The Economy's Biggest Warning Signs That Everyone's Missing — Adrian Day

[00:00:00] Speaker 1: I'm pleased to welcome back to the show Adrian Day, President of Adrian Day Asset Management and Portfolio Manager at EuroPacific Gold Fund. Adrian, it's good to have you back. The gold market has lost trillions in dollars of market cap value over the last couple of weeks, probably the last couple of days alone. So we're going to be getting your sentiment gauge on precious metals, as well as your reading on the latest economic data. Welcome [00:00:25] Adrian Day: back to the show, Adrian. Good to see you. Well, thanks for having me, David. Good to be back. [00:00:28] Speaker 1: The CPI, let's start with that. So 4.2% headline, the highest since April 2023, most of that driven by gasoline. Energy up 23% year over year. Core is up only 2.9% year over year, which is still higher than the Fed's expectation or target rather, but lower than headline CPI. Core is up 0.2% on the month. Meanwhile, initial jobless claims, 225,000. That was June 4th, up 13,000, the highest since early February. At the same time, the latest non-farm payrolls numbers beat expectations by quite a wide margin. That was last Friday. So we're having a confluence of economic forces at play. One, inflation is higher. Two, non-farm payrolls, jobs have beaten expectations, more jobs added than the consensus expectation. But at the same time, jobless claims, which is the, I guess, the inverse of new jobs added, that's also up. What's going on, you think? [00:01:33] Adrian Day: Well, you're right. And the two first things, the inflation and the jobs, which were last week, of course, is what led to the sudden reversal, the sudden sharp, I shouldn't say reversal, the sudden sharp decline in gold because of concerns, obviously, but central banks around the world, particularly including the Fed, would not be easing, but on the contrary, might be. It added to the sentiment that they may be raising. Excuse me, David. Just to look at the economic reports that you mentioned, again, I'm going to be a little bit glass half empty, which seems to be my role in life recently. You look at the jobless claims. There was, not jobless claims, sorry, the new jobs created. Absolutely no question, but the report came in above expectations. And that's the number one thing that the market seems to really care about. Was it above or below expectations, right? So it's not the number itself. It's not the details of the report. It's just, did it beat the expectations? And there's no question this beats expectations. But, you know, if you look more carefully at it, first of all, virtually all of the jobs created were either local government jobs or healthcare, which is in the US, as you know, is a sort of pseudo-government enterprise in the US. So healthcare and local government jobs accounted for virtually all of the new jobs created. That's the first thing I'll mention. Healthcare, yes, they're real jobs. Local government jobs, I don't think you can have a healthy jobs market if you're depending on government jobs, if that's where your growth is coming from. But I mentioned a couple of other things that were really, or three other things that are really important about this report. Number one, you already mentioned that we just, subsequent to that report, we had the jobless claims, which were up. Okay. And the number of people on long-term unemployment has not gone down at all. So when people seem to, when people are unemployed for more than a couple of weeks, they seem to stay unemployed for the duration of the unemployment benefits. Two other things were, and this is all from the Bureau of Labor, Bureau of Labor Statistics own report. It's not, you know, me, me making stuff up. It's from, it's from their own report. Number one, 4.8 million people, according to the Bureau of Labor, 4.8 million people looking for full-time job, but can't find it and are working part-time and are counted as employed. And now maybe some of those part-time jobs are good, but maybe some of them are considerably lower or less than the person is actually looking for. If you're delivering Uber Eats, you're counted as employed, but it's not really what you as a engineer want. So 4.8 million. And then the number of people that want a job, say they are looking for a job, but have not reported to the, um, uh, uh, the, um, uh, labor, whatever you call it, you know, the jobs, um, uh, uh, labor participation rate in the last four weeks. Yeah. They no longer count as unemployed, but they are unemployed and they are looking for a job. That's 6.2 million people. Add those two together. You've got 11 million people, um, looking for a job that they can't find or underemployed. So I don't think it's as healthy as, uh, you know, the mere beat would, would, would [00:05:15] Speaker 1: suggest. Let's assume that the Strait of Hormuz remains closed for the foreseeable future and deal is not reached anytime soon with WTI above $80. It's come down significantly from a hundred dollars that now at 83, but with oil still up far beyond, uh, it's pre Iran war levels. Do you think the American economy can just enter an adjustment phase where people can get used to the $83 a