All That Glitters: The Outlook for Gold
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This is Barron's Live. Each week, we bring you live conversations from our newsrooms about what's moving the market right now. On this podcast, we take you inside those conversations, the stories, the ideas, and the stocks to watch so you can invest smarter. Now, let's dial in.

Hello, everyone, and welcome to Barron's Live, our weekly webcast and podcast. I'm Lauren Rublin, Senior Managing Editor at Barron's. Thanks for joining us today for a market update and a look at gold, which is enjoying a historic run. My guests are John Hathaway, Senior Portfolio Manager at Sprott Asset Management USA, a specialist in precious metals, and Barron's Deputy Editor, Ben Levison.

Stocks are down more than 2% today. Gold is up 3%, and the president has posted that the chair of the Fed is a major loser. Just another day on Wall Street. With that, let's welcome John and Ben and get this conversation started. Thanks to both of you for joining me today. Thanks, Lauren. Thank you, Laura.

All right, John, we like to start with our outside guest and that would be you. So I'm going to comment first that gold has had a nearly parabolic move over the past year or so. So I've got two questions for you. Number one, what is behind this monumental rally? And number two, is it too late for investors to get in? Great. Okay. So two easy questions. First,

The run in gold started not this year. It started probably four or five years ago. I think the seminal event was the weaponization of the US dollar on the heels of the Ukraine invasion by Russia.

And that made treasuries, U.S. treasuries, U.S. dollar assets less appealing to our adversaries, China, Russia, Iran, and so forth.

But our allies took note. And since then, we've seen a noticeable increase in the investment by foreign central banks and related official sector institutions into gold bullion and away from U.S. Treasury. So that's been in the background for quite a while. More recently, we've seen very, very persistent buying by the Chinese public. And you can see that in terms of the growth of Chinese investors.

ETFs backed by gold. And what's interesting, and I think I should mention right at the start, is that there has been virtually no participation until the very last few weeks or months by U.S. investors. They've basically been involved in overpriced tech stocks,

And, you know, basically captivated by AI and whatever the dominant market themes we have. And to your second question about the timing, I would say, you know, jumping on a speeding train is not recommended. I would suggest waiting for the train to come to a stop at the next station, wherever that may be. And that's for the technicians to decide.

to discern when we have a correction. So I would not chase it. I do think it's important to have exposure, but I would wait for a pullback. That makes sense to me. Let me ask you, why have the Chinese been such big buyers of gold? Well, if you talk about the Chinese official sector, it's because of the reasons I mentioned earlier, which is that we've made the dollar a little bit less friendly as a neutral reserve asset

the settled trade balances and and we started with our adversaries and then this current administration has uh even made our allies think twice about uh our friends think twice about recycling trade surpluses into u.s dollars treasuries but why the chinese uh

I think it's in their culture. I think they basically maybe don't trust their banking system, probably for good reasons. And so the Chinese public has an affinity for gold. And I think it's been encouraged by the events that I talked about. So some people talk about gold as a haven asset. Would you think of gold at the moment as a haven? Well, you know, it's always been a haven.

It's always been talked about in the same context as other safe assets, which would be U.S. Treasuries as one example. Is it a haven if you chase it in a market that's rocketing higher? Maybe not. I mean, unless you take a really long term view. Again, I would say gold is always a haven, always has been. I would just be careful about entry points.

All right. One of the things you wrote in your April gold report is that the migration of capital to gold and possibly other monetary metals could result in a price that is multiples of the current price of $3,000 an ounce. And I understand the point of not chasing the current rally. But when you talk about multiples of $3,000, that suggests you see the price longer term going up significantly. Could you comment on that?

Yeah, sure. The thought there is that gold is very scarce relative to financial assets. Financial assets, this is broadly speaking, equities, 100 trillion, various denominations of debt, various categories of debt, 300 trillion.

And as nearly as I can figure, the market cap of gold that could be freely traded is about a trillion. So the ratio is of 400 to one tells you that if you had a slight shift in allocations out of bonds, out of stocks into gold, the just the math leads you to the conclusion that

a price much higher would not be difficult to imagine. It depends on external events. If we have a bear market, if we have a bear market, if it continues, I think that would be one of the driving forces. Sadly, we do have a bear market. But I wanted to ask you about gold stocks and what the implications of the bullion's rise are for gold miners.

