Tim Price Interview Transcript
Speaker key:
BS Boaz Shoshan
TP Tim Price
BS Hello, and welcome to our Silver Symposium. In today’s video, you’ll be seeing an interview I conducted with Tim Price. Tim is a good friend and colleague here at Southbank Investment Research. He’s an award-winning fund manager, who loves value investing, but even more so than that, monetary metals in general, gold and silver. Today’s was quite a broad-ranging discussion. We didn’t focus entirely on silver, but the broader macro environment and what that means for precious metals. I hope you enjoy.
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Tim, you are a big Austrian economics sort of guru, as it were, and you’ve been a strong supporter of silver over the years, especially following the financial crisis. If memory serves, I remember you telling me about a story of you with a carry case full of kilo bars of silver once upon a time and dragging it through the streets of London. Can you tell us what got you into silver in the first place, and how you view silver specifically relative to gold?
TP Okay, so let’s go back a few stages to the ground zero of the crisis. So, my thesis has been for some time, and it predates the global financial crisis, that the problem with the financial world is that there’s too much debt clogging up the system.
So, there’s too much government debt, there’s too much corporate debt, and there’s too much household debt. But let’s look specifically just at the government debt for the time being.
This is obviously a problem before the global financial crisis, and it was a problem before the, what I would call, PCR test pandemic that’s driving the world into madness now, because government… Debt issuance is going off the scale, and money printing is going off the scale.
But if you accept the argument, the fundamental argument that there’s simply too much debt in the system, then there are only three ways of resolving that predicament. One way is that you engineer enough economic growth to keep the debt serviced. Good luck with that given that we’ve just destroyed the global economy. When I say we, I mean, of course, the governments, most of the governments of the West, and the World Economic Forum, and the WHO, and China.
So, the economic growth argument is going to be a difficult one to buy into. It could happen, but I don’t think it will. I think 2020 will end up being one of the worst economic years in history. Probably the single worst year for GDP in history.
What’s in box number two? The second box is called default. Or if you want to be more polite about it, it’s called reset. It’s a debt jubilee. It’s a form of debt restructuring. But let’s call it what it is, which is default. We also live in a credit-based monetary system. So, if you have big governments arbitrarily defaulting on their debts, that’s Armageddon. So, let’s pass over box number two.
So, what’s in box number three? And there are only three choices, only three boxes. What’s in box number three is what has always been the answer or the supposed solution resorted to by every heavily indebted government throughout all history, which is inflation. So, it’s effectively a policy of state-sanctioned inflationism. Money printing, QE, for want of a better word.
Now, we’ve clearly had this for some time already. The global financial crisis of 2007, 2008 accelerated the process. And coronavirus, or the PCR test pandemic as I prefer to call it, have just driven it into overdrive.
Now, if you accept that, ultimately, inflation is a thing to worry about because it’s a problem driven by debt, then it makes sense to own things that are going to help hedge against that inflation as and when it arises. One of the things I think that all sensible investors should consider is basically what we would call real assets, and that clearly embraces a multitude of things. But prime among that asset type for us for the last 15 years or more has been… When I say real assets, I mean specifically the monetary metals, that is to say gold and silver.
The reason we specifically focus on those two is because they have always been, up until 1970 or 1971, up until the comparatively recent past, gold and silver, between them, have always been money. They’ve always been what gave money its backing. And obviously, that’s a relationship that’s kind of broken down because Nixon took the dollar off gold in 71. The shift of global finance has been sort of unmoored and sort of tossing about in the harbour ever since.
Gold is probably something that everybody instinctively has some familiarity with. Silver, maybe not so much. And the situation is more complex for silver to the extent that in addition to being a monetary asset in the same way that gold has been, silver is also an industrial metal. So, the outlook for silver is more confused by the fact that it’s not just a store of value, but it’s also an industrial commodity.