barrel or whatever the case may be above 80 and just adjust their spending and lifestyle that way? In other words, it wouldn't create the economy and put us into recession. Well, other things being equal or in [00:05:48] Adrian Day: isolation, I would say yes. I mean, at eight, just over $80, the price of oil is meaningfully below where it has been in the past. And particularly on an inflation adjusted basis, forget about COVID when it went to one 48, but 2011, it was, you know, 15 years ago, it was trading over 140, 140 a barrel. So we are meaningfully below breeder speaks and we are today's price where, or I should say we're, we're, we're close to the lowest 20 percentile of, uh, prices, inflation adjusted prices, uh, for the last 20 years. So it's the price of oil today is not extraordinarily high. I would say that, but of course we've got used to low oil prices. So any increase means a jolt. It means a jolt and an adjustment to people's spending. So I don't think the oil price in itself is a particular, certainly not at today's price, is a particularly worrisome thing. I think perhaps a more worrisome thing is that for half of the population, the lower half in terms of income and assets, they don't have a lot of wiggle room. And so if the price of gas to get to work goes up, it means it means something else has to go. Unlike for you and me, if the price of gas goes up, we say, look at the price of gas, isn't it awful? But we move on with their lives for half the population. It means they've got to do something else, adjust somewhere else. Before we continue with the video, [00:07:28] Speaker 1: let's talk about one of the fundamental problems of owning gold. There's a lot of reasons to hold gold. It's often viewed as a store of value, for example, but in most cases, gold doesn't generate income. Today's sponsor, Monetary Metals fixes that problem. Monetary Metals introduces a model where gold can produce a yield paid in physical gold. Through their leasing platform, investors can earn up to around 4% annually with yields paid monthly in ounces. Your returns are measured in gold itself, not in fiat currency terms. In an environment where most assets depend on price appreciation alone to justify holding it, this model allows gold to serve as both a store of value and as a source of income. The metal remains your asset and can be redeemed at any time. Thousands of investors are already earning a monthly yield in gold through Monetary Metals, so visit monetary-metals.com/lin today. Link in the description down below or scan the QR code here on the screen to learn more and get started. This may be what's stopping the oil prices from going much higher and causing this awful thing that you're talking about. China's helping to cushion global oil prices below $100. Market strategists say that China is acting as a key pressure valve on energy markets with Beijing's move to cut crude imports from 11.7 million barrels a day in February to just under 9 million barrels a day by late May, helping to ease the straight-up for most supply shocks. However, Societe Generale warns that the market will ultimately require higher oil prices moving forward as global inventories are depleted and strategic reserves are rebuilding or require rebuilding. So this is temporary. What's your take on the direction [00:09:12] Adrian Day: of oil? Well, absolutely. I agree with what Societe Generale says. Absolutely. I've been saying that for a while. When the straights are open, when the straight is opened and oil starts flowing again, I am betting that a lot of particularly countries, but also other large-end consumers will rebuild or will build those stockpiles that they should have had six months ago but didn't have, including the US, which of course depleted its energy stockpile, oil stockpile back in 2024. So I think we'll see a lot of restocking. So that's one factor. But beyond that, yeah, I mean, I think the oil price on a longer-term fundamental basis is going to go meaningfully higher over the next few years. Look at the beginning of this year when we were $60 a barrel. That was in the lowest decile of its price, inflation-adjusted price. And it was the most hated commodity out there. And people were thinking that we could run a modern industrial society without fossil fuels. And you only have to look at Germany and England to see that that isn't working out too well. But what the closure of the straight did is it put a huge focus, not so much on the price of energy, but on actually the security of supply of energy. Because for Asian countries, not just China, but for a lot of Asian countries, including Japan and Thailand and Indonesia and Malaysia, who depend on imports of oil, this was a shock where the real risk was they couldn't get oil at any price. In the US, North America, you know, it's a higher price, but there's no question, there's no concern about the actual availability of oil. It's just a matter of the price we pay. But in the Asian countries in particular that I mentioned, there's a real concern about the availability. And that, of course, is why coal production and investment has gone up in those countries just in the last three months. Because coal is something, if