Sure. And frankly, if you know, for those who are interested in getting exposure, but without chasing the metal itself, gold stocks have lagged, even though they're up year to date by a nice amount. If you look at a five year chart, for example, most of them are not that scary in terms of price appreciation. And they have something going for them, which is that they are

cheap based on the metrics of any equity valuation scale that you would use. The enterprise value to EBITDA of the mining sector, gold mining sector as a group is about the lowest it's been in the last five years and that's using trailing earnings. So if you look at forward earnings based on current prices,

they're ridiculously underpriced. And so I would say, you know, for those who can't wait, who are looking for an immediate exposure, I would say look at the gold mining sector as an alternative to owning the metal itself for the moment. Why is it that they've lagged so much? Those are pretty cheap multiples. Yes, they have lagged.

And by quite a bit. And you can see, for example, that if you look at the VanEck ETF, which is a passive reflection of the GDM index, there has been an actual outflow. I think it's in the low teens in terms of shares outstanding. So even though VanEck ETF is up substantially year to date,

I'm going to say 40-ish type percent. Assets have been draining. So again, investors are not going there. And why, to make it quick, the history of gold mining management has not been stellar. Their financial decisions, their M&A decisions,

have not been great. So there hasn't been value creation that one would hope would go along with higher gold prices. But I think we're in a new cycle. I think many of the managements, not all of them, have learned a bunch of lessons. And so I think they're much more appealing

than is generally perceived. So I think it's a combination of history, the fact that gold was in a nuclear winter for 10 years after 2011, and the gold stocks kind of got that in spades. But if you think we're in a new era for gold, which of course I do, then gold mining stocks are undeservedly undervalued.

Good point. I wanted to ask you a little bit about your macroeconomic view. Gold reflects a lot of macro trends. And I know you're not an economist, but when you look out over the market and the global economy and the behavior of gold, what do you see out there? What are some trends you're watching? Well, the biggest thing is the gradual loss of confidence in current positioning of the U.S. and the European investor.

Super underweight gold, heavily overweight things that are going down, particularly overvalued tech stocks. We know, I mean, this has been on the front pages, so I'm not saying anything new. But if that continues, I mean, I was just looking at the S&P this morning. It's trading at roughly 19 times the, I guess, the consensus estimate. And I could be a little out of date. It's 270. And, you know, here we're at 5,200.

You know, there's plenty of room for that to go lower. And God forbid we have a recession. If that's the case, then that 270 on the S&P is not going to hold up. So I think a protracted bear market is one of the most important potential drivers of people to rethink how they're positioned and say, you know, what could be a better position?

place to be. And I think among other things, gold and mining stocks will be discovered.

I think Ben has a question for you, speaking of the markets. Yeah, I mean, a note hit my inbox today that was talking about the S&P 500 in gold terms and that it's down, I think, 25% relative to gold. And I was just wondering, what do you make of those kind of analyses comparing gold to the S&P 500? Is there any meaningful information there for investors?

It's an interesting observation. The Dow gold ratio is another one. You know, and I think I don't have them. I can't recall them off the top of my head. But, you know, in terms of that cycling, I'm more familiar with the Dow gold ratio as opposed to the S&P. There's plenty of room for that ratio to shift in favor of gold. But again, I'd say those are interesting observations to have some historical significance.

context, but I wouldn't hang my hat on just that alone.

Fair enough. All right. We're going to go on to look at some companies reporting earnings this weekend. Then, John, we'll come back to you with a lot more questions about gold. It's a topic of great interest to our listeners. So, Ben, I wanted to ask you about first quarter earnings. We're in the thick of earnings reporting season. We've heard from a lot of high profile companies, including the banks. There's been a lot of worthwhile guidance that companies have issued. What have you learned so far? What are some of the highlights?

You know, I think it's more about low lights, Lauren. Oh, no. You know, we've had about 18% of the S&P 500 report through the end of last week, so about 59 companies.