BS Yes. On that note with silver and its difference with gold, for me, I’ve been thinking about it for a while, and the gold status, it’s not been totally demonetised because the central banks still own the stuff. They still increase their holdings of it. They still trade it somewhat. Silver has been completely cut off from the monetary realm, as it were. It’s in 1960s that all these silver coins in the US, they were getting demonetised. So, it preceded gold somewhat with Nixon taking the world off the dollar-gold standard.
After the financial crisis, it was a debt problem, as you described, and you did see the attempt or some kind of an attempt from government to reduce debt for a while, to reduce public expenditure, to reduce…
TP It was completely partial, though. It was almost insignificant. So, I would call it fauxsterity rather than genuine austerity.
BS Yes. And you can go through different countries and different things that they tried. But there was at least…
TP There was a token effort to do it.
BS Right. In terms of the size of its increase at least, it wasn’t increasing during those years to the levels that we are seeing today.
TP No. As you know, we’ve now, just the UK alone, thanks for Boris Johnson’s fatuous flailing around madly in the dark, we now have a national debt that’s over £2 trillion. It’ll never get paid back, except in devalued monetary terms.
BS Right. We’re being much more aggressive now. But what I was thinking of was that in those years after the financial crisis, you did see some kind of paring back when it came to government expenditure relative to the way it was before, and different from the way it was now. And over those periods, we didn’t see very high inflation, and we still don’t… In terms of the amount of inflation that we’re experiencing, it’s still not extreme, or it’s yet to become extreme.
But silver, I think, is more sensitive to inflation than gold is. Gold seems to be more sensitive to interest rates than silver is. So, it feels to me that now we’ve gotten to this WuFlu crisis, and we’ve gotten to the lockdowns, and we’ve got to governments doling out money left and right, it seems to me that central banks have kind of passed the baton to governments when it comes to trying to create economic growth.
They’ve said, we’ve got interest rates to zero. We’ve got a load of quantitative easing. We’ll keep that going. But it’s up to you guys now to splurge a load of money in order to get the economy going.
So, it feels like we’ve moved from this interest rate suppression regime, where governments weren’t going crazy with their spending, and they were still spending plenty, but now they’re being much more aggressive, and central banks have sort of passed this on. So, it feels to me the period when gold did really well was when it was just interest rates getting suppressed, and silver was doing really badly. And so, we’ve got this crazy gold-silver ratio.
But now that it’s governments that are in control, and they’re wanting economic growth, economic activity at any cost, it feels to me that because they’re trying to create demand in the real economy because they don’t care about austerity or anything like that anymore, silver is sort of the key. Silver will be a better metal for this environment because it’s linked to industrial demand, and it’s more sensitive to inflation in that way. What do you make of that?
TP I wouldn’t disagree with that thesis. The main thing that silver has going for it for the private investor is that it’s so much cheaper than gold in nominal terms. If you’ve got, say, £1,000 or $1,000 or whatever it is, you can buy a lot more mass of silver than you can gold for the same outlay. The best way of describing silver is poor man’s gold. It’s as simple as that.
But as you say, because it also has industrial uses, I mean, try making a smartphone without silver. It’s probably impossible. And the same goes with copper. So, because it has that, it’s more geared to the cyclicality of an industrial recovery, of a global economic recovery, as and when that comes. And hopefully, with the news of these vaccines then, we’re somewhat closer towards that process. That seems to be the message that the commodity markets are telling us.
BS Yes. Commodities in general have been beaten very hard. Do you think we’re around the bend when it comes to that? Do you think we’re going to see a return to booming commodities like we’ve seen just straight out of the financial crisis, for example?
TP That’s certainly the bet we’re taking within my financial business. So, most of the allocations we’ve got, most of the real assets investments we have are gold related, but we have some in silver as well. We own Fresnillo, for example, which is the world’s largest silver miner.
And I think, in the fullness of time, we’ll probably also start looking at commodities writ large, which is something also I’ll have to do for subscribers to The Price Report newsletter. But as things stand, it just seems to be maybe a tad premature to be betting on economic recovery, given that we’re all still trapped under house arrest.
