Gold at Record Highs: What Comes Next?

With gold trading at record levels, we'll be discussing what's driving the rally, whether the market has further to run, why many gold equities have lagged the metal and where investors are finding value today.

Guest Host: Lyndsay Malchuk, Global On-camera Reporter, Apaton

Featuring: Henry Weingarten, Managing Director, The Astrologers Fund

Transcript

SPEAKER_03 0:00

You're listening to the ASTA podcast, where mining meets capital, powered by one-to-one mining investment. Today we are coming live from our event in New York City. Please note this podcast is for information only and isn't financial advice or recommendation to invest. As always, the views you'll hear are those of the speakers.

SPEAKER_02 0:18

Gold is doing exactly what it's supposed to do. That's what's so fascinating here. For more than a decade, markets rewarded a very specific set of behaviors. Capital flowed toward growth, scale, technology, momentum, and increasingly concentration. Investors learn to trust liquidity, trust central banks, trust that every period of instability would eventually be met with another wave of intervention. And while that has happened, gold became easy to ignore. Yet here we are. Gold sits at record highs, central banks continue accumulating reserves, governments around the world are carrying debt burdens that would have once seemed unimaginable, and geopolitical tensions have become a permanent feature of the investment landscape. What's remarkable isn't that gold is rising. What's remarkable is how many investors still seem uncertain about what the move actually means. Is this another cycle? Is it a warning, a repricing of risk, or the early stage of a much larger shift in how capital is allocated globally? Today we're going to explore those questions with someone who has spent decades studying market cycles, investor psychology, and the forces that drive major turning points before they even become consensus. Henry Weingarten is the managing director of the Astrologers Fund. Throughout his career, Henry has built a reputation for challenging conventional market thinking and examining the deeper forces shaping investor behavior and capital flows. Henry, it is so great to have you here.

SPEAKER_00 1:46

Thank you. Well, it's always nice to hear how I'm introduced. I'm impressed with myself.

SPEAKER_02 1:50

Oh. Well, there we go. The show has been good for you. You are a very busy man, so it is my honor to sit with you today.

SPEAKER_00 1:57

Well, let's just say we're a little different in terms of our views in gold and silver than you the consensus here. And there are two points that are substantially different.

SPEAKER_01 2:08

Okay.

SPEAKER_00 2:09

One is we believe in buying wholesale, not retail. And what do I mean by that? To me, it's very foolish to spend, say, $4,500 for gold when I can buy it for $1,800. It's very foolish to spend $70 for silver when I can buy it for $20. I.e., a good company is better than and I know the argument's the other way, so we'll deal with that. But it's better to buy a good company. Why? Because if gold and silver goes up, gold and silver companies go up more. If gold and silver stays the same for the next three years, gold and silver companies will go up much more.

SPEAKER_01 2:41

Okay.

SPEAKER_00 2:41

And if, etc. So the point is that's that's one way we're different. The second is we believe it's highly overvalued. Now, what do I mean by that? Fundamentals don't matter, until they do, of course. Right now they're not mattering in many areas. But if we take the all-in cost for uh gold, it's about $1,800. If we take it for silver, 2022 for a direct company. When it's more than double, it's not relating to classic fundamentals. So you have to say, why would I pay more? Well, most of the people today who are trading on the West have very little experience in gold and silver. They're treating it the way they would treat Bitcoin, for example. In fact, much of silver trading in the last two years was basically Bitcoin. Now some of it's moving to AI and um to SpaceX. But at the moment it's it has no relationship. And the problem with silver, for example, is when you had silver over $100, we suggested shorting at $111, by the way. The fact is that that's gonna affect demand. It's demand destruction. So people now are looking for substitutes. That doesn't mean silver uh is not going to be continually more valuable. It's certainly going to be used more, but some of the initial drivers will not be done but in silver because we could get over 100 a den, which makes it too expensive. So, you know, the cure for high prices is high prices. So we're a little different that way. Now, from a timing viewpoint, we had some tests of both the uh the 4,000 level and et cetera, in gold, but the main time that investors have to look at is September and October. At that point, the value, the real value of gold and silver would be known. It could be closer to 5,000 or it could be under 4,000 as we think it is. But until then, it's sort of an unknown situation. Likewise, in the broad markets, we believe the market's very toppy here. We'll be down. We had two down periods. The first was the end of February, beginning of March, which was perfectly timed, except we thought it would be more than 10%. We're not complaining because we made money for everybody, but it should have been more, but intervention changed it. The second time is over the summer, but I don't think it's going to stick, and I can't tell you it's five to fifteen percent. But we can say, at least for the precious metals, that in the September-October period, you'll have a much better sense of what the real value of it is. And the problem is fundamentals don't matter, and I'll give one quick story and then I'll take the next question. Around 2001, in the before 2000, I could get gold to the dollar in the day. I'm a Leo, so we're very much attuned to it. And all of a sudden I couldn't get the same results. I was lucky if it was $10 and two, three days. So I went to the second largest trader on the Comex and said, What's going on? I used to be able to call silver and I could just look at the chart and say, he said, Henry, you know how big we are. I said, Yeah, you're the second biggest gold trader on the Comex. He says, Well, that's true. But there are five, and this time, it's this is very historical, there are five hedge funds that are ten times bigger than us, and they don't care about fundamentals. And it's much bigger now in this situation. So people, you know, fundamentals don't matter until they matter. So there are a lot of different forces at work, there are different buyers and sellers. Uh obviously, what's happening in India is different than what's happening in China, which is happening from the West. So again, it's always about buying and selling. Um, so there are obviously good reasons to own gold, there are obviously good reasons to own silver, either you as a hedge or other reasons, but there are also times to sell them.