I mean, the good news is that earnings overall are coming in a little bit better than consensus. The bottom up number is about $60.43, and that's up from $60.27. Bank of America is expecting about $61 for the quarter. The

EPS growth is about 7%, sales growth 4%. The problem, though, is that really the beats have been by the financials. And that's fine. But overall, you're just not getting as many as you normally would. You had 59% of companies have topped their earnings expectations. That's versus a historical average of about 64%.

And only 36% have topped both earnings and revenue versus a historical 45%. And the thing is that the misses are getting hit a lot harder than the beats are getting rewarded. And that's never a great way to have an earnings season go.

It's kind of in keeping with the overall trend of the market, though. Very much so. I mean, it was mentioned earlier that earnings are still for about $270 this year. And if that number, if that's too optimistic, then stocks just generally are too expensive and need to come down a bit.

As they have been doing. So let's take a look at two of the MAG7 stocks, the Magnificent Seven, that is. They're reporting this week. We'll hear from Tesla on Tuesday. We'll hear from Alphabet on Thursday. Tesla has had a rotten three months stock-wise. The shares are down more than 40%, and the company has become a lightning rod for anger about CEO Elon Musk and his role as the head of the Doge committee, or

or the federal cost cutter in chief. What can investors expect to learn from this week's Tesla earnings? And what's at stake for Musk here?

I mean, I think the first thing we do is step back and look at the stock. Yes, it's dropped 40% over the last three months. It's actually up 61% over the last 12. The loss that it's had is really just to give back this massive run, both after its AI day that it had in October and then the election. The election, it launched the stock into the stratosphere.

I think that what's happened is that those gains have gotten pulled back that, you know, people who just thought, OK, Trump and Musk, that Trump is going to be a good thing for Musk and Tesla. They push the stock up. You know, that isn't materializing. It was never probably real to begin with. And we're kind of where we started.

And now we're dealing with all this stuff. And it's interesting. There's a guy named Dan Ives over at Wedbush who is one of the most bullish analysts out there generally on tech stocks and on Tesla. And he listed six things that he thinks is wrong with Tesla right now, that it's become a symbol of Trump and Doge. It's

You know, it hasn't done well since Trump was inaugurated. And then you have the brand damage that's resulting in first quarter delivery numbers that are much lower than people had expected. And it just goes on and on. You have protests and you have, you know, cars being damaged and you have these, the tariffs that are put on there and even have the possibility of long-term demand destruction. Ives puts at 15 to 20% permanent demand destruction for future Tesla buyers.

because of what Musk has done with Doge. And, you know, so really what's going to turn this around? It has to go back to the fundamental things. You know, it has to be about when is full self-driving, truly autonomous cars going to be, are they going to be rolling out in Austin this summer? How much tariff relief is there going to be? Are they going to be able to roll out that new, cheaper car, which they've been

reports that maybe not. And how are they going to convince people they can still grow? And these are the big issues that are out there. And really, it's going to have to start with Musk, at least according to Ives, pulling back from Doge and running Tesla as a car company, being a CEO rather than a political operative. I'm not going to take bets on whether that will happen.

I would, I mean, this is one where the technicals are so important. The stock has been able to hold around 210-ish, maybe a little bit higher than that for a very long time. You know, if we see a break below that and then break 200, it's going to be a tough, I mean, the stock can go, dare I say, goes back to 100. But if it can, but because it's held out onto that support, if there is good news, there's a real springboard there for it to go higher.

All right. Let's talk about Alphabet, which may be easier to understand or maybe not. It's been a Barron's favorite. The stock has struggled a bit over the past three and 12 months. What are you going to be listening for when Alphabet reports? Now, this is another one where, I mean, it's tough because so much of what's hanging over the company. I mean, it's two things. One is the government actions. You know, it was declared a second judge declared it a monopoly last week.

But at the same time that its search business is very likely getting eroded by AI. I mean, we all, even those of us who use Google are now getting those AI results at the top of the page. And the worry is that, you know, its search results are getting cannibalized by itself, but also it's getting, but they're getting share taken by things like open AI and, and other AI search tools. And, and,

The setup isn't great because they have very tough comparisons. And, you know, you have Bank of America looking at it and they're seeing, you know, they think that actually that there is a miss here. Their earnings estimates are below the street. They're seeing $1.93 when the street sees $2.01.

