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 I'm Charlotte Mloud with investingnews.com and here today with me is Adrien Day, president of Adrien Day Asset Management. Thank you so much for being here. Great to have you. >> Hello. Thank you. Good to see you again. >> Yes, we are catching up from our last conversation back in November. So, it hasn't been too much time, but there's still there's so much to talk about since then. So, I want to pick up on some themes that we were going over then. Gold was in a minor price slump

and you told us you didn't think it would last long and there was no evidence that gold was topping at that point. So, we're talking today gold is near 5,000. It could get there by the time we post this. We'll see. How are you feeling right now? >> No, I feel much the same way. Um, look, a pullback is always in the cards and people forget. Everybody talks about n not everybody you talk about as 1974 to75 when gold dropped almost 50%. But people forget the same thing happened in 2006 you know halfway

through the bull market you had a 30% correction in gold which of course means a much bigger correction for gold stocks. So a pullback at some point is is always not just a possibility but it's almost a certainty. But I if if if I may re if we rephrase the question to is this a top you know absolutely not in my view we are absolutely nowhere near a top and we can talk about the things that are driving gold and I'd like to do that but what's missing from this market is generalist investors. They are not in

this market. Everybody looks downstairs at the conference hall and says, "Oh my gosh, all these people, but they're all gold investors. Where are the generalists?" This might blow your mind. I don't know unless you've looked at it. The GDX, which is the largest ETF of gold miners in the world, the GDX has had net outflows in the last month. Net outflows. And of course, for the last 3 months, 6 months, and last year, it's had outflows. But even now people are not buying they're not the

generalist investor is not buying gold right now. So I think so you can't have a almost by definition you can't have a sort of you can't have a bubble for bursts without public participation. And we simply don't have public participation. >> Okay. Not yet. The lines were looking pretty long here today. These are all gold investors. I bet you if you went up that line and said, "How long have you been investing in gold?" There's very few of them would say, "Oh, this is my

first year." >> Okay, fair enough. I'll do that tomorrow because we've still got one day. I'll I'll start asking people. But yeah, let's talk about the the drivers that are behind gold at the moment because we have seen a big move since we last talked. Was there a single trigger that you would pull out or is it again that confluence of factors coming together? >> Interesting question. Well, I think I think fundamentally the drivers of goal for the last 3 years led most

importantly the central banks they continue to buy. They have not gone away. And um if if you're if you if you're buying if you're selling the dollar and using some of those proceeds to buy gold because you're worried about the concentration of your reserves in a single asset issued by a fiscally irresponsible government that is prepared to weaponize its dominance. Has anything changed? Nothing has changed. So central banks are continuing to buy gold. People concerned about fiscal

deficits are continuing to buy gold. What's new I think are two things. One is uh the can we say chaos? I think we can but certainly the uncertainty um generated by the current administration in the US has has added to the gold buying. No question about that. It's not one particular thing. It's not Venezuela. It's not Gaza. It's it's just the general sense of uncertainty and not knowing what's next. Um and then the other thing that's incredibly important is Tether. You

know, Tether, which is a stable coin company, what are they the eighth or seventh largest holder of US treasuries in the world with a US stable coin. But now, as you know, they've they've introduced a gold stable coin. Uh Tether bought more in the last two quarters, Tether bought more gold than any other single central bank. You know, if you rank the central banks and put Tether in, they were the number one buyer of gold. To me, that is incredibly important because for two reasons. One is Tether's plans

and goals are to see the gold stable coin grow as rapidly. They think the gold stable coin will grow as rapidly as the dollar stable coin grew in the last 5 years. So that's tremendous growth and that has to be backed by gold, right? I mean, every gold stable coin has to be backed by physical gold. They already have over 20 million ounces of gold. That's a lot. Um, so they're going to be continuing to buying gold and and also continue for the mining sector. What's important is continuing to look for

sources of reliable gold. So they've been trying to get offtake agreements with major miners, but they're also buying royalty companies, uh, for example. But but they're going to continue to be a buyer of physical gold, I think. And the other thing that's very important, the other consequence of Tether buying gold is it, how can I put it? It legitimizes gold for the crypto crowd. Because the Bitcoin crowd, the crypto crowd who thinks gold's outdated, gold's a pet rock, Tether is our hero,