BS It feels to me that silver, it’s kind of an enigma, right? As you described, poor man’s gold. It feels if you own physical silver, it never feels like you own quite enough of it. Because even if you have a kilo of silver in your hand, it doesn’t feel anything like owning a kilo of gold, right?
TP I mean, gold has this special allure, this almost sort of mystical quality to it, which silver doesn’t quite have. Of course, silver coins used to circulate, so it’s more likely that silver… This is, in a sense, the perfect storm for silver because it has antibacterial properties. So, in the middle of an allegedly health pandemic, you think that silver coin is the first thing they’d want to introduce back into circulation.
BS Yes. What’s your take on all of the biotech applications for silver in general, with the antibacterial properties?
TP It’s not something I know much about, to be honest.
BS It does feel that the more humanity progresses, the more that we find these applications for silver. Silver is the standard for all electrical conductivity. All other metals…
TP Is it the most conductive metal basically that exists, more or less?
BS Yes. It feels as though with the price being as low as it is, maybe we’re going to find this is going to lead itself to more applications for it. When you’re factoring in the industrial metal…
TP I’m not saying there isn’t utility for them, there isn’t value within the context of a diversified portfolio. But what I am saying is no one has ever used platinum or palladium as a monetary asset in the past. So, I’m just saying there are these different characteristics to consider, and clearly they’re also going to be vulnerable to trends in auto, car manufacturing, etc.
So, there are a lot of moving parts attached to each of these metals. Like I say, gold, in a sense, is the purest because of its history and the supply-demand outlook and all that kind of stuff.
I appreciate it’s silver we’re talking about, but one of the reasons why gold works, if you like, as a monetary asset is because the rate at which it’s being extracted from the ground stays fairly constant over time. So, even though gold is close to or at record highs now, its supply in terms of new gold is not going to grow at more than between 1% and 2% this year.
I don’t know what the equivalent metric is for silver. I suspect it’s more volatile. But either way, that’s exactly what you want from a money. You want something that’s going to be limited in terms of supply, as opposed to something that can be completely artificially created out of thin air like a pound or a dollar or a euro.
BS What do you make of the World Economic Forum and their grand reset announcement?
TP I don’t have any strong views, but I think they’re creepy charlatans who should all be in jail.
BS It does feel rather strange because it’s very overtly authoritarian. It did seem kind of strange. You do see a lot of politicos now supporting it. A lot of people saying this is how we’re going to get loads of green investment. We’re going to solve social justice. People talking about universal basic income, things like that.
TP I think, just on the topic of UBI alone, I remember it’s probably going well back into last year now, but I remember being in an investment conference, and the panellists at this conference pretty much agreed across the board that something like universal basic income and modern monetary theory, and they are kind of linked in a way, was going to happen at some point. I’d say they’re already here. They’ve already arrived. What is the furlough if not universal basic income?
BS Yes. And in the States, with the bonus cheques almost, as it were, the stimulus cheques, they effectively are almost a universal basic income.
TP I’d say they’ve been sort of inflicted on people by stealth. I mean, I don’t want to sound like a member of the tinfoil hat brigade. The question I’ve been asking, probably like everybody else listening to this call, been asking for the last nearly full calendar year is, is this a cock-up or a conspiracy? And now I’m convinced it’s oodles of both.
BS When we’re looking forward on it, to me, the silver argument becomes even more pronounced in that after this grand reset that’s supposedly about saving the environment, saving the planet, there’s going to be loads of silver consumption just from all the renewal energy and all the silver panels and things like that going forward. It feels to me that silver…
TP Is probably not the worst bet to make.
BS Exactly. Over the past, we kind of had a pretty troubled decade for precious metals. Miners in general, it’s been very brutal, some of those middling years. What’s your feel on how things have changed?
Because silver is a funny one when it comes to the miners because three quarters of silver mines, they’re not there to mine silver. They’re there to mine other things. So, when the price of silver goes up, they don’t increase production of it. They don’t even try to increase production. They’re not trying. And so, more silver won’t get added to the market and depress the price much.