And they see the search revenue not growing as fast as Wall Street expects it to. The one thing that really is, I mean, two things that work in Google's favor or Alphabet's favor is that there's very low sentiment and the valuation is, it's very cheap. It's the cheapest of the max seven. And so they were, you know, B of A remains bullish on it, but, you know, there's still a lot of room here that if there is a miss for some reason,

there could be some more downside to the stock. I mean, the valuation only goes so far at some point. And you read some of the analysts that are less bullish on the stock. They really do see, you know, some people have they just see that search business getting eroded over time. And that's really the bread and butter for Alphabet. If that gets hit, then it's not the stock that everybody thinks it is. So that's really what we're going to be paying attention to when they report this this week.

That's a worrisome situation for sure. This episode is brought to you by the RE/MAX Collection, seasoned real estate agents who help open the door to the most luxurious properties worldwide. Visit RE/MAX.com/luxury to learn more. Each office independently owned and operated. I wanted to talk briefly about airline stocks. The industry is facing some challenges, as is the travel industry broadly, what with the stock market down here and foreign travelers not visiting the US quite as often.

Let's take a look at some broader trends in travel, and then we'll talk about American, which reports Thursday, and Southwest Air, which also reports on Thursday.

Sure. So, I mean, it's not good out there for travel companies. As you mentioned, you know, there are foreign people or people from other countries are not really looking to the U.S. for travel in the way that they were before Donald Trump became president. The stories that are out there just make it, you know, clear that, you know, or just sends a message that, you know, you can go elsewhere. And so they are looking elsewhere. Right.

At the same time, you know, we're seeing that, you know, the U.S. outbound travel has remained steady, according to Mellius. But the worry is that with fears of recession, and I would even throw out there with the weak dollar making it more expensive to go abroad, that there's just going to be less travel going on. And

If it goes the longer that this happens with the uncertainty around travel, the more estimates are going to have to come down. Melanies is worried that they're actually going to have to start bringing down 2026 estimates, which would be a real problem. And Seaport is global as gloomy, basically. You know, they expect more Chapter 11 filings and

They, you know, they're worried that there are some other there's some good things that's going to ultimately mean fewer competitors. Labor contracts are going to get reset lower because there'll be reduced supply. So there will be some of those positives for the ones that can come out of this and take share.

And one of those might be American Airlines. Seaport highlighted them as a share taker, noticing that, or they noticed that Spirit, Southwest, JetBlue and Frontier have been actually pulling back where they overlap with American Airlines. And so that means like in Dallas, at LaGuardia, in Miami. And so that's ultimately good for American. The problem though right now is just the setup is

so tough just generally that they actually think that there are going to be better times to get into the stock. I just want to know if seat prices are going to come down.

You know, it's that's always the big question. If it becomes a market share game, maybe not. You know, they the airlines have gotten very good at making sure their planes are filled, having enough airplanes in the sky to certainly have to just meet demand barely. And I just came back from Denver and each of the flights are both my flight out to Denver and coming back.

both of them were overbooked. They were asking for people to volunteer to take a different flight. And so they're still running these very tight capacity. And that could be a good thing for pricing for the major airlines like American. All right. What about Southwest? What's the story there? I mean, I think Southwest is really a self-help story, which makes it perhaps the most interesting because the macro is the same for all these companies. Southwest has been, you know, it

It had all those issues that made it go from really the one airline that was unlike all the others to just another airline. And now it's becoming just another airline by, you know, charging for bags, you know, having seats instead of this. I've never flown Southwest, but I hear that's a little free-for-all that goes on is kind of interesting. All that's going away is becoming another airline, but there's a lot of room here.

for the company to really drive new sources of revenue and to fix what has been broken. And if they're able to do that, it might be an outperformer among the airline sector, even in this kind of environment.