you've got coal, if you're Indonesian, you've got coal deposits in your country. That is a source of energy, notwithstanding CO2, but that is a source of energy that you can ensure it is reliable, it is there. And so, yeah, there's a question on that report that you just pulled up about China. Is China deliberately minimizing its, reducing its imports in order to ease the pressure on the price? Excuse me. Or in fact, is that all the oil they can import? Because it's just not coming through, it's just not coming through the straight, and out of a red sea. So it's, it's, it's, I don't know, it's a chicken and egg question to me. But I think part of it is just that they can't, they can't get the imports. [00:12:27] Speaker 1: Maybe they can't get the imports. You're right. Eventually, though, what you're suggesting is key, that oil prices will eventually succumb to market forces and grind higher. Absolutely. Yeah, this leads me to wonder what central banks will do the ECB, by the way, this week already raised rates for the first time since 2023. This reminds me of when they raised rates in 2008, right before the Lehman collapse, when the energy price went up, then that was in hindsight, a policy mistake. I wonder if this is a policy mistake now. But then again, we're at a different [00:13:01] Adrian Day: time, yes. Yeah, the ECB doesn't have a particularly good track record, as you mentioned. I, yeah, so the thing that all of the central banks are, all of the central banks and policymakers seem to be focused on the inflationary effect of a higher oil price. And what they should be focusing on, equally, if not more so, what they should be focusing on, that every time we've had an oil price spike in the last 80 years, we have had a recession. You think of 1974, of course, with the Arab, with the Arab oil embargo, that was obviously the key one. And the US went into recession then, because the US was dependent at that point, largely dependent on Middle East oil. Europe went into a recession. You think of 1990, with the Iraq invasion of Kuwait, when the oil price spiked. And again, there were worldwide recessions 2000, again, and you mentioned 2008. So every time we have an oil price spike, it leads to a recession. And when you think about it, I mean, that makes sense. That makes sense. I won't go into my rant about inflation. You can only have inflation if central banks actually accommodate it. Excuse me. So I'm not saying we will have a recession right now, because certainly in the US, we don't really rely on Mideast oil at all. We don't rely on oil coming through the Strait of Amuse at all. I wouldn't be surprised if Europe heads into a recession, and some of the Asian countries head into a recession, if this war or conflict or whatever we want to call it carries on for longer. But the US and Canada, North America, although we import some and we export some, on net, net, net, we are energy independent. You know, if the government wanted to, they could ban all exports, and we could be energy independent. So we are nowhere near as reliant on the Mideast as other parts of the world, nor are we as reliant on the Mideast as we have been as the US and has been in the last sort of 50 years. [00:15:22] Speaker 1: This chart just to illustrate your point that whenever energy prices have risen in the past, a recession usually coincides or follows shortly thereafter. There are exceptions, of course. Now, that's an interesting pattern to note. That leads to me to my ultimate question about monetary policy, what the Fed will do. The Fed looks at core PCE, as you know, stripping out food and energy, the volatility of food and energy. Now, the question is, Adrian, will the rise of oil translate to the rise of core CPI products and PCE products? Because if that happens, then they'll raise rates. [00:15:55] Adrian Day: Yeah, no good question. And as you noted earlier, I've forgotten if it was off camera or on camera, I'm sorry. But you know, at 2.9, we're still almost 50% above the Fed's own target. So we shouldn't be taking any victory laps about core. But yes, oil is one of those commodities, as you know, one of those goods. But when its price moves up, that price moves through the entire economy. It moves to every single good in the store is transported in some way. It may be transported 10 miles, but it may be transported across the country. And so a higher price of oil translates into higher prices for all goods, and even to a lesser extent, services. You know, because services, you have to travel to get to the service. And so the yes, the higher oil price will, if we have a higher oil price for any period of time, that will definitely translate into higher, into higher core. [00:16:56] Speaker 1: So can we expect higher interest rates this year? [00:17:01] Adrian Day: I don't think so from the Fed. As you mentioned, the ECB has already raised interest rates. They always seem to be contrary. But anyway, they've raised race. Japan, of course, is doing its own thing. Other central banks have talked about, you know, the era of easing is over, and we're going to watch the impact on inflation and may need to raise rates. Britain, Canada, Bank of England, Bank of Canada, and