And of course, it’s a very small sector, silver miners, especially if you’re finding companies that mining silver is their main thing. What’s your take on this? You do allocate to miners and to the streaming companies.
TP Well, you’ve just beaten me to the punch because I was just going to say one of the things that’s worth highlighting as an investment opportunity, subject to getting the right kind of valuations, is exactly the royalty and the streaming sector.
So, the way we approach it with our clients is as follows. Let’s assume someone comes to us with a blank slate. They’ve just got, say, cash and it’s not invested in anything. We would say to them the following. Well, first, we’d ask them a question. I appreciate this is silver. Let’s just start at gold because they’re clearly related metals. Which country in the world is the largest sovereign miner of gold?
BS China.
TP Which country in the world doesn’t allow an ounce of that for export?
BS China.
TP And which country in the world has advised all its citizens to own gold?
BS China again.
TP So, you can see a few themes developing here. So, one of the things that we say, that’s as much a political issue as anything, which is, could we conceivably see a monetary system in the future where, say, a gold-backed renminbi might be a potential competitor to the US dollar? Answer is on the postcard.
I know I’m not bright enough to work that one out, but I think most people in the precious metals world would probably concede that the chances are China has been gobbling up gold like there’s no tomorrow. That activity in markets is not well represented because it’s not transparent. It’s completely opaque.
Anyhow, we’ll move on beyond that. So, when we talk with clients, these are the reasons why we want to have precious metals exposure, the starting point has to be the physical asset. It has to be, basically, the equivalent of, say, gold or silver bars you can keep in your hands, and if you drop them on your foot, they hurt. So, that has to be the first place to start in the construction of the real assets part of a diversified portfolio.
So, I’m not just a gold bug and a silver bug. I’m also a value equity bug and a systematic trend-following bug. So, we’re doing a variety of things. Just for the real assets component, this is the pecking order.
It has to start with the physical asset itself, and clearly that can be done in multiple ways. So, you don’t have to have it in a safe deposit box or in a safe in your own home. You can store it overseas. With our own company, for example, every month, we put some of our revenues into gold and silver. We have it stored in Canada, Switzerland, and Singapore, for example. So, we’re practicing what we preach.
The next stage is probably the royalty and streaming companies. So, these are companies like Franco-Nevada and Wheaton Precious Metals, what used to be called Silver Wheaton. And as you say, the silver market is interesting because a lot of miners aren’t actually going out in search of silver. They’re going out in search of copper, say, or something else.
So, let’s take a hypothetical. Say there’s a copper mine in Chile, run by someone like Antofagasta or someone like that. Silver Wheaton, or Wheaton Precious Metals as they’re now known, or Franco-Nevada, any of the other players that operate in this space will basically pop over to see Antofagasta, and they’ll say, okay, guys, you’re mining copper, but a by-product of that copper is some silver that’s going to come out of that mine as well.
You don’t want it, but we do. We will agree to basically pay you a stream of payments in return for silver at a slightly below market cost. And so, the original mining company is going to say, great, we can then develop the mine with your money rather than ours.
This is one of the few things in finance that’s like a win-win for everybody involved. The original miner gets to develop their resource, and the streaming company gets a stream of basically slightly discounted silver, for example, in this case.
The crucial thing about this from an equity perspective, from an investor’s perspective, is these royalty and streaming companies do not explore themselves. They don’t come bundled up with exploration and production risk. They’re simply interested in finding people who might have some silver, and then they’ll contract with them. So, it’s almost like a mining company without the mine.
So, I would argue that those kinds of companies, if they can be bought at sufficiently cheap levels, are a great way of investing in gold and silver. Then you’ve got large cap miners of various types, and then you’ve got small cap miners of various types, including those that are specialists in, say, gold and silver exclusively, like Fresnillo, for example, in Mexico.
And that’s your ladder. That’s the pecking order. So, you start with a physical asset. Then you start with the companies. And there are various ways of skinning the cat when it comes to the equity exposure.
