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 all, gold has been the best performing currency in the world, and second, as a commodity, which is the way some people look at it, it’s also outperformed. So when I look at gold, I see something that is an accident waiting to happen. And I love being long on accidents.
Seems to be asymmetric in terms of risk/reward.
Completely. So when I look at the gold space, I see no reason to adjust my $3,000 to $5,000 target. And by the way, I think that there will be days when gold trades peak to trough the absolute price that it’s trading today. It would not surprise me to see $1,700-$1,800 days where gold will trade up and down. I think that we’re going to see that kind of volatility by definition. That means that gold is a great buy here, if I can say that with that level of conviction. I did that once before when
I made that forecast in silver, which was trading at around
$6 per ounce at the time and people thought that I was nuts and you had much greater intraday volatility a couple of
years later – the implication being that silver was much, much higher. So for gold bulls, I would say what we’re seeing now is a correction within a long-term bull market, but $2,000 won’t be the number. And if $2,000 per ounce gives me a $10 billion NPV for Donlin Gold without adding any reserves, you know what? That’s a very good investment.
This is probably a good time to bring up crypto, because I think crypto has sucked the oxygen out of the room for gold in many ways. It’s been a headwind, and certainly has a generational aspect to it in that guys at my stage of the game believe in gold. What are your thoughts on the competitive aspects of gold and crypto?
It reminds me of that famous exchange between Henry Kissinger and Premier Zhou Enlai when Kissinger was secretly negotiating Nixon’s visit to China and the U.S.’s recognition of the People’s Republic. Kissinger, being a historian, asked Zhou Enlai what he thought the long-term implications were of the French revolution of 1789. Zhou Enlai famously responded, “It’s too soon to tell.” Now I don’t think that we need to be
that long-term in our thinking to understand that crypto is
a phenomenon. Crypto currencies are here to stay, just as automobiles were a phenomenon, just as airplanes were a phenomenon. Railroads were a phenomenon. Most of those that were early movers ended up going broke.
We don’t yet know who the winner is. I personally think that it’s likely to have a Chinese name attached to it. They’re a larger trading partner with more countries than the United States. They have of course phenomenal opportunity just domestically to be able to develop that market. And through the Belt and Road Initiative, they have a lot of other countries who may very well be open to that idea. What that means for things like Bitcoin or Ethereum, I don’t really know.
I am, I suppose, a true conservative. There was a professor at The London School of Economics named Michael Oakeshott who once defined a true conservative as one who prefers present happiness to future utopia. There are many different forms of crypto. I don’t know which of them will emerge victorious, whether we even know its name yet. I do know that there’s only one gold, there’s only one silver. They have their chemical definitions. They’re called
AU and AG, and that’s it.
So, what we’ve seen in the
crypto market to me is extremely bullish. In the same way that I view the scarcity value of Donlin Gold to be one of its greatest attributes, I view the scarcity value of precious metals to be amongst those greatest attributes.
Let’s understand what the crypto phenomenon really means in its essence. It means that your narrative, the John Hathaway narrative, the Tom Kaplan narrative, has won.
That is, we have seen gold – and the reasons why people buy
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