so on. But they haven't done it yet. I don't think the Fed is going to raise rates. I, especially with Walsh coming in, a new Fed chairman. I think it would be, I think it would be a huge surprise if his first move as Fed chairman was to raise rates. I think what it does mean, though, is that probably much less likely to lower rates in the near term. So long as the oil price stays high and the, and the, you know, gasoline and other components of the CPI remain high, they are much more likely to, much less likely to lower rates. And there's two things there. One is, we mustn't forget the wash, although he's the chairman is only one member out of, out of the open market committee. And if you look at the members of the open market committee that are the ones that vote and determine on rates, a majority of those have recently indicated a preference for fighting inflation rather than for fighting the economy or the need, the need is to fight inflation rather than to help the economy. And so many of them individual members of the Fed, excuse me, have actually wanted to raise rates. I don't think they're going to go against Walsh on his very first or second meeting, but the Fed is a much less collegiate body today than it was, you know, 10, 20, 30 years ago. And so I think the Fed's wishes have some sway. Um, but, but, um, uh, I, I don't, I don't see lower rates in the U S I don't see high, I think for the next few months, we'll just be holding steady. Walsh wants to reduce the balance sheet. And so if he can, if he can meaningfully reduce the balance sheet, which I am skeptical of, frankly, but if he meaningfully reduces the balance sheet, even keeping interest rates stable, that will also have a stimulative, uh, loosening effect on the economy and he can achieve the goals. But he wants without cutting rates. Um, but we'll see if that we'll see if they're going to be able to do that. That was a long answer, David, I'm sorry. [00:19:52] Speaker 1: I understand your point. So no move from the Fed, at least from the upward trajectory while the bond vigilantes do their work for them, which is to say the long end of the yield curve will move up [00:20:02] Adrian Day: regardless of what the Fed does. Correct. Absolutely. And we're seeing that. [00:20:07] Speaker 1: Yeah, that that's bad for gold, isn't it? Uh, many of my, um, guests on my show have commented that one of the reasons why gold has moved down is because the tenure has moved up. And so, uh, what, what's your outlook on the tenure that if you assume that the relationship [00:20:20] Adrian Day: will hold that's bad for gold? Yeah. Well, I I'm not about, yeah, absolutely. And it's not just the, it's not just the tenure moving up itself, but it's in, in a line in, in, in, uh, along with the dollar moving up. So for the last three months, we've had the dollar moving up and interest rates moving up on balance on balance. And so higher interest rates and a higher dollar that is, that is quite negative for gold. Yeah. Um, I think once the war ends, the dollar will, will turn, uh, again, uh, and, and continue the trajectory from last year. So I'm not overly concerned about the dollar, um, rates, I think are going to have to remain high. We, you know, so long as the supply continues. And of course, in the next, what, three years, we've got a huge, you know, um, rollover of existing, of existing us debt. And we've got fewer and fewer people wanting or willing to buy particularly foreign countries. So, um, yeah, I think rates will, will, will stay up, but I guess as with all things, there's, there's 10 or 20 or 30 different factors affecting something. And one of them can be negative, but if other ones are positive, you know, on balance, uh, on, on balance second, that cannot be so bad. So I'm not negative on gold at the moment. I think in the immediate time, in the immediate term that the wall continues, the dollar goes up, long-term rates go up. The fed doesn't cut all of that could see gold under continued pressure. But once the war ends, it seems to me, uh, you get a little bit of relief on oil in the near term, which, which will be a reason or an excuse, uh, to cut rates. And the buying that we've seen, and this is an important point of buying, the buying that we've seen for the last three years from central banks and in the last 18 months from tether is continuing. As you know, in the first, the first quarter net gold purchases, despite all of the high profile sales from Turkey, mostly, but also from Poland and from the Gulf States, and from Russia, but the net purchases was the highest quarter since the end of 2024. So for more than a year, April numbers, which came out last week, um, show an increase over March, over, over any month in the first, in the first, uh, quarter. So the trend for net purchases by central banks is continuing to move higher. Um, and that makes logical sense to me. They're not price, you know, they're not price sensitive buyers. Tether as far as we know is continuing to buy. They were in the first quarter. I haven't seen numbers for April yet, but they're continuing to buy. So the fundamental underpinning of the demand for gold seems to be continuing. What has changed, of course, is the