The other thing I’d add is that whether you’re looking at a silver miner or a gold miner or whatever, don’t overpay if you consciously can. So, we treat our mining equity interest in our portfolios and in our fund in exactly the same way we treat every other thing that we buy. In other words, we want these companies to have little or no debt because debt, I think, is going to be the biggest killer for companies as the world hopefully emerges from this disastrous mess.
BS Just to play devil’s advocate there. I do understand what you mean when you speak of debt being this drag on economic activity. But if we do get inflation, it’s not going to be good for the silver miners or for the precious metal miners in general that do have debt, in that they…
TP For sure. But this is exactly why you don’t want to own something that’s heavily indebted. You want to own something that’s got basically a bulletproof balance sheet.
And that’s one reason why, for example, in our geographic exposure, and this is reflected in The Price Report newsletter portfolio to an extent, a lot of investors are playing, investing out of the rear-view mirror. So, they’re saying, what has worked? Let’s go with that.
One market that has conspicuously not worked is Japan, because Japan has given rise to so many false dawns that people are just too scarred by the very thought of ever investing there. They’re physically revulsed at the idea, so they’ll do something else.
But in its favour, Japan, for example, has been through a decade-long, multi-decade-long deflationary depression. It has been through what the rest of the world is now about to experience, arguably. And on that basis, the reason why I like… I appreciate we’re getting a bit off the beaten track now. The reason why Japan has merit, I think, is because Japanese companies, as a result of their long period in the wilderness with zero interest rates and all the rest, Japanese companies now have the healthiest balance sheets in the world.
Compare and contrast Japan with America. American companies have never had more leverage than they’re going into this crisis with. Which market would I rather own? Well, this isn’t rocket surgery.
BS Yes. It is just a strange dynamic with the manner in which debt affects companies, economies, governments, depending on what we get out of it, right?
So, if we get inflation as a result of over-indebtedness when there’s an attempt to purge this through inflation, as you previously described, precious metals miners, for example, will do very well out of that because they’re mining a commodity, or they’re mining money, ultimately, that’s impervious to inflation, which of course becomes hugely valuable in a highly inflationary environment.
But at the same time, if you do have any debt, if you’re existing in a high-inflation environment, then the state is doing you a service to some degree. All of the companies which have become grossly indebted, provided they managed to shrug off any deflation effect of it, there’s almost a state subsidy that goes towards melting their debt away in an inflationary environment. And I wonder how that would affect the precious metals mining space in general, because there are plenty of indebted companies in that sector.
TP We just don’t want to own any of them.
BS Yes. No, I mean, it’s purely a thought experiment, really.
TP To draw some more dots out, to tease some more dots out from where you’re going. At the end of the day, you go by what’s happened historically. You go by what’s happened in the past. And I think I’m correct in saying that when you had, for example, the infamous Weimar hyperinflation, and that might be perhaps a more telling comparison than you might previously have thought, to the extent that it is not beyond the wit of man that we end up seeking reparations for this mess.
Reparations from whom? Well, government and China. So, basically, the bill may never get paid, but there is a bill outstanding, and that bill has not just thousands or millions or billions. It has trillions attached to it. So, this thing is easily capable of bankrupting even Bill Gates himself, and I hope that happens because I just think he’s a healthcare dilettante. He should’ve stuck to software. But no, that’s by the by.
If you accept that, then the way this played out in the Weimar period was we had a period of pronounced inflation on the back of basically unrealistic reparations demands made by the Allies, particularly the French. I have mixed feelings about Mr Keynes, but one thing I would say he was absolutely right on was that the reparations demands, the Treaty of Versailles were the worst mistake we ever made, and he was proven, I think, right in that judgment because they triggered the Weimar period, which then brought in Hitler. So, go figure.