SPEAKER_01 6:09

Right.

SPEAKER_00 6:09

And unfortunately, the public can very often buy very well but doesn't know when to sell.

SPEAKER_02 6:15

And that's the thing, I think that there's a lot of instability, we'll say, that's happening around the world. Do you feel like the cycle that we're in right now and the and the patterns that you're seeing for the highs and the lows, you're talking about maybe in the fall. Do you think that things that are happening overseas will actually set that off, or do you still predict that that's going to be another area where there would be a price adjustment?

SPEAKER_00 6:38

What markets are we talking about? I'm sorry. We'll do gold.

SPEAKER_02 6:47

Tough one.

SPEAKER_00 6:48

Well, no, I w you see, the markets in gold are very strange. If I told anyone five years ago that every time that there was a problem in the world, a crises, it's one of the four drivers for gold are crises. Uh, you would assume that if there's a crises, gold's gonna go up.

SPEAKER_01 7:06

Right.

SPEAKER_00 7:06

Whereas for the last three months, every time there's a crisis, the gold went down. Now, markets do change, obviously, but that's to me something that's gonna reverse back. So that there's a lot of very untraditional comments that are influencing markets, primarily happen post-COVID with when the markets used to be totally controlled by professionals. That's no longer the case. You have the home traders who will short a stock that's absolute garbage, will never make money, and and yet they'll short it, excuse me, they'll they'll buy it to get rid of a short squeeze. I mean, you have things that no professional would do because there's no sense of risk. Until people get burned, and I'm hoping it comes with um, I don't want to, I don't want to have this happen, but if it did, I'd like to see Bitcoin down to 40 or less so that people will understand you can lose money. Now, obviously, if you did it at 120, you lost it. And I think they'll see it in SpaceX, which we're just doing our work on SpaceX, which we're releasing very shortly. Yeah. But it's a little too soon for that. The point is people assume it only goes up. But the main thing is you have to know why you're buying gold. If you're buying as a hedge, there's never a time to sell it. Okay. If you're buying gold as a long-term investment like a house, never a reason to sell it. But if you're buying it as a positional trade, you definitely should buy and sell it because that's how you get better results. So it depends on why you own it. It's obviously a good medal to have, it's a better medal, uh, but I don't think it's a total panacea. I don't think Bitcoin's gonna replace it. Uh, but time will tell.

SPEAKER_02 8:43

Time will tell. You know, we are in a very different state with investors as well. We have a lot of seasoned investors that will go through, you know, their patterns and what they've seen over history. But we have a lot of young investors coming in now, especially with crypto, with Bitcoin, with EFTs, with things like that, where they may not be able to get in at the Bitcoin level, but they're taking a step back, going, what's the macro here? And what else is go that goes into Bitcoin, we'll say, and gold comes up. So we have a lot of those young investors coming in.

SPEAKER_00 9:12

Well, the big difference, of course, is you may remember when AOL bought Time Warner, how significant it was. Well, people are not spending enough attention to how Tether bought gold, and that was a major seasonal shift. They also bought into two royalties, one of which was Elemental Royalty, which is one of our favorite royalties. So that was a significant risk, and to me, it was an earth-shaking type comment in the same way when AOL bought Timewater, that Tether realizes how much they can do, or even with their new uh tether gold situation. That's a significant shift in what's gonna be happening.