ETF purchases. Um, you know, if it, and, and last month was the first month in three years, I think where we'd had global ETF, physical ETF, physical ETF net selling. But certainly if you look at, if you look at, um, the U S we've had net selling, um, the GLD alone. I've just got it here this month, this month to date has lost $2.6 billion on a three month basis. It's lost $8.2 billion. So people are selling physical gold in the face of a war. Individuals are even as the central banks are buying and who's going to win. I, I, I don't know. [00:24:13] Speaker 1: People have sold. Sorry. People have either sold because they thought it was due for a pullback at $5,500 at its peak, or they were selling because they don't think the Iran war is going to last and they don't need this kind of protection. Well, no, on the contrary, more sense. [00:24:30] Adrian Day: But war is actually hurting gold. When the war ends, I think individuals may think, oh, it's a war. Uh, it's not going to last. I don't need. I don't. [00:24:39] Speaker 1: Do you think this war has fundamentally changed the narrative for gold for investors seeking gold as a form of protection against volatility, geopolitical unrest and wars? Ultimately people have called it even on my show, the war asset gold is for war. Well, it hasn't been for the Iran war. Has it? [00:24:56] Adrian Day: No, but I think there's a gross misunderstanding here, David. If you look back 50 years, 60 years, you see with nearly every negative geopolitical event, nearly every military event around the world, gold has followed the same pattern, which is, it moves up in advance of the war and it drops right afterwards. And not only do we see that with Iran, but the last example with the Russian invasion of Ukraine was a perfect example. Whereas the troops were massing on the border and the tanks were massing on the border and all the speculation, will they or won't they invade? Gold moved up dramatically for six weeks. Within a week of them crossing the border, gold peaked. And again, within six weeks, it was back to where it was at the beginning. And you can go back 50, 60 years and see that pattern. The exception that that's assuming that the event that happens is in some way anticipated. Now, the Iraq invasion of Kuwait, that was not anticipated. That was a shock. I think it was a shock to everybody. I remember driving home from the office at two o'clock in the morning, actually, and hearing about that. And I thought, my gosh, I didn't see that coming. Then gold, then gold moves up because there's a surprise. But if it's anticipated in any way, which these events normally are, then gold moves up in advance and drops off because that's number one, buy on the rumors, sell on the news. The second thing though, David, which is really important, is that the dollar is still a safe haven asset. When we have a war, the dollar goes up. And other things being equal, if the dollar goes up, gold goes down. So what you find by looking at different geopolitical events in the past, when the geopolitical event happens, when the military conflict happens, gold drops, and then something happens. It either ends, or it just kind of fades into the background. I think it's fair to say, rightly or wrongly, it's fair to say that for most people in North America, the Ukraine conflict has now just moved into the background. And at that point, gold can start to move back up again. So I'm not worried about gold dropping in the last three months. I'm not worried about that because we can see why it's [00:27:25] Speaker 1: happened. Are you worried about gold repeating 2011? That's what the chart looks like in comparison. [00:27:30] Adrian Day: I'll let you answer that as I put the chart up on the screen. Yeah. No, we could have a deeper correction. But is this like a longer term fundamental end? I don't think so. And the reason I say that is is because we've had, we've really had no or very, very little, uh, retail speculative interest we did in silver, of course. But if you look, if you look back to 2011, and you look back beyond that to 2000 to 1980, gold was a topic of conversation everywhere you went, right? Um, you went to get a cup of coffee, like the 1920s shoeshine boy. But nowadays you go and get a coffee and the barista wants to give you his latest stock tip. And it was a gold stock tip. Uh, we had none of that space. We had none of that speculation at the moment. If you look at 2011, the GLD and the, um, the GLD was actually with physical trust was actually trading at premiums for weeks on end. You, you, we didn't have that this time. As I just pointed out, we've had outflows from gold even prior, uh, even prior to the war starting, you know, for six months, three months and six months, we've had outflows from the GLD and we've had outflows from the GDX. So there was no speculation and I questioned whether maybe you can, but typically you don't get one of those major tops like Japanese stocks in 1980, like gold in nine in 2011. You don't get a major top without [00:29:21] Speaker 1: public speculation. And we just, but that public speculation, which is, which is, which has come, but let's take a look at this. The GDX, the gold miners