And what I’m saying is the period of hyperinflation doesn’t last forever. So, if you happen to have debt obligations, for as long as the high inflation lasts, then you’re doing fine, because as you say, basically, your debt is being melted away in real terms. But on the basis that it doesn’t last forever, you’re going to need to be the mother of all market timers to ensure that when the system reverts to a harder currency environment, that you then get rid of all that debt pronto. Otherwise, it’s going to bankrupt you. It’s going to be like…
There’s a great story. I can never remember who tells it, but I cite it in my book Investing Through the Looking Glass. Ruskin. I think it was Ruskin. Ruskin had this story that there’s a merchant going overseas, and he carries around him… Well, he’s got a load of gold with him on the journey. He’d tootle out of port. Everything is fine. And then suddenly, in the middle of nowhere, a storm comes up, and the waves start to get increasingly volatile.
In the end, the captain goes, right, abandon ship. He rushes off, gets his gold, ties it around his neck, and then jumps overboard. And Ruskin says, as he sank under the waves, did he have his gold, or did his gold have him? It’s a fabulous story about the way that gold can just turn everyone mad because it arouses such strong feelings for such an inert pet rock.
BS Imagine if he’d been storing his wealth in silver instead. Imagine how much of it he would’ve tied around his waist.
TP Well, indeed. This is a very serious point to the extent that in the Weimar thing, when people were trying to get… In all of German society, in the decade, in the period after Weimar and then during the war, if you had gold or silver, obviously, gold particularly of value because it’s so dense. So, for not much weight, you’ve got a lot of purchasing power.
When Money Dies – it’s one of those gloomier hyperinflation porn reads, but they’re all worth reading. The guy says at the end, an ounce of gold could be the difference between survival and not surviving.
We’re getting into bleak territory, but who knows. These metals will pay off in the event that they’re owned in the right form and in the right jurisdictions, to the extent that… Financial repression is coming. Financial repression is undoubtedly coming. This is a drum that the likes of Russell Napier have been banging for some time, and it’s been out in the wilderness for a while, but maybe his time is now come due.
BS I was asked recently by somebody whether or not it was the right time to buy gold. And then before I had a chance to answer, the gentleman answered his own question and said, well, I mean, I guess if everyone is talking about it now, now is not the right time to own any gold because the price is high. So, just thinking of ownership of gold as a speculation. And so, I didn’t answer his question. He answered it himself. There’s no point asking me if you’ve already come to that conclusion.
I was thinking just in terms of what the answer to that question is, and what I actually believe. Because if you do want to speculate on precious metals in general, and you want to make a quick buck, or you want to make a big buck over a long period of time, by all means. But just when it comes to the precious metals, the ownership, and it applies to silver as well, I think the answer that I have come up with for a little while, if you don’t own any gold, or you don’t own any silver, it’s always time to buy some because…
TP Agreed.
BS If you bought a house, and you’re living in it, you wouldn’t say I’m so glad I saved all my money by not buying any fire insurance for the last ten years, right? That’s just not the approach. You don’t feel, yes, I made a great trade here. I’ve not lost that money on fire insurance.
You own this stuff in the event that things go wrong. You can point to all manner of things, as we’ve described it in this chat about how things can go wrong, and things are going wrong. The reason precious metals are going up… Precious metals going up is not actually something you want to happen.
TP Yes, this is true. You’re right. There’s a perversity to this, which is although gold features, gold and silver feature heavily in our client portfolios, my portfolio, etc, I’d be much happier if I wasn’t actually making money on those positions. I’d be much happier if they were basically just flatlining. I’d be perfectly happy in that environment because an environment which gold and silver are going through the roof is not a happy environment. Or to put it another way, gold is for optimists. We’re getting into quite dark territory.
So, yes, my response in relation to the timing thing would be it implies there’s a target dollar or pound price for this stuff, and that’s not the case. So, the way we address this when we talk about it with clients is as follows. When they say, at what price are you going to take profits in gold? It’s the wrong question. They’re looking through the wrong end of a telescope.
The question is not what is gold worth in dollars, for example, but what’s a dollar worth? So, what I’m saying is we would only consider “taking profits” in gold and silver when… It’ll be a contextual thing. It’ll be when the reason for buying it in the first place has been resolved.
