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Gold’s Rise Signaling a “Major Paradigm” Shift in Global System, Be Prepared Warns Billionaire Kaplan

The Daniela Cambone Show Mar 25, 2024

Could history repeat itself, ushering in a new era of gold-backed currencies? Or is gold’s meteoric rise signaling a paradigm shift in the global monetary system? Join Daniela Cambone for an exclusive conversation with Dr. Thomas Kaplan, Chairman of NOVAGOLD and Chairman and CEO of The Electrum Group at the New York Stock Exchange. They delve into a range of topics, from the geopolitical landscape to how FOMO — the fear of missing out — influences investor behavior, market dynamics, the potential for gold and gold equities, and beyond.

CHAPTERS:

00:00 Gold price phrases
02:40 Why gold?
7:32 Bitcoin
10:41 Crypto
11:55 FOMO
13:55 Novagold
21:41 Gold
23:17 The power of luck
28:22 Legacy

TRANSCRIPT FROM VIDEO:

00:04
Hi, this is Daniela Cambone for ITM Trading. I’m excited to introduce our next video interview. It’s with philanthropist, billionaire, entrepreneur, Tom Kaplan, many of you know him from the Electrum Group, but he has a ton of successes in his career. He rarely gives interviews, but he…

00:25
gave us an exclusive look into his insights on what he sees in monetary policy and in the economy. So we had a sit down with him at the New York Stock Exchange a few weeks back. I think you’ll be surprised and shocked to hear many of his insights. We actually spoke with him before Bitcoin’s big breakout and before gold hitting new all-time highs. But it seemed that Tom already had a feeling that this was all going to unfold. Enjoy it. Let’s talk gold because

00:54
Last year at this time, I was telling you how investors were frustrated that gold could not hold above 2000. Now that we’re here, alas, and getting back to your point, of course, no one wants to see a gold rally because of geopolitical tensions. Now, I guess the new question, Tom, is 2000 the new bottom? Well, I think you always have to fade the numbers because who knows how many stop losses can be triggered.

01:23
if gold goes below a certain point below 2000. But the beauty of the gold chart is that we have been in a bull market for more than 20 years. And phase one of that bull market was 12 years where gold went from 350, 400 to as high as 1800.

01:52
which I call phase one. Phase two was a consolidation between, let’s say, 1100 and 2000-ish. I believe that when we look back at the chart, we will see that, again, you have to fade spikes down as well as up. You will see that we are embarking upon a wave three.

02:20
that will take gold to a new equilibrium level between 3,000 and 5,000. If you had to really break it down, when someone asks you, well, Tom, why do you sleep well at night, not stressed with most of your wealth in gold? What’s the answer? Why gold? Gold gives me everything that I need to feel that I have protected my family and because I’m in the business.

02:50
to make a lot of money on the most leveraged aspects of that trade, which is the equities, when inevitably, the tide turns and we see a rush into those equities that will be paralleling that rise in gold to the new equilibrium level. Gold gives me everything that I need.

03:20
a gloom and doomsayer. As I said, gold’s been in a bull market long before we had any of these geopolitical emergencies. If gold goes above the 2100 area and starts to have that sustained liftoff that I believe we will see, don’t believe it’s because of the geopolitics.

03:48
It’s for what I would call non-fear factors. Why did I sell my energy company in 2007 to pivot into gold? There were two reasons. Number one, when I started the company in 2003, 2004, I was a very successful investor.

04:10
The price of oil had gone to $18, gone actually below $10 at one point, and my analysis was that oil would go to over 100. Gold at that time was $500, let’s say. When I sold the company in 2007, oil was at 120 from 18.

04:39
600, 650, and that seemed to me to make sense. I would apply that to silver as well. Now, this is where the why am I so comfortable, why do I sleep so well with gold aspect comes into play. Since the time that I sold my energy company, oil went from 120 to at one point minus 20.

05:09
to over 2000. There were people who said, why do I need gold for? I have oil. They’re commodities. And my attitude was, no.

05:21
Oil is a commodity, gold is a currency. Then when you look at the other monetary items that we call currencies, when I sold my energy company, dollar euro was 147.

05:41
Gold has tripled while the dollar has strengthened. Gold doesn’t need commodities to go up to multiply. Gold doesn’t need a weak dollar to multiply. The geopolitical environment was fairly stable. We did not have inflation, which is the other thing that people say is a prerequisite for higher gold prices. And stocks were rallying.