SPEAKER_02 9:50

So, what sort of in investment advice would you give to a young investor coming into the space like gold or silver?

SPEAKER_00 9:57

First of all, are we talking investing or trading?

SPEAKER_02 9:59

Uh in fact, we're gonna do investing.

SPEAKER_00 10:00

Okay, well-defined investing as something you want to hold for two years or more.

SPEAKER_02 10:04

Two years or more.

SPEAKER_00 10:05

For that, we suggest having quality gold and silver stocks.

SPEAKER_01 10:09

Okay.

SPEAKER_00 10:10

Uh the easiest, again, depends on how your risk and reward phenomena, because if you're doing something early on, there's a lot more risk. Uh basically, if you're beginning, you start out with royalties because there's very little downside risk versus most of the upside. Um, and it depends on what risk reward you want to place. Our favorite at the moment is Elemental, which gives you about 50% more than companies like Wheaton, which are the gold standard.

SPEAKER_01 10:35

Of course.

SPEAKER_00 10:35

Um then you have gold and silver companies. Uh, for example, tomorrow we have diesel or silver, which is our current favorite, ran into some problems. We love being deep value. So the fact I wasn't happy they ran into problems, but for us it's an easy double in less than two years because their return on investment is well under one year. So that's a no-brainer. And the particular problem they have is gone. Uh, when it gets to gold, there's so many good choices, again, depending on what you like and your risk and reward. But I would I would suggest, just like people suggest index investing to start with, I would just suggest two or three companies or an index in gold and silver to build somewhere between five to ten percent of a portfolio in precious metals.

SPEAKER_02 11:22

That's really great advice to give. I'm gonna flip over here. Gold is, you know, as we've mentioned multiple times, it's at an all-time high, yet investors, their enthusiasm feels surprisingly still restrained in some aspects. Historically, when an asset reaches new highs without that kind of speculative excitement typically associated with major tops, what does that tell you?

SPEAKER_00 11:44

Well, first of all, you're thinking about US dollars.

SPEAKER_02 11:47

Okay.

SPEAKER_00 11:47

And the world is very different if you were using Euros or Japanese yen or everything else. So the returns on investment are very different than the way the US people see it.

unknown 11:58

Okay.

SPEAKER_00 11:58

But the top of 5,500, because remember, gold has four drivers. One is as a crisis, which reached about 5,500. Another is as a currency, and that depends on the strength of the US dollar, and that depends on what Donald is doing overseas in Iran, which is sort of a headwind. Um, then you've got uh inflation, and inflation's here and not here, depending on where you want to look and how you define it. Uh, but certainly things like oil will be well under $69 by the time we get to November. Wow. There's no question about that. Uh short term, it may be a little higher, but not much. Uh let's see, so there are four things commodity, currency. I forget the fourth at the moment. But there but there are multiple drivers. Remember, people buy and sell for different reasons. So we even when we have multiple portfolios, I might be buying in one portfolio, selling in another, because it meets it. Um certainly the difference is if this were three, four years ago, I might have to give you reasons why you should have gold in your portfolio. But there are many newbies now, so you don't have to do that. Silver the same way, except silver people have no don't seem to understand that it can't go to $500 and be actually functional as a metal. And I think there's a mistake when people say there's a deficit. There's only a deficit because of investment demand. If you take investment demand out of silver, it's not at all in a deficit.

SPEAKER_02 13:24

Okay.

SPEAKER_00 13:24

So, which is a little different.

SPEAKER_02 13:26

Well, you're brought up silver, so let's let's continue down that path. It's definitely stepped into the limelight. What do you think is pushing that rally behind it? Do you think it's momentum?

SPEAKER_00 13:37

Basically, you you have the Bitcoin players. Once uh we went under 100,000 on Bitcoin, you can't make the same money that you could before, but you couldn't silver. And with silver, you were getting 10% moves a day.

SPEAKER_01 13:51

Yeah.

SPEAKER_00 13:52

And that's a lot of money, especially if you do it in futures. So, but I think some of that's going over into SpaceX as we talk. So I don't know if it's gonna stay there because SpaceX now, people don't care. 200 is just absurd numbers. Uh you know, you never get and the reality of that is very interesting. Uh, while it's under some positive influences now, you're gonna see some changes in the fall and a lot of lawsuits next year.

SPEAKER_02 14:18

Oh.

SPEAKER_00 14:19

First time we're saying that publicly.