All right, very quickly, because I do want to get back to gold, I wanted to ask you about two consumer staple stocks reporting this week, PepsiCo and Procter & Gamble. Theoretically, staples should be a somewhat decent place to hide from the current market storm. It's worked out in P&G's case a little less so in Pepsi's case. But what do you see ahead? Yeah, Pepsi is just having problems right now. There's issues with its snack business.

And there's, you know, it's just it's a stock that hasn't acted like a staple. It's actually near a 52 week low. It's down 70% over the past 12 months. And UBS thinks that that's actually going to continue. It's a.

supposed to grow sales about 0.6%, which isn't great, but it's something. And UBS actually sees it coming in at 0.4. They see volumes declining, so they're selling less, but they're making up for it on pricing. But we'll have to see if that happens, what happens with that, given the strength of the economy. And really, the growth is coming from international markets, not from the U.S. And so it's not acting like you would hope a staple would.

Procter & Gamble is acting just like a staple. If you look at XLP, which is the staple ETF that I tend to watch, the two charts look almost identical. Procter & Gamble is having a tough time. They're another one that they rely a lot on pricing power to keep revenues growing, but they're at least acting like you would expect a staple to. It's going to be interesting to see how

The earnings are going to play out. They're expected to come in at $1.93, but JP Morgan actually sees that perhaps not coming out quite that way. And if they miss, then maybe it becomes one of these things where staples just aren't as quite defensive or some of these staples aren't quite as defensive as they have been in the past.

Which leads us back to gold, doesn't it? Yes, it does. All right. So I wanted to ask you, John, about silver. We have had a lot of questions from listeners about silver and the gold-silver ratio and so forth. And we all know silver has been a laggard while gold has climbed higher. Wanted to ask what the reasons are for that. It's somewhat of a puzzle, but I would just offer this, that silver...

While it is a monetary metal and has a monetary usage, and in theory it should trade in some relationship to gold itself, it also has industrial uses. And historically, when there have been worries about a recession, downturn in demand from industrial users because of that, it can be a break.

or it can retard flows into it. But what I would say is that I think there's a lot of catch up potential in silver. I think at a time when there is loss of trust in the dollar, which we can see on a daily basis, maybe in treasury debt because of some of the concerns about

was happening between discussions between the administration and the Fed, all of those things. The monetary aspect of silver does get more attention. And because it has been such a liar, I would say, in my opinion, I think it has a lot of catch up potential.

So, you know, we have to wait and see. But I would say it's I think it's unusual for silver to trade at such a discount to gold thinking in terms of the gold silver ratio. A lot of questions about that. So thanks for filling us in. We also had a question from Harry about platinum, palladium and rhodium. Any quick thoughts about those three? Well, if you want to get really exotic, I mean, you can look at rhodium. I don't know how you position it. It's it doesn't really trade.

There are I think there probably are ETF ways to participate in both platinum and palladium. Again, they both they're a little bit like silver in the sense that they have industrial uses, particularly as substrates and catalytic converters for the automotive industry. Again, I think that's that's to me, it's.

a little bit off the beaten path. They both are reviewed as monetary metals, particularly platinum. They are scarce. They have a lot of the same attributes as gold, but it's a much smaller market. I think that's kind of straying from the, I mean, to me, the thesis on gold is monetary debasement, which of course we've lived through for the last 25 years and maybe we're in for more of that.

I mean, gold is the go-to solution for that. Silver with some complexities, yes, that is also a solution. Platinum and palladium and especially rhodium, which you can't really buy, I think they would come in as third and fourth choices. Distant third and fourth, it sounds like.

So let's keep going with our listener questions. Mike asks, what is the best way for retail investors to play the gold market? And maybe you can talk about the different ways of getting involved. Sure. I would, at this moment, just want to mention Sprott's Physical Gold Trust, PHYS, which is fully backed by gold.

The gold behind PHYS is stored at the Canadian Mint. And should an investor ever want to take delivery, you can redeem in gold instead of cash. Also, it has the advantage in terms of tax issues. It's not taxed as a collectible. We're talking about the Sprott Physical Gold Trust.

you can actually treat it as a security. And so a long-term gain there would be taxed the same as any other equity. As far as other alternatives, there is GLD, which is a gold-backed ETF.