06:10
Completely. So if it looks like a duck, and it walks like a duck, and it quacks like a duck, and it even tastes like a duck, it’s a duck. Now at the same time, the reason why I pivoted to gold, and I said it at the time, was I wanted to deal with the upcoming financial crisis, which was apparent to me in 2007. And I used that to exit our energy company. I used that to exit our-

06:40
platinum company, because these were economically sensitive, I wanted to move into a currency that could not be debased. The best one that I could find was gold, which has made new all-time highs against all currencies, including the dollar. Nothing has changed in my worldview. If anything, I’ve had what psychologists would call positive reinforcement, but then again, so have the Indians. Every Indian who’s ever bought gold.

07:09
since the dawn of mankind is doing well. Having gold as a store of value, having it as the best performing currency in the world, having it as an asset, which does not represent someone else’s liability, to me, it’s the perfect asset. Who wouldn’t want to find that? I’ve been working on Wall Street for 20 years now.

07:35
has always been treated as the script tonight. They only really talk about gold when it’s rallying. We don’t talk about gold on Wall Street. On the flip side, look at the acceptance that Bitcoin has had on Wall Street. Why Tom?

08:00
people have bought into the gold argument. One of the most powerful arguments made by proponents of cryptocurrencies is that it’s gold 2.0. I no longer have to tell people when I meet them when we talk about gold, I no longer have to make the case of having the merits of gold being that it is a currency that can’t be freely debased. They buy that.

08:29
It used to be, until the cryptocurrencies changed the narrative or reinforced our narrative, it used to be that people would say, well, you can’t use gold, you can’t eat it. My response would be, what do you do? You eat yen, you eat euros, you eat Aussie, it’s a currency. Now people understand.

08:58
that having a currency that cannot be freely debased is good news. The best sign that we’re all right in that respect has been the buying by central banks, which know better than anyone else, the true value or lack therein of so much of the world’s paper. The buying by China.

09:26
and India competing over who’s the largest purchaser. We in the West suffer from a certain form of narcissism, but the pivot, the shift to different kinds of economic power to Asia, one of them is the buying of gold. When gold pops, and we who are a little bit more feckless in the West start to say, oh, you know what? That makes sense. I’m jumping in there.

09:57
It’s only going to add kerosene to the fire. They’ll start by going into the ETFs. Then I think that you will see gold stocks, particularly those which are in safe jurisdictions, which goes to a lot of what we just spent considerable amount of time discussing. All of that reinforces my own narrative, which is that the way to sleep well at night is to have the greatest.

10:26
amount of leverage to an underlying theme in a jurisdiction that will allow you to keep the fruits of that leverage. That’s why NovaGold is, for me, the perfect asset. I want to talk NovaGold and the miners, but just one more question out of curiosity of when you do get that pushback of, well, then Tom, why wouldn’t you be in Bitcoin if it is?

10:51
Gold 2.0 and it’s just a better version of gold and it’s the fastest horse in the race and Bitcoin is here to stay. Do you have a one line answer you tell those folks? There are a lot of things that can go wrong with cryptocurrencies, not the least of which is that there are a lot of things that can go wrong with the platforms on which they’re held.

11:20
a collapse of the Bronze Age again, it’s likely to come from some butterfly effect calamity that hits the internet and the global financial infrastructure. I don’t know how that affects cryptocurrencies. When I don’t know something, I don’t know how to do it.

11:47
I prefer to avoid it. With gold, $2,000 an ounce, this should be the time for miners. I think it will be. I think that what you will see is a stealth breakout, that people will not really be noticing that a bottom was put in. And then the way that-

12:15
the markets work, once people see that something is performing, they want to buy it. People very rarely buy something that’s truly depressed and represents value, because they’re afraid. They see it as buying a falling knife. Now, the great investors of the world like Warren Buffett, or Lee Kai-Shing, and some others, they looked for falling knives.

12:45
They did their analysis and they said, is that justified or are people just running in the opposite direction, in which case I’m going to load up the truck? That in turn creates its own virtuous circle. It’s just a truism that in the financial world, unlike the real physical world where people buy more of something when it’s cheaper, in the financial world, people need the ratification of the-

13:14
auction process that are the financial markets in order to see that other people are buying too. Then when things start to outperform, they then want to get in on the action because people have a fear of missing out. Of course, FOMO. Exactly. Most people would rather lose money in conjunction with other people and buy something that’s overvalued because of FOMO.

13:43
and then watch it go down because they’re afraid to sell it lest it goes back up and it shows their neighbor to have been more prescient than they are. That’s just human psychology and it hasn’t changed. Where do you want to see Nova Gold a year from now? I want that the investing public will reach the conclusions about Nova Gold and by extension, the Donlin.