index, uh, from this peak in, uh, let's just start from early March fell 30%, gold fell 21.5%. Uh, the leverage is there just maybe not as much as some people would have imagined. Uh, do you think that, uh, gold falling, the gold miners falling proportionally to gold, uh, is actually a, a, a good sign that maybe, um, uh, there isn't as much selling pressure on the miners as you would have thought it would be. [00:29:58] Adrian Day: Well, your, your statement is correct. There's definitely not as much selling pressure. And we've had many days, in fact, where gold is down and the gold stocks are up, um, many days in the last three weeks. It either means that, um, uh, the, the, the gold stocks are not as susceptible to the decline as they have been in the past, or it means that, you know, we're going to wake up one day and they're going to catch up on the downside. I, I, I tend to be in the former camp. If you look at the valuations, you know, I'm a value investor. If you look at the valuations of the big cap stocks, they are very, very low. They are very undervalued relative to their own histories. And, and again, I mentioned Agnigo Eagle price to free cashflow. Um, I don't know if you have that chart there or not, but if you look at the price to free cashflow of Agnigo, it's selling within 10% of its all time low valuation metric, which to me simply doesn't make sense with gold at 4,000. Uh, uh, as you said, again, I don't know if it was before the show or after on camera, but go to 4,000 in a longer term horizon is not that bad a price. No, we, we shouldn't be crying too much. [00:31:13] Speaker 1: Right. And I said to you off camera, people care more about what happened in the last, last three months than the last three years, it seems. [00:31:19] Adrian Day: Yeah. Yeah. But you know, if we hadn't had such a sharp, if we hadn't had such a sharp rise, uh, in 25 second half of 25 and beginning of this year, but if we had simply gone from 1800 to 4,200 in a straight line, people would be dancing in the streets today. Now, of course it didn't happen. So I understand, you know, the pullback is, [00:31:44] Speaker 1: is fairly meaningful. Um, yeah, but, but I use a fund manager do in an era of supposedly or let's put it this way. A lot of people think that the markets are extremely frothy right now to the point where a major bubble pop is imminent. Now people have been talking about bubbles for ages and ages and ages, and I'm not going to bring up the bubble argument once more, but let's just, for comparison sake, I, SpaceX IPO today at one point intraday, it was worth more than $2.6 trillion. People have been making this comparison online all day. I even made this comparison, uh, myself earlier in the day, it's worth more than Canada at $2.5 trillion GDP. Uh, now that's not say much because Nvidia is, you know, worth double Canada. It's been there for a while. The point is when you have a company IPO-ing at $1.7 trillion, and then it climbs immediately afterward. Uh, and then when you have the rest of the mag seven, um, pulling up the entire stock market index, what do you do in [00:32:50] Adrian Day: that environment? Yeah. Well, no, you, you raise a couple of good points there. And one point I think we need to emphasize is that as investors, we are not in the business or should not be in the business of making a prediction. I think the S and P is going to continue to go up. I think the S and P is going to crash and burn. We shouldn't be in the business of predictions. We should be in the business of looking at risk and reward from a particular starting point. And risk is often misunderstood. Bill Bonner, you know, gave a wonderful analogy once of the drunk at the party who was 10 times over the limit, got into his Ferrari, drove at a hundred miles an hour at two o'clock in the morning, was sped past every red light and miraculously wound up in his bed asleep. Does that mean he wasn't taking risk because he didn't get killed? No, of course not. So risk is not a matter of what's the result. What happens risk risk is a possibility of that event. And if you look at it that way, there's no question in my mind that the market today, particularly the big cap, the big cap tech growth stocks and, and particularly the AI subsector of tech is very, very risky, very, very risky. And so I would be, and that's my art, that's been my argument for moving out of the U S and into global markets into, you know, non U S markets, which are extraordinarily undervalued relative to the U S. You mentioned the video in Canada. Okay. I'll mention the videos bigger than Britain. I don't know which one was worse, but as a Brit, I don't think, you know, I'd rather take all of Britain and all of Nvidia. Um, so, so the markets, if you look at those in comparison terms, it seems to me, the big tech stocks are just grossly overvalued and have risk. Does that mean they can't continue to go up? No, of course not. It just means that if you're looking at risk as well as potential, then you need to be, you know, pulling money out of those sectors. [00:35:00] Speaker 1: You're diversified across countries, which sectors are you still mostly concentrated in? You mean outside of a resource or outside