look at what they're doing, and then suddenly Tether buys gold. Well, that that is an endorsement for gold for the crypto crowd. What I think could happen, I won't say will happen, but could happen. I think Tether will continue to buy gold, but I think what could happen is that the volatility that we're seeing in Bitcoin really tells us that it's not a store of value. It might be a lot of different things, but it's not a good store of value. And if I'm in Bitcoin and I've

gone from 130 or whatever it is to what is it today, 75 or 80? and gold has gone from 4,000 to 5,000. I might be thinking maybe I should switch some of my Bitcoin into gold. And I think that's the next big the next big buyer of gold will come from crypto. >> Okay, that's really interesting. I'm glad you brought up Tether because, you know, you mentioned there is it's legitimizing gold for the crypto crowd, but I kind of think that from the gold side, people are paying less attention

to what's going on with Tether because they see it as coming from that crypto field, and it's a little bit anecdotal. We did some content on Tether and gold, and it just didn't really get that much traction with the Well, and maybe maybe that's my fault. Maybe I didn't title it well, but I I wonder if also people are not seeing it as significant just because where it's coming from. >> I think you're right, but I mean this is incredibly significant. I mean, as I

say, the facts are facts. Tether bought more gold than any other single central bank for the last two quarters. that is and by a large margin that is meaningful and if they can and uh Juan Santo the chief of what do they call them global projects he's the one for tether he's the one driving this gold uh force if he thinks that the gold stable coin is going to grow tfold over the next 5 years and he has said their biggest concern is finding a steady supply of gold to back the stable coin um you know

I their plans may not come to fruition. Of course, they could be wrong, but um I I I mean I think it's incredibly significant and people should really pay attention to it. >> Yeah. Yeah. I think it's really interesting. So glad we went into that. So we've got Tether as this current catalyst and potential future catalyst as well. You also mentioned just the overall global chaos that we are seeing right now and that also feels like it's building like you know when we've had in

the past these geopolitical events they impact the gold price and then it goes away pretty quickly. Do you see that happening or is this something that's just going to keep building as they stack? >> No, that's a really interesting question and if you look back you know Gaza didn't really move gold. Ukraine, you know, it moved up for two weeks before, then it fell back for two weeks afterwards. You know, each you're you're absolutely correct. If you look back the last 40 years, geopolitical events have

really not had a lasting impact on gold. What what's happening now is something different. Gold is moving up not because of Venezuela, not because of Gaza, not because of Iran, not because of XYZ. It's because of all of these things happening and the uncertainty of what's next. So I I if if you look at what the motives, why are people buying gold? Because they don't like fiscal deficits, you know, they don't like uh all of the debt in the world, they don't like the loose money and the excessive uh

monetary creation. They don't like instability and uncertainty. None of that has changed in the last 12 months. And is any of that likely to change for the better in the next 12 months? I don't think so. >> I also would guess probably not. And maybe we talk a little bit more about what brings those generalists into the market. And I think we've talked before about how it could be growing awareness that the US economy isn't doing as well as it's said to be or stock market

rollover. Is that kind of where you're thinking? >> Yeah, absolutely. and the stock market rollover um I think is most likely to be the catalyst. You know, if you look at the leaders, the big tech leaders like Nvidia and Microsoft um they've got nowhere for 3 months, they've got nowhere for 3 months. But if you're a regular ordinary investor with a 401k plan or whatever and every month you open your statement, it's still increased in value. So you don't look at what Nvidia's done in the last 3 months.

you know, your your S&P your your S&P has gone up. When that stops, when the investor stops seeing his SM or his his 401k go up month after month after month, then the investor says, "Where else should I put my money?" And um there's lots of places I should go. You look at international markets. international markets. Most people don't know this or a lot of people don't know this, I should say. If you look at the Morgan Morgan Stanley World XUS index, which is the benchmark, that went up 32%

over 32% last year and the S&P was up 17. The world markets almost had double the performance of the S&P. That is the first time in 16 years that the global markets have outperformed the US. uh you've got the global markets today at the lowest relative valuation to the to the uh US market that they've ever been at. Let me just say that again. You global markets, international markets rather, international markets are at their lowest valuation relative to the US market that they've ever been. Value

stocks are at a 30-year 20 30 year low relative to growth stocks. Small cap stocks are at a de multi-deade low relative to big cap stocks. So all of these things are beginning to turn. I mentioned international which is the obvious one. They doubled the performance. But all of these things are beginning to turn. And these things typically typically you don't have international markets outperform the US for one year and then revert just as you don't have the US market outperform for one year and then revert. So I think

we've got five six seven years ahead of us of outperformance by international markets and that's all helped by international a lot of international economies particularly the smaller ones are doing better than than the big cap than the US. You've got the dollar falling, which of course the dollar falling means that if I'm a foreign investor, my um when the dollar falls, yeah, I can buy something cheaper, but if it continues to fall, my returns are lower. And US investors in particular are so