14:12
project that we have reached, that Fidelity, John Paulson, the Anielis, Tocqueville, Sprott, First Eagle, not to mention, of course, Black Rock Vanguard and the rest, but a lot of smart money has come to understand that the Nova Gold story is an extraordinary one, because it is a pure play.

14:40
on an asset that it’s in its combination of virtues is unique. I can literally ask someone to say, tell me if I’m wrong in terms of its size, in terms of its, first of all, you start with 39 million ounces in measured and indicated. You start with 2 and 1 quarter grams of gold, open pittable.

15:10
This is where the gold industry was 20 years ago. We’re now approaching a gram and new discoveries are lower than that. When you have the quantity, you have the quality, you have the ability to mine it to scale, and then the grade kicks in to be able to give you very low operating costs because if you’re mining two and a quarter grams versus one gram or one and a quarter grams, Keteris

15:39
your price per ounce on an operating basis is going to be half. That is a relative advantage. Then you take into account that the 40-ish million ounces are on only three kilometers of an eight kilometer mineralized belt that’s already been identified. That eight kilometers in turn only represents 5% of the land package that we have with Barrick.

16:08
Then, of course, you superimpose onto that fabulous relationships with the native corporation partners and the fact that we are in one of the world’s tier one jurisdictions. Alaska is the second largest gold producing state in what’s considered to be overall the safest large jurisdiction in the world. For me, jurisdictional risk now is the gating factor for whether or not you want to own.

16:36
How does that relationship with Barrick work? Do you speak to Mark Bristol regularly or just curious? Mark and I go way back. I would say that when it comes to Barrick, Mark and I have a very different view on jurisdiction. I made my bones in Bolivia.

17:06
Zimbabwe, South Africa. I sold Kibali to Mark when I was the largest shareholder of Modo Goldmines, which I accumulated during the financial crisis. In fact, he will always say that the two people who really believed in Kibali were himself and me. I come from that world of the-

17:36
How should we put it? Go with the gold is mentality, or go with the silver is mentality. I decided to leave that behind. There came a time when I went from being very, very adventurous to seeing the world in a different way. You’ve heard some of those prognostications. I decided that whereas I probably had the most expensive.

18:05
gold exploration portfolio in the world at one time, from Mauritania through to Pakistan, Malaysia, and pretty much everywhere in between. I was, according to the Arab sovereign wealth funds who invested with me, probably the largest holder of mineral rights in the Islamic world. Nice Jewish boy from New York, so hardly stereotypical.

18:34
conclusion that that world which began with Newmont going to Yanukochia with Buenaventura in the 90s, that that world was going to come to an end. As I always say, there’s that wonderful line of Woody Allen where he said, I’m not afraid of death. I just don’t want to be there when it happens. I thought, you know what? It’s time to go. I got rid of everything between Mauritania and Pakistan.

19:05
And I said, I’m going to focus on the part of the world where I can sleep at night, where the rule of law is not a novelty, where you do not rely on a relationship with the hairdresser, of the mistress, of the deputy, mines minister, and all of that other nonsense. I want to come back to a place where I’m comfortable. Where I know that-

19:33
When I go to sleep at night, what I thought I owned, I still owned in the morning. There aren’t that many places left. I came back to the future. The interesting thing was when I came back, because we were still dealing with the fumes of the go where the gold is mantra, assets in the heart of darkness were trading at

20:02
greater valuations and multiples than North American assets because people still said, well, it’s harder to get things permitted in North America and you have more environmental restrictions and the like. My attitude was, you know what, there’s merit to that. The point is that when you get your federal permits and state permits like Nova Gold has, you own it and they’re not going to take it away from you.

20:31
that especially if I’m right on the price of gold, most gold assets in the jurisdictions where the rule of law is not truly inculcated will be nationalized as strategic, like we’re seeing with lithium, like what may very well happen with copper. It would basically is gold confiscation. Correct.

21:01
It will come either piecemeal in a salami strategy or outright. If you look at West Africa, who’s the big player in gold now? It’s Russia, the Wagner Group. Russia is looking for gold from a belt that stretches from the Red Sea to the Atlantic. The Chinese are looking for gold. The Chinese are not just the world’s largest producer of gold. They buy all of it.

21:31
They and the Indians, depending on the year, are the largest importers. These are strategic assets. Could you see this nationalization happen in Canada and the United States? No. The only scenario in which that happens is if the United States decided to go back to the gold standard. When Roosevelt confiscated gold, he had to in order to gain control of the money supply because the dollar was literally as good as gold.

