bitcoin! (That would be pure gold)
  • HC
    Hao C.
    26 October 2019 @ 16:04
    Yes!! Btc and Gold aren’t enemies. They’re cousins.
  • VP
    Vincent P.
    26 October 2019 @ 15:59
    Hope I'm around to witness what this preview is suggesting :)
  • RW
    Ryan W.
    26 October 2019 @ 06:37
    This was another thoroughly enjoyable video. It would be nice if RealVision could please cover how bitcoin and gold are positioned (not priced) vs the USD in terms of money supply. M1 has increased over the last decade twice as fast as in previous decades. That should mean inflation, unless the economy keeps pace or outpaces it. M2 similarly is rising yet on a curve. The expanding pace of M3 has been steady relative vs both of those, though with a lot more volatility. How many dollars must shift into gold and bitcoin to be of consequence and is there a potential tipping point that alters the valuations? It seems this entire gold play may take several decades unless a black swan shows up, Of course, the risk noted everywhere on this site, is what one mitigates with gold.
    • PW
      Patrick W.
      28 October 2019 @ 02:02
      The Erste Group did a very detailed report back in 2011. Granted, their call for $2300 in the intermediate-term was wrong, but I find that their valuation methods are still relevant. https://www.cobdencentre.org/wp-content/uploads/2011/09/Special-Report-GOLD-in-GOLD-we-TRUST-July-2011.pdf.
  • BK
    Brian K.
    26 October 2019 @ 00:45
    The cherry pick timeframe of 2000-2019 makes gold look alright but a more realistic timeframe gives a different view. Americans could own gold legally since January 1975...my working life started in 1975, and even though I retired in 2015, using 2019 as an ending point gold has returned approximately 1% annualized. The S&P with dividends reinvested gave just under 8%. Millennials need to keep this in mind when evaluating gold as part of their strategy. Silver is even worse.
    • PP
      Patrick P.
      26 October 2019 @ 01:29
      Millennials also need to keep in mind that "To everything there is a season, and for everything there is a reason for every season". If you look up the lyrics for the song "Turn! Turn! Turn! (https://www.azlyrics.com/lyrics/byrds/turnturnturn.html) you will realize that now is the time for "Gold". It is the season.
    • BK
      Brian K.
      26 October 2019 @ 04:58
      Old enough to remember that song when it was new on the radio. Great song; sad to see it used in such a trite and banal way.
    • PG
      Petter G.
      26 October 2019 @ 08:54
      I agree. But do you think that the past 50 years is relevant to look at when you make decisions about the coming 50? My guess is that the context of your working life will prove to be vastly different compared to the context of coming generations. Not saying that gold is the right or wrong way to go, but the rear-view mirror is not always a good predictor about the future. There's no fundamental law that says stocks have to go up.
    • MS
      Michael S.
      27 October 2019 @ 02:40
      That's not the correct percentage per year. About 5% is the correct number. The real number you should be using is since 1971, though. Since it was no longer held down to a fixed price to the dollar. Since 8/13/71, gold is up 8.12% per year, to its $1,507 price today.
  • yj
    young j.
    26 October 2019 @ 00:41
    ㅌㅌ
  • GL
    Gregory L.
    26 October 2019 @ 00:04
    Interviewer often stepped on Hathaway in mid-sentence. Also, bitcoin discussion seemed to be opportunity for interviewer to speak on bitcoin rather than hear Hathaway’s views. Needs to pause to listen, if for no other reason,so we get to hear what he said.
  • JL
    James L.
    25 October 2019 @ 21:27
    Terrific interview! I am older enough to have participated in the late 1970’s gold mania and believe we will see a repeat over the next decade. I am encouraging the Millennials to get onboard now and average into a diversified gold portfolio.
  • JD
    Joshua D.
    25 October 2019 @ 19:50
    Particularly given the jurisdictional concerns about Argentina and other prominent gold mining countries, any thoughts about specific pure play Australian gold miners, other than the big boys?
  • TC
    Thomas C.
    25 October 2019 @ 18:17
    Great interview and John really has a clear macro view. He comes across as very knowledgeable and sincere
  • KS
    Karen S.
    25 October 2019 @ 17:02
    The canadian government will nationalize all of their goldmines. They have absolutely no gold in their reserves.
    • RS
      R S.
      25 October 2019 @ 22:48
      One of the more bizarre comments on RV.
    • BK
      Brian K.
      25 October 2019 @ 23:27
      The RBA holds 80 tons of gold.
    • BK
      Brian K.
      25 October 2019 @ 23:28
      Tonnes, rather.
    • JM
      John M.
      26 October 2019 @ 05:42
      I can't recall an instance of Canadian Federal Gov't nationalizing anything? Province of Quebec nationalized a few things (hydro & asbestos) but nothing in recent decades.
    • RW
      Ryan W.
      26 October 2019 @ 05:55
      The RBA (australia) has 80 tonnes on reserve, but the Bank of Canada, as Karen mentioned has no gold and for years has reserves only in foreign currencies (fiat) and IMF rights. Like many governments, they still produce a lot of gold coins, but do so by purchasing the metal. While Canada might never have done such, there is first time for everything, but it would be dire, as was with the US reserve act of '34.
    • JM
      John M.
      26 October 2019 @ 20:35
      R.W: I agree with you that just because they haven't doesn't mean they can't (nothing is impossible!). However BoC was happy to sell the final gold held as reserve just a few years ago (if you can believe it). And as usual the Canadian MSM news coverage provided no useful perspective. Canada relies on foreign investment. It's an open economy that is highly reliant on trade. I think don't think 'nationalizing' is a good strategy in those circumstances. IMHO.
  • SS
    Steve S.
    25 October 2019 @ 13:40
    Thank you for The Gold Miner recommendations. Seems like you can make similar returns to Bitcoin i.e. 5x, 10x if you buy Gold Junior Miners.
    • TM
      The-First-James M.
      25 October 2019 @ 23:58
      Just make sure you buy the right juniors. IKN Mark on Twitter would not be a bad place to start...
    • PG
      Petter G.
      26 October 2019 @ 08:58
      IKN Mark is super knowledgable. I'd also recommend GoldStockData.com as a starting point when you're screening for mining companies. Don't take the reviews too seriously, but rather use the database as a tool to find interesting stuff. Not too expensive either.
    • MS
      Michael S.
      27 October 2019 @ 05:17
      I'm an IKN subscriber.
  • db
    don b.
    25 October 2019 @ 12:19
    Interesting that manipulation of the gold price by HFT at the NY Fed ESF is never mentioned by insiders. That is the real 3rd rail (with career risk).
  • PU
    Peter U.
    25 October 2019 @ 10:49
    Very good discussion. However, I was surprised and a bit disappointed that gold miners' shareholder destruction wasn't discussed at all. In the past, so many gold miner boards and management teams have been net destroyers of capital. What is different this time?
    • RW
      Ryan W.
      26 October 2019 @ 06:41
      Wasn't that the proprietary secret sauce he didn't want to get into in the Torex mention?
  • DR
    Dave R.
    25 October 2019 @ 09:26
    Great broad ranging interview with two legends - really enjoyed it