The Sprott Physical Gold Trust has a substantial amount, I think it's around 8 billion or so off the top of my head. GLD has something like 57 billion. One of the issues with GLD is you can't redeem in gold. You can only redeem in cash. And it's taxed, I believe, as a collectible if you have a long-term gain, which is obviously less advantageous.

um but those are the two easy fixes otherwise if you want to buy physical that is a challenge for most people because uh an ounce of gold is obviously it's uh 3 400 or so today you can buy smaller denominations they're always that but if you're if you're and if you're talking about coins you're paying a premium probably eight nine percent just for bullion related coins so i i think that

that the avenues to owning physical metal are all complicated. And I would say,

and obviously talking my book here, uh, the Sprott physical, physical gold trust is probably, um, the, the, the, uh, best way to, in terms of taxes, in terms of ability to redeem in physical, probably the best solution. What do you make of, um, places like, you know, we always get these stories every few months of Costco selling gold bars and, you know, having trouble keeping them in stock. Um,

I mean, is Costco a good place to buy gold? Well, you're paying a big premium. I don't know what the number is off the top of my head, but I think if you look at the price you're paying at Costco for, and I think they're what, they're smaller denominations, maybe a tenth of an ounce. I can't remember exactly what it is, but they're obviously more amenable for retail pocketbook.

But you are paying a big premium. But I do think what Costco says is that there is huge demand for physical metal. And why is that? Because there's a lot of distrust of the financial system as it stands today. And so people are willing to pay an overpay for physical metal just to get money out of the financial system. It's been a very interesting phenomenon at Costco.

For sure. We had a question I know absolutely nothing about, and I don't know what you'll say. Tim notes that there is a rather large gold deposit discovered in China's Hunan province that was estimated to contain a thousand metric tons of gold. Is this a valid discovery? And if so, will it affect the market? Can you tell us anything about this? Well, consider the source. It's China.

um is it a thousand metric tons i don't know how they come up with a number like that who knows what the grade is how how expensive it would be to mine um uh when it will actually produce cash flow which is probably not for many many years um so i'm you know we spend a lot of our time on a daily basis looking at

individual gold mining stocks. And one of the first questions we always ask is if it's a new deposit, what's it going to cost to bring it into production? How much capital is going to be needed? What kind of permitting will be required? There are dozens and dozens of questions that have to be answered. So I would never take a story like you just cited at face value.

All right. Fair enough. I had not heard about it. And good advice. We have a question from Sheldon who wants to know, how do you know when to sell or lighten up on gold? We talked about whether one should buy more at this point. How do you know when to sell?

You know, one thing I learned at business school, it was great advice from my finance professor. He said, the only thing you have to know in investing is when to sell. You think about it, you know, it's easy to buy. You can always buy things cheaper. If you're a momentum player, you can buy, you can chase things and be successful at that. But you have to know when to sell.

I would say an answer to that, it depends on your timeframe. If you want diversification from financial assets, you buy gold and you are even if you buy it at Costco, you have taken some of your capital and taken it away from the financial system. And that might be your only objective.

On the other hand, if you're a trader, I am not a trader. I'm a long-term investor. I wouldn't know how to answer it. I would say this, that if you look at how gold has done since 2000, which was the dawn of radical monetary policy, starting with Greenspan and taking interest rates down after the dot-com crash, it has outperformed both the S&P and bonds.

So I don't have the exact number at the top of my head, but it's roughly 9% compounded over 25 years. Better than stocks, better than bonds. So, you know, the answer to your question is it depends on your time frame. You know, who has a 25 year time frame? Well, I guess I did when I started the Gold Fund back in 1998.

But for most people, that's not a very good answer. I guess I would go to a technical chart kind of analysis to answer the question if you're short term and that I just can't help on that. All right. Ben is great at technical analysis. If you have time while we're talking, Ben, take a look at us now.

what you see there. In the meantime, I'm going to go on to a question from Gary. If the market for gold is so good, he asks, why are bankers not funding more gold mines?