22:00
because you could trade your currency into gold. It’s not the case anymore. You can’t buy fiat. So you don’t think gold confiscation could happen again? There’s only one way it could happen, and that is if gold rose to a level that it would be able to cover a meaningful metric of the money supply. And for that to happen, the numbers that I used to look at, and that was before.

22:30
the global financial crisis, you were talking about 20,000, 25,000 even then. If people start to have a sense that there is a snowball effect for things that might happen with the dollar, scenarios in which we could have runaway inflation, or conversely, depression, which is also very good for gold, one way or the other, you could have that

22:59
atavistic ancient way go back to something that has given them a sense of value going back to before the Lydians created the world’s first coinage out of Electrum, which is a naturally occurring alloy of gold and silver. Fascinating insights. As we wrap here, Tom, making the brilliant case for gold, I asked you, you obviously get good night’s sleep.

23:28
Talk of World War III aside, is there anything else that keeps you up? We didn’t even talk about the Fed pivot or the possibility of central bank digital currencies. Are there any other concerns? Truth be told, if we discuss the Fed or digital currencies, my answers would probably be something along the lines of, I don’t know.

23:57
Give us a lesson. Most of the time, I just say be lucky. There’s that great line attributed to Napoleon, but probably actually preceding him with Cardinal Mazarin that don’t give me smart generals, give me lucky ones. In the exploration business, I think any of my pals like Ross Beatty and Bob Quatermain and the great explorationists, Bob Friedland, Lundin.

24:27
You mentioned Frank Giustra. We all recognize the power of luck. Ross puts it beautifully. He says, she’s the only thing that has never let me down. Same thing for me. Yeah, la fortuna. And I’m a very, very big believer in that. But the advice- Being born lucky, or can you become lucky? Well, first of all, let’s understand anyone who’s born.

24:55
where your parents don’t have distended bellies from hunger, or where they are not fleeing starvation or political oppression or anything else, you’re already lucky, and you should already be counting your blessings. Then there’s genetics and who you’re born to and whether you have good parents, and then so many sliding doors phenomenon. I know that I’m the product of.

25:24
many instances where if I’d gotten off the elevator 30 seconds later, something that came back and redounded and candidly made me wealthy would not have happened. You either take the tech that I bucked 1000 to 1 odds and found something, I’m a genius. If it happens again, I’m a super genius, or you look at that and you go, whoa, this shouldn’t have happened.

25:54
luck or la fortuna has been with me, and I’ll try to do something that merits her goodwill. It leads you then into all kinds of other ways of living a good life. A good life means being grateful, then it means giving back to the people and the causes that care to you. That has certainly been the overweening ambition that I’ve had for decades now.

26:24
On a more prosaic note, I can’t really influence somebody to be lucky, but I can influence them by giving them one piece of advice, especially when they’re young. If you have true conviction about something, pound the table. Passion. Passion, go all in. If you don’t have that conviction, feel free to say, I really don’t know.

26:53
If somebody presses you and said, no, you must have a view, say, no, I actually mustn’t have a view. I want you to focus on that which I really believe is going to happen. I know that even if you say that you won’t hold it against me, that I gave a flippant off the cuff remark about something that you’re asking, you still will, because it’s human nature to remember the mistakes people made. If you are going to make a mistake.

27:23
Do it in a grand way. If you’re going to fail, fail spectacularly. Don’t fail because you felt the need to be glib. So 90% of the time, I’ll say, I really don’t know. But it’s that time when I say, the Iranians are going to attack next month, this day and date. And then go all in on that if you truly believe it.

27:54
This is always my advice, stay true to yourself.

27:59
and don’t let people get away with forcing you to answer questions that you can’t with maximum conviction. And I think it’s probably fair to say in my case that I’m not subtle when I believe that I have a handle on how I see things happening. So I guess my question to you is what, obviously, the question of legacy has to come up and what you want to leave behind.

28:28
What do you want people to remember Thomas Kaplan for? I have been blessed. And I say this as a way to distinguish between a gift and talent, which can be nurtured. But I’ve been blessed with having multiple passions that create their own ecosystems, some of which overlap.

28:57
So I developed a love for art, particularly classical art, art of the Dutch golden age, from the time that I was six years old. Same for my love of history began then and was nurtured. The same time as I developed this boyhood yearning that when I grew up, I would be a wildlife.

29:26
conservationist focusing on saving tigers and the big cats. I developed deep connection to antiquities. As part of my study of history, ended up pursuing saving cultural heritage in war zones. As part of my love for the environment ended up co-founding with my wife and Alan Rabinowitz,

29:57
leader in cat conservation around the world. My study of history, I pursued all the way through my undergrad and doctoral work at Oxford where I could have pursued that as an academic. But instead, I chose to use an affinity for the understanding of cycles to give me a relative advantage in natural resources. For which I have no natural.

