The precious metal that got left behind – Will Rhind

by birtanpublished on August 24, 2020

He's will ryan ceo of granite chairs will welcome to kitko thank you michael good to be back let's talk precious metals versus treasuries in a note today you said treasuries have descended into irrelevance what's happened to

Treasuries well very simply you're not getting anything for your money and you know this has always been really the barometer of the fixed income market you know the 10-year

Us treasury and sitting here at real yields on a negative basis so you're nominal about half a percent but once you take away inflation you're not getting anything for your money

And this has been a huge thing for bond investors you know this lack of income in this current environment and therefore put simply michael people are looking for alternatives to bonds

And gold is one of the places they're going do we see uh how does this trend look going into the future well you've heard it from the officials at the federal reserve

But i think the market is telling you that there is no immediate return to nominal real interest rates um that don't see any chance of interest rates being raised uh in the

Foreseeable future especially with all the uncertainty around covert and remember you only have to go back a couple of years to when the fed actually did try and raise rates and they only got so far

Before the bond market had a tantrum and rates have to come down again so i don't see any way this time around we're going to be an environment where rates are rising anytime soon we're going to talk about hard assets and

We're obviously going to talk about precious metals but before i get into that i just wanted to talk about gauging what is the broader interest in gold

Look when i talk to juniors i talk to miners in the gold business it's all about gauging the broader awareness of gold how mainstream has gold gotten since the start of the year

I think there's certainly an increased awareness michael i mean you sort of have to be living under a rock if you don't realize or haven't looked at an alternative to bonds or the stock market this year and

So from that perspective you know gold has been getting some press but look i i've made this point on kikko before you know the tourists are not here they're not in this market yet and it's

Really this is a big signal when we start to see the tourists rushing into gold and you'll you'll see that you'll know it when you get the talking heads on the major you know financial news networks

Saying gold is in a bubble when you pick up the uh the front page of your local newspaper talking about gold being in a bubble you know that would be a good indication that

Um that's happened but so far nobody's saying that and you know we just haven't seen that you know from our business obviously michael we're dealing with investors all the time

And i can just tell you that you know unlike you know back in 2011 certainly in the in the few months leading up to the all-time high the situation is very very different what's an idea allocation for gold and

What should that allocation be well i think in many ways it's as much as you can afford from a risk perspective um i think the mistake would be not to own gold

Um but you know i've always advocated for gold in the portfolio and i think the the reason why that allocation your now is going up versus in the past is not because the price has gone up it's

Nothing to do with that it's because the relative um attractiveness if you will of bonds has declined perhaps even to to historic lows and so from that perspective you know how do you diversify a portfolio

And i think for equity investors they're realizing that gold may be one of the only real ways to do that only viable alternatives because your traditional method of diversifying

Either bond market is not giving you any income but if you're looking at it right now so i'm somebody that's an investor i'm out of treasuries or i'm trying to rebalance against treasuries

What am i looking at am i looking at etfs am i looking at gold miners am i looking at the royalty streams what might uh what might somebody do if he wants to get exposure to gold well obviously from my perspective

Michael may we focus on on etf so that's giving exposure directly to the gold price we have the granite shares gold trust which is one of the largest ways for people to get in investing into gold there are lots of

Other ways to get a proxy to gold but when i'm talking about investing in gold i'm talking about buying exposure to the real physical metal i'm talking about tracking the spot price of gold

So yeah sure there are ways to get exposure via royalty companies or by juniors or you know some of the large gold companies but to me that's a different investment that's not the same thing

Because what i want to see is an investment that's one-to-one correlated to the price of gold and so for me the etfs are the easiest way to do that gold and silver have been hitting fresh

All-time highs but let's talk about another metal that's in your radar right now why does platinum look good right now well simply if we frame it in the context michael the four major precious

Metals that's gold that's silver that's platinum and palladium you know platinum is the one that's sitting there you know less than a half 50 percent below its all-time high now contrast that to the other precious

Metals and although silver's had a run silver's you know higher than that gold obviously at all-time highs your palladium hovering around or near all-time highs and so from that perspective i look at

Platinum just from a pure you know price relative to its all-time high and say hang on a minute this is a metal that you know in a hard asset rally should do well along with the other precious

Metals but this is the one that right now is trading at the steepest discount versus its historical high lastly let's catch up on gold supply we talked to you just as covet 19 was uh

Falling on the world at that time and we're dealing with all these disruptions and one of the disruptions had to be with the divergence between spot and future prices for gold and then also you were

Talking about logistic issues with air travel being disrupted how are we doing with the gold supply right now and how are we doing with uh silver supply right now yeah so i think um

At the moment those kind of issues have dissipated for the time being there was a certainly a very serious moment in time where you know there's big logistical challenges with getting gold

Um where it needed to be and from that perspective it was necessary it wasn't necessarily an issue of supply in an absolute sense it was more that there was gold available just trying to get it to um the market

Destinations or the markets where it was needed most and so from that perspective you know now that travel has eased up a little bit um i think that those kind of concerns have gone away for the time being

Who knows what happens in an event of another sort of global lockdown but for right now certainly no liquidity issues to report in the gold or the silver markets from an institutional perspective

Will ryan with granite shares thank you very much for your time with kitko thank you michael always a pleasure you

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