Well, they are. They are funding them. But gold is hard to find. There's so many things that go into the analysis of a gold mine, one of which, the first of which, I would say, is political risk. Many gold deposits are found in countries that don't exactly have a rule of law. Some of the best geology is in West Africa, but...

you know last i heard they were trying to put uh some barrack executives in jail in maui barrack is a large gold producer with a large gold mine in west africa uh we in addition to into political risk we look at the capital cost of bringing a mine into production uh to the question on why our bank why are why aren't bankers funding new projects i think

They are, but they're looking at safer jurisdictions where there's a good chance that you'll get your money back. Building a new gold is scarce. I mean, there's a reason that you have that ratio of 400 in financial assets to one for gold. The reason it's going up is because people are losing trust in financial assets and they're diverting some of that, a small amount so far, into physical metal.

But yes, there's money to be made by bankers in financing new gold projects. There's money to be made by investing in the equities of new gold projects. But it's a very tricky, tricky business and something we do on a daily basis. But I just wouldn't recommend that to do it on your own.

All right. And then one more question. Then I'm afraid we're at time. Stuart wants to know, is it worth owning both gold shares and or rather both physical gold and gold mining stocks? Or is that all too much gold? No, I would say that two ways to look at it. One is that gold is the safe asset. You know, if it's if it's bought correctly and bought, you know, intelligently, maybe on a pullback.

It is a safe asset. Gold mining stocks are risky because they're miners. But what they offer is torque octane to a move in the gold price. So you would expect doesn't always work out, but one would expect a gold mining stock to outperform the gold price in a rising market, which it has done this year, and to underperform the gold price in a declining market, which it did from 2011 to roughly 2020.

All right. We did have a question. I said it was the last question, but we've got one more that came in about royalty companies, and we haven't talked about both royalty companies yet. Any thoughts there? Yes. Royalty companies, it's a great business model. Relatively few employees. They basically invest in streams that are produced by an existing mine, whether it could be a royalty interest, lots of different variations.

uh they can be pure streams as a participation in cash flow of a given mine um the advantage that they have over a pure gold mining stock is that they are first of all they they they're more diversified they can own many more assets in different jurisdictions um and uh secondly

They don't actually undertake the risk of building and operating a mine. They simply carve out an interest when that mine is in production.

And if you look at the employee count at a royalty company, it's very small compared to a mining company, which has to have lots of people in different disciplines. So think of royalty companies as merchant banking stocks that have...

a small interest in lots of different mines. And many people, and I don't disagree, it's a better business model than actually operating a mine. The negative is that royalty companies are more expensive in terms of valuation metrics. And so they're always pricier. And so that's the other side of the equation. - Well, I wanna thank Sam for bringing that up because that was an interesting discussion.

So, unfortunately, we are at the end of the call, unless, Ben, you want to weigh in on the technicals of gold. I don't know if you had an opportunity to take a look. I did. I mean, I looked. You know, right now, I agree, like, the momentum that just shot it up to its most recent highs, it's a little scary to chase. Andrew Addison over at the...

sorry, I'm forgetting the name of this company now. The Investor View. Yeah, Institutional View. Institutional View. Had a note out today and he's actually, he thinks that the next short-term move will take it up to about 3,800 to 4,000.

And he's looking at monthly charts here, but he also expects he thinks that it's possible that you get up to before this entire move is done. He says it's not the question that could get to eighty six hundred nine thousand. He's not saying any time soon, but that if you're just looking at the long term charts, that's kind of the projection over the next number of years.

So, you know, there's a lot more upside based on the charts right now. I mean, charts always change. And so you know that people like Addison will come and that view will change if the charts change. But when looking at the chart now, that's what he's seeing. He's seeing a lot more upside. Well, that means we're going to have to have John back to talk about gold again. So, John, thank you so much for joining us today. Yeah, thank you. Really interesting.

And Ben, thank you as always for joining us and sharing your insights. And to our listeners, big thanks for tuning in and thanks for your wonderful questions. Next week on Barron's Live, we'll be talking about markets again and corporate earnings in the economy.

Our guest is David Kelly, Chief Global Strategist at J.P. Morgan Asset Management. He's a very thoughtful economic analyst whose work we follow at Barron's. So please join us for a conversation about economic trends now shaping the market and our world. Till then, everyone, stay well and have an excellent week.

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