US- ccentric, but it's true for investors in every in every uh country. You don't really look at the currency because if you buy X and it goes up 20%, you think you're up your 20%, even if the dollar fell by 30%, you still think you're up 20. But for a foreign investor, that's very, very significant because it affects their returns. And so foreign investors who have been pouring money into the US market for the last 12 years pouring money in to the extent a lot of international

investors and pension funds and institutional investors in UK, Switzerland and elsewhere they'll have 40 50% of their assets in the US. That money is now flowing out. And the only reason in my view, the only reason that money is continuing to come into this market is AI because the US is obviously the world's leader in AI at the moment. And certainly, I mean, China is doing a lot, but the but companies in terms of companies, if I'm an investor in Switzerland, I want to invest in AI,

it's the US market. Once you remove that as the incentive to invest in the US, then I think the US market falls dramatically relative to uh the foreign markets. And and and we're very close to that point. I mean, you look at Nvidia. Nothing against Nvidia. I'm not even going to say whether it's a good company or a bad company. Let's say it's a great company. Nvidia's market cap today is greater than the market cap of Britain. It's almost twice the market cap of Canada. It is greater than the market

cap of every small cap company in the world. Does that make sense? There's something missing there. You could have Singapore, Singapore, Switzerland, uh Sweden, Spain. You could have all four markets for Nvidia. So, so, so I think you're So, so in other words, that's an examp. Um, you didn't ask me about AI, but I guess I'm telling you. Anyway, there's a lot of reason to think that that AI is overdone. Um, so even if in five years time AI is the greatest uh, you know, the greatest

thing since the internet, are the companies that are so overvalued today going to continue to grow? We could go back to the year 8 1980 and think of who were the leaders in the internet back then. Half of them don't even exist as companies anymore. >> Yeah, AI is definitely it's all it's all tied up together in the stock market. So, I think it's it's good to go into that. And you know, we've been talking about gold price drivers. We haven't even mentioned the Fed yet. And usually

the Fed is just front and center at our discussion. So I'm wondering, you know, how important is the Fed at this stage with everything else going on? And obviously there's there's so many things that we could say about that as well. There's >> there's so many directions. Yeah. >> You know, that's a really interesting point, Charlotte, because you're right. When you think about the gold right now, gold right now, you don't think about the Fed first where 6 months ago, a year

ago, you did. I mean, what the Fed I mean, the most important thing the Fed has done in my view is the QE. Institute a QE again. Now it's QE. It's not it's not QEQE, right? Because they went to pains to say this is not QE. It's nothing to do with monetary policy. But we've the Fed has started buying treasuries again. And um and that's when when their when their balance sheet has gone from what 8 trillion down to 6.5 trillion. So yes, that's a nice move down. But when it was less than a

trillion back in 2008, you know, that's not even retracing half of the of the enormous growth. So, and now the Fed is buying is buying um treasuries again. Rhetorical question. Do you think that they're going to keep their 40 billion 40 billion a month cap and do you think they're going to end the program in April? No. No way. It's just not going to happen. QE is is the intro reintroduction of QE in December was remarkably important for gold and that was one of the factors to move gold

up but of course so much has happened since then you know we've forgotten all about it so um yeah I I think what's happening with the Fed is still very important um and yeah there's so much I mean they're not really acting as a normal they don't there's so much going on that they can't really react or act uh simply to the economic factors anymore. >> Yeah, we have this the whole criminal investigation that's going on. We have Powell on his way out and I know we're

still waiting to hear about who the replacement could be, but it it I guess we already know it's going to be somebody who's in line with Trump, so we'll see lower rates. Maybe maybe a question this is something that I have seen people asking about is so Powell's term as Fed chair ends but will he stay on beyond that? >> Well, you know, look, I don't pretend to have a real insight in that. There's other people here that maybe have better insight on that. I suspect, you know, he's a man, right? He's a