SPEAKER_02 14:21

First time publicly. Do you think that we're in the top end of the cycle for silver, or do you think mid, or where do you think we are in the cycles with silver right now?

SPEAKER_00 14:32

It really depends on how risk-averse. You can see the problem with these, as you know, silver is the poor man's gold. So you have people who are less sophisticated, who have no sense of what the usage is. Uh you know, in the old days, before 2000, people who traded in gold and silver knew the industry inside out. Now, for everyone else, now it's just a dot on a trading screen. So it as long as it looks easy and they're not losing money, they'll still play it. But the problem is, like, we had some clients who came in at uh 18. And when it got up to you know, 70, 60, I said sell a little bit. No. Got to 100, sell some of it, no. Now it's act at 70, and they'll trade it down to 40.

SPEAKER_02 15:14

Wow.

SPEAKER_00 15:14

You know, they just will hold. And it's okay if that's what you did it for. If you but um I think as long as it's an easy thing, they'll continue trading it. But I look, the fundamentals for silver for usage will continue to grow. But is it enough to justify current prices? I don't think so.

SPEAKER_02 15:32

Oh, okay. I love all this perspective. I mean, I should be taking notes. I feel like I'm taking notes.

SPEAKER_00 15:37

Well, we have it on our website. A lot of this stuff is on our website.

SPEAKER_02 15:40

Absolutely. So when future investors were going to say, study this period right now, what do you think they'll identify as the defining force behind the gold rally right now? Do you think it's stockpiling? Do you think it's the government? Do you think it's AI?

SPEAKER_00 15:53

Do you think it's well, first of all, obviously you have central banks which have been buying for a couple of years, which they didn't do before. And if you remember around 2000, it was the English who sold out all their gold under $200, $300, I forget the number, which was a bad mistake. Part of this is de-dollarization.

SPEAKER_02 16:13

Okay.

SPEAKER_00 16:13

Um and there also remember the there are many parts of the world that can't get access to dollars, and there's parts of the world that don't want dollars politically. So for that, gold is a good usage. I think what it is for the Western investors, you know, if we had gone, if we were giving this in India or in China or Japan, the idea of having gold investing was just normal. Or certainly in Dubai, we go buy a machine. It's only in the West, and especially the United States and in Europe, that's become an issue, that it's now something that people look at. Now, part of the other reason, which is not realized, is that you think of mining, you're digging shovels and it's hard physical work. Now it's all computerized. You go on, I mean, this has changed. If you're a young person today, you can get into mining and you're just on your computer and you're just doing all sorts of things with AI, you're doing all sorts of things with robotics, with machinery. So it's really cool that you have a lot of young people into it. Whereas previously, if we go back ten years ago, everyone's gonna look like me. And now, of course, you go to a conference and there are a lot more young people because you can use modern skills and not have to do hard physical work.

SPEAKER_02 17:23

That's true, absolutely. This naturally will lead me into a bigger question right now. We've spent years framing gold through inflation, through interest rates, monetary policy that we spoke a little bit about. But increasingly I wonder whether gold is responding to something even louder. Not inflation, not rates, not confidence. Like confidence is fiscal policy for sure. Confidence is institutions, it's currencies, it's all the thing. Do you think gold is becoming less of an inflation trade and more of a confidence trade?

SPEAKER_00 17:50

Well, the problem with inflation, of course, is the government can't find it. Um everyone wants when we when we can, when I go to the uh supermarket, I seem to find it. Um I don't know how much it's confidence. You see, people forget about one thing. They say, oh, gold's gonna be replaced. Excuse me, the dollar would be replaced by gold or bitcoin, but they forget that the government has two very important factors. One is taxation, and two is the ability to put you in jail. And those two factors are very influential. They're very influential. So I don't know if it's a confidence factor. I mean, I if I talk to almost anybody in the world, they're unhappy with their government. I was I don't care if I'm talking to someone in Australia, England, Switzerland, United States. I know very, very few people that are happy with their government at the moment. And of course, we're actually there's a tremendous shift going on, too, between far left to center right, which I happen to like, but that whether you like it or not, it's happening. Um I think but the most important thing you have to realize is the following. Everything you see in the market is depending on one thing only, in my opinion.

SPEAKER_02 18:58

Which is no guess? No.

SPEAKER_00 19:01

Okay. In my view, everything depends on what happens in November in the United States. That's gonna shift everything. And you have to have your portfolio ready for that. If yours, the big money has high cash levels, some cases as much as 20%, doesn't mean it's gonna be necessary, but there's a lot of cash out there for that reason. Uh, and things can go very differently depending on how November goes.