And to go back to what we were discussing half an hour ago, the reason we own this stuff in the first place is because we want to be hedged, insured against an inflationary mess, which I think is coming rapidly towards us. Albeit, we might have a deflationary crisis before we get the inflationary mess. Maybe we get both. Or maybe we get stagflation. There are so many moving parts. We’re in the hands of governments now, and those governments, most of them are mad. So, it’s not easy to say.
So, in relation to answering the question about, say, timing or targets, I’d say, you can never do too badly if you pound cost average in these things. So, clearly, gold and silver are different from mining companies to the extent that in the greater scheme of things, you probably want to own a process rather than a product, and we prefer to own both. But you’d probably do better if you own the right types of companies because then you benefit from ingenuity as well as the rise in the underlying price of the asset.
I’d feel fairly grumpy about a win simply from buying metal at X and selling it at X plus whatever per cent. But as an entrepreneur, I feel very happy about backing other entrepreneurs, particularly if their shares could be bought at a quite cheap valuation.
So, to go back to the question about timing. Pound cost average. We don’t know what the end game is here. I mean, an extremist, the gold price could trade at $10,000 an ounce, and silver might trade at, I don’t know, $500 an ounce. But imagine what that world is going to look like, and for most people, that’s going to be a disaster.
So, I don’t know what the price target is, but then I attach very little validity to the value of the current system in which they’re being expressed. So, a very wise chap once said to me, look, trying to measure gold using the dollar is like trying to measure a suit using a piece of elastic. The only response, the only rational response is to get rid of the elastic until the return of an honest monetary system makes a calculation of relative asset prices possible again.
Well, good luck waiting for the one. It may never come. But one senses that some form of monetary reset is already in process. Time will tell. But it will also be a function of whether entrepreneurs are allowed to win this battle, as they ought, or whether government functionaries and technocrats win it, which would be a disaster because these are the very same people who’ve caused the crisis in the first place.
BS It does feel like if there was a time to own some insurance, even if it’s a small bit of insurance, now would probably be a pretty good time.
TP I think this is an insurance-rich environment – ie, the need for it has never been greater. It reminds me of an anecdote, I think, from the first Gulf War, and I think it was Stormin’ Norman who’s being interviewed on one of the cable networks. And they said, General or Major, whatever he was, you’ve basically been carpet bombing Iraq for the last however many weeks. Is there not a danger you’re going to run out of targets? And his response was, no, sir, this is a very target-rich environment.
Well, I think this is an environment where you really want to have as much insurance as you possibly can. So, again, this is the route we take at least, which is, how do we insure our portfolios? Well, we want to own stocks, but we can be very selective. We’re a very small firm, so we can be very selective. We will own basically the cheapest, highest quality things from around the world. So, there’s our value stock thesis.
We want to be hedged. We want to have insurance, so we use trend-following funds for that, things that are completely uncorrelated to the stock and bond markets, and they trade everything both to the long side and to the short. And then we’ll have a bucketload of crisis insurance, please. And we’ll have that in the form of real assets. And prime among those, again, with the likes of gold and our friend silver.
BS I think that’s a very apt way to end this call. Tim, thank you very much for joining me. It is always good to discuss precious metals and all things macro with you. Of course, we’ve not just dwelled on silver, but I think a lot of this topic flows from one thing to another. If you end up with silver, you’ll end up talking about gold, and then…
TP We haven’t even touched the surface with bitcoin. So, that’s a whole other topic, but I think you’re better qualified to talk about it than me.
BS I don’t know about that, but maybe for another time. Tim, thank you so much for joining me.
TP My pleasure. Thanks for the invitation.
BS There you have it, folks. That was Tim Price over at The Price Report. A very broad-ranging discussion. We didn’t laser focus in as much as we have on some of our other interviews, but I hope you found it valuable, nonetheless. It is always interesting to hear Tim’s thoughts on the broader macroeconomic environment and the kind of conditions that’s going to create in the future when it comes to precious metals prices. That’s all for the moment. I hope you enjoyed it.