human. I would think for when his he wants to stay on his term, but when that's over, surely he says, "Let me go and do some gardening or watch a movie." Surely. >> Sure. >> I mean, he could stay on on the board and do what? Just be someone who carps from the sidelines. >> Yeah. I don't really know. >> No. Yeah. >> So, I'm not sure. I know people I respect, people I respect very much um have have suggested that that's a high probability, but I'm just wondering what

his motive would be. >> I don't really know. Maybe just to to be a thorn in the side. I I really don't know. >> Yeah, I I'm not saying it's not going to happen, but I would suspect he's going to want to stay on. He's not going to retire. He's not going to resign because Trump wants him to. I mean it why why do that? He's only got a few months left and then I think he's going to go out saying, you know, we we've kept uh the economy growing. We've kept inflation

low. We've kept um unemployment low. You know, we succeeded in our policy. >> Well, we'll definitely will ask you about that again as as time goes on. But, you know, before I let you go, usually we keep our focus on gold, but I think I'd probably be remiss if I didn't mention silver right now given the the price milestone we've seen. So, for gold, you know, you mentioned you're not seeing a top in gold at this point. Does the same go for for silver or how are you looking at it?

>> Yeah, there I mean, again, there's probably other people with a more insight into silver than I do. Um, I would be less surprised at a major pullback in silver right now than I would be at gold. Um, but again, there's there's there's some fundamental things with silver. Um, and and one is we've talked before about how most silver today, unlike 25 years ago, 75% of silver today is byproduct silver. So the the price signals from changes in prices up or down um are not very strong and they're

not very certain and and they certainly take a long time. And so by that what do I mean? What I mean is that uh you know the zinc producer in Bolivia in um Peru who gets 8% of his revenue from byproduct silver he doesn't decide to buy build a new mine because the silver price goes up the miner's happy you know he can sell forward or you know reduce his costs and that's all good but but you don't go out and build a new zinc mine because the price of silver which is 8% of your revenue has gone

now it's 12% or whatever and the same goes for lead miner in Bolivia and so on so forth. So, so silver production does not increase much or it doesn't increase in lock step with an increase in the price even on a delayed basis because of that. Um and it's a really interesting market because it's being driven by physical. It's not driven by um you know traders, commodity traders unlike previous moves in silver that have really been driven by by commodity traders. So no, I think it's definitely got legs

and again everybody focuses or you know the media will focus on the fact that not you I mean them they'll focus on the fact oh it's an all-time high you know but on an on an inflationadjusted basis as we all know as everybody in this room knows um we're a long way from an inflation adjusted high for silver you look at silver gold and silver has well outperfor underperformed underperformed so no I think we've got a lot further to go with silver. A lot further. >> Okay, good to get your thoughts there as

well. And >> now I should just say one thing on the other side, which is, you know, the the big industrial demand for silver that comes from solar panels and so on. They're becoming much more efficient. So, they're using less silver uh per panel or whatever than they would have done in the past. And solar panels are last built to last a lot longer. So they don't have to replace so much. So I mean we shouldn't get carried away when we just look at the amount of silver that was used in solar panels last year.

That's becoming more more efficient. But we're using silver in in um data farms. Um yeah using silver in in batteries. So I yeah I'm very bullish. >> Okay. Okay. Well, I will wrap it up here and send you back out onto the conference show floor unless you had any final final thoughts for investors. >> No, I think for one final thought I would have well, you know, if if if you're a more conservative investor, an older investor, you've been in this market a while, you know, you got a 10, let's say

a 20% allocation to gold and that 20% is now 40%. your hundreds 100,000's gone to 300,000 over the last four or five years. There's nothing wrong in taking some money off the table and keeping your allocation or even a higher allocation. Um so it's not a matter of predicting investing and certainly financial planning is not a matter of predicting what's going to happen. It's a matter of trying to manage your risk and reward. So again, if if you have a 20% allocation, it's

now 40%. There's nothing wrong in cutting that back to 25%. And being more exposed than you were when you started. >> Yeah, I think that makes sense and good good note to end on. So thank you so much. This was a fun conversation. Always great to have you. >> Well, thank you very much, Charlotte. Thank you for having me. >> Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Adrien Day.