SPEAKER_01 19:26

Wow.

SPEAKER_00 19:26

Um, but I will say that the forecast we made four years ago is pretty uh clearly obvious. Number one, eggs will be down, which they are. Number two, oil will be down, which you'll definitely see as we get to November. And the third is that we think that the bond rates will be a little bit less than they are now.

SPEAKER_02 19:44

Okay. When you look across markets today, where do you see the greatest vulnerability in consensus thinking?

SPEAKER_00 19:53

That there's any sense of reality in the in in the in the today's in today's market pricing. It's absurd. There's no reality uh in terms of price earnings at all. And remember, we have at least a K or an E economy, so for certain parts Actually, I'll give you one quick thing if we have just two minutes. Absolutely. What we tell our people is, besides the fact we think markets are toppy, we put everything into three baskets. The first basket is what do you do if things are bad? And for that you want precious metals and you want and you want security, both digital and physical. That's one set.

SPEAKER_01 20:29

Yeah.

SPEAKER_00 20:30

The second basket you want is companies that don't care at all what the market's doing. They'll make money either way, and that's entertainment and beauty and longevity, which is something we're doing a lot on at the moment. And the third area is the areas where money is being thrown at it. And that's space, that's energy, um, well, yeah, and then you've got AI and you've got rare earths, but those two you have to watch out a little bit. Because some of those oh, and defense. I'm sorry, defense. No brain, yeah, defense. So those are the three big but when you have AI, but in terms of rare earths, most of those companies are never going to make it. So the government's throwing money at a lot of things that I think are very poorly done. I'm not into state capitalism. I think it's better than just throwing the money out and getting nothing back, but they don't know what they're doing because it's all about the processing, which most of us know in the industry. 100%. But they're wasting, there are a lot of companies, which is typical for the mining space, that will never become mines less than 100. It's a waste of money, but that's life. So you have to remember you have to be very careful if you're doing the rare earths. There are a lot of winners and losers. Think of the internet. We played it, there were a lot of companies that made money and a lot of losers. And that's what you're gonna see in AI, and that's what you're gonna see in rare earths. Whereas you won't see that in defense, you won't see that in energy, um, and you won't see that in space as much.

SPEAKER_02 21:53

That's so true, so true. We have just a little bit of time left. So, my closing question here is every market era leaves behind a lesson that seems obvious only after the fact. You know, the Nifty 50 taught the, you know, the lesson, the tech bubble taught another, the financial crisis that taught another. This is a terrific place to leave it right here. My question is when this chapter eventually closes, investors look back at the 2020s. What do you think will be the defining lesson of this era?

SPEAKER_00 22:22

Well, I hope it's Bitcoin. I don't know if it is. Um, you know, we have the madness of crowds, and we have that with space now. I mean, there has to be something that will bring markets down to some semblance of reality and profitability. Now, profitability is not absolutely essential. I remember around 2000, I was at a very large conference, and we had two, we were told, take all the companies on the Nasdaq that make money and compare it to all the companies on the Nasdaq that lose money, guess which outperformed last year?

SPEAKER_02 22:56

The ones that lose.

SPEAKER_00 22:57

The ones that lose. And the reason they lost, which is correct, is because if let's say you're making money and you're now making 50 cents, I can calculate well, it's 50, 60, 100. But if you're losing money, I can say you're gonna have unlimited profit. And so you have the same sort of issue now where people do not have any sense of good financial training. So I would like to see it with some recognition of risk without too much damage.

SPEAKER_02 23:23

Well, I hope everyone out there was uh taking notes because this has been such a phenomenal conversation. Thank you so much for sitting with us.

SPEAKER_01 23:30

My pleasure.

SPEAKER_02 23:31

We'll see you soon for sure, I bet.

SPEAKER_01 23:33

Okay, we're around.

SPEAKER_02 23:34

If there's one thing markets have taught us time and again, it's that biggest opportunities and often the biggest risks emerge long before the consensus recognizes them. We'll see whether gold proves to be a commodity story, a confidence story, or the first signal of something much larger. I'm your guest host, Lindsay Melchick, right here in New York. Stay tuned. There's way more to come.

SPEAKER_03 23:55

Thanks for listening to the Assay Podcast, where mining meets capital, powered by one-to-one mining investment. Subscribe for new episodes and visit theaste.com to stay close to the conversations shaping global mining and investment.