of, outside of the U S in particular, is it still [00:35:13] Adrian Day: mostly resource companies outside the U S? Yeah. I'm looking mostly at, I'm a bottom up investor when it comes to global markets right now. So we're not looking at, well, let's see what's good in Scandinavia. See what's good with bottom up. But you know, Warren Buffett has a wonderful saying about, I like to fish in most of pounds and the world stock pounds for us would include the UK market, which I think is astonishingly undervalued up until, uh, the end of 20, I will beginning at 25, up until the beginning of last year, the British market was essentially at the same level that it had been 20 years ago. So I think that's a good market. Hong Kong is a good market. We know the risk in Hong Kong, but we could say much the same for Hong Kong. Um, you know, for the last 20 years, it's been essentially flat. Um, so Hong Kong, Britain, we're finding a lot of good value Singapore, which is not by any means a basket case economy like Britain, but that has some very good companies of good valuations. So we're finding, we're finding value. We're finding good, good opportunities in a lot of different markets. I would say on balance, we're finding more in smaller markets like Brazil, Singapore, Hong Kong, uh, than we are in the major economies. Um, but again, the, the, the, um, world stock markets X us are trading today at 50 year relative lows to the us market. And at the beginning of last year, they were trading at lows that historic lows. They had never been lower, never been lower relative to the us. And we've had a 13 year period where the us has outperformed and these periods of outperformance and underperformance tend to go in these, you know, eight, nine, 10 year waves or cycles. So the, you know, just on that basis alone, uh, it seems as though we're due for rotation out of the big tech growth stocks in the us and into defensive stocks in the us value stocks in the us, uh, global stocks, uh, value stocks, stocks, internationally emerging markets, you know, and so on. Okay. Adrian, the, um, we've talked about [00:37:32] Speaker 1: the gold market. We've talked about, uh, miners. Uh, I wonder if the frothiness in tech companies that you alluded to will put pressure on the rest of the market. In other words, as a fund manager, are you more incentivized to sell your gold holdings solely because of frothiness in the tech sector that may have a systematic or pose a systematic risk? [00:37:56] Adrian Day: Well, certainly there's a systematic risk. There's no question that everything drops. And typically, as we've seen from history, 1987, 2008, when, when there's a sharp decline in the market, gold stocks tend to fall sharper than the rest of the market, but historically, and including 2008, they tend to come back sooner. So, and that was certainly true in 2008, you know, the XAU had more than doubled from September, more than doubled before the S and P had even hit bottom. So they tend to drop faster, but come back sooner. So one has to ask oneself, given that the future is uncertain, one has to ask oneself to what extent does one want to be a hero and sell all of one's gold stocks waiting for that decline, you know, the may or may not come. I think it's a time to be defensive. It's a time to have a bunch of cash, but I certainly wouldn't, wouldn't say it's a good time to just sell everything. Because I found when people do sell things thinking, oh, I love Franco Nevada, but I'm going to sell it and buy it back when it gets cheaper. They rarely do. They always miss it for psychological reasons, because as it's dropping, you, you become more reinforced in your view that you were right and you should wait. And then it starts to rally and you feel like an idiot buying it back at a higher price. So I found generally people, generally speaking, when people sell something intending to buy it back at a lower price, they rarely do. So, you know, be defensive, have some cash by all means. But it also depends, frankly, on how quickly the market drops. You know, if you had stocks roll over, such as we were seeing, and I thought it was the beginning, frankly, such as we were seeing, you know, the last quarter of last year, when the video and Apple and Tesla, one by one, Microsoft, they all started rolling over from their peak. And over the next three months, were down meaningfully from those peaks. But it was a slower and orderly and, you know, individual idiosyncratic declines, then the market overall doesn't have to drop. It can continue to hold up because the money that's sold from Microsoft gets put somewhere else. [00:40:23] Speaker 1: Okay, good. Thank you very much, Adrian. Very good update. Appreciate your insights. I appreciate your analysis. Let's follow up next time. Where can we follow you for in the meantime? [00:40:33] Adrian Day: Yeah, the best place is adrianday.com, which has information on the newsletter as well as the money [00:40:39] Speaker 1: management. We'll put the links down below. So do follow Adrian there. And yeah, I appreciate it once more, Adrian. Speak again soon. Take care for now. Thank you very much, David. Thank you. Thank you for watching. Don't forget to like and subscribe.