30:26
aptitude intellectually or in terms of training, I’m not a mining person or an oil and gas man, but I’ve known how to pick the best to surround me and to tell me the truth. There’s a wonderful Russian proverb that it’s better to be slapped with the truth than kissed with a lie. And

30:54
I’ve always surrounded myself with people whose job…

30:59
is to recognize that as King Solomon put in the proverbs, as iron sharpens iron, so a friend should sharpen a friend. Tell me what I need to know. Never tell me what you think I want to hear. For that, there’s zero tolerance because I immediately lose my confidence because I know what I don’t know. Whether it’s been in art, in culture, the environment, in my business, the common denominator has been wanting to move the needle.

31:28
and to do it in a way that I can be proud of, to do it in a way that my children can say, Papa did it right. He didn’t go out of his way to harm anyone in the making of his movie and had a very, very firm conviction, which I always teach my children and which they know I adhere to.

31:57
which is don’t lie. I know that sounds really strange, but the ancient Persians were nomadic people before they took over Mesopotamia and became peripatetic, but more urban. An ancient Persian prince was taught three things, how to ride a horse, they were the best horsemen, how to shoot a bow and arrow backwards, they didn’t have saddles in those days, and how not to lie.

32:27
was a fundamental precept of Zoroastrianism and had a huge impact on the Jewish religion as well. I always tell the kids, don’t lie. In the household, when they absolutely want to hear the truth, they go, that’s it, I’m going to Papa. I’m very proud of that. I’m proud of the fact that they know that-

32:56
No matter how brutal. No matter how brutal, but also they know that I’ve really led a life of trying to move the needle to make a difference in the things that I’ve cared about. And I believe I have. And so it’s hard not to lead a happy life if you’ve actually fulfilled something in all the areas that really moved you.

33:26
And so to me, that’s really the key to happiness, because when you learn to be grateful for what you’ve done, for what you’ve been able to do, for who you have in your life, what you have in your life, then you can understand that happiness doesn’t come from wanting someone new or wanting something new and shiny. It comes from loving what you have, not what you think that you want.

33:54
If you really embrace that philosophy, and it’s an ancient philosophy, this is, sounds like a hallmark card, but it goes back to the ancient Greeks, also in different geographies, Buddhists, and even further east in Asia. If you really believe it, you can be happy and you can endure trials. So you know.

34:24
My legacy is not what people will say about me afterwards because the truth is that maybe my kids, I hope, will remember it. After that, less likely. I don’t care. I care about what contribution I’ve made in my lifetime. I’m not thinking about eternity.

34:54
I’m thinking about when I go to sleep at night, did I move the needle in one of the areas that matters to me? And if I did, that was a good day. And if I have an accumulation of good days…

35:11
The best legacy that I can have is to show that I can live well. That’s all that I need. I love that. The great Tom Kaplan. I mean, who should play you in a movie? Well, apparently, I do look like Danny Kay, or at least I did. But that’s a name that so few of your viewers would still remember. But that’s dating me. Well, I want to thank you for your time.

35:40
I thoroughly enjoyed this. Merci, grazie, in whichever language, I’ll take an hour with you any time, Tom. Thank you so much. Merci infiniment, grazie mille. And my thanks to you for once again, just a splendid and enjoyable time. And I wish you and all of your followers peace and

36:10
thriving. I hope you enjoyed Tom’s thoughts on gold monetary policy and how he feels the world will evolve over the course of the next few months. I know I sure enjoyed the conversation, but I also want to invite you all to reach out to one of my colleagues at ITM Trading if you have any questions about the content discussed or if you just want to discuss a strategy session regarding your money and what you should be doing with it, given the context of the world. Feel free to reach out.

36:39
at the Calendly link below in our description. I urge you all to do so. That’s it for me. Thank you so much for watching the Daniela Cambone show here at ITM Trading. And as always sign up at danielacambone.com so you can stay on top of all these exclusive and incredible interviews. Thanks for watching.

SOURCES:

TAGS:
Daniela Cambone, ITM Trading, Lynette Zang, gold, silver, wealth protection, coins, buy gold, economy, Dr Thomas Kaplan, Tom Kaplan, NOVAGOLD, NYSE, gold investing, monetary policy insights, billionaire investor interview, economic analysis, precious metals markets, jurisdictional risk in mining, gold vs bitcoin, luck and success, leaving a legacy

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