Latest / Merryn Talks Money / Investment Trust Turmoil, Silver’s Surge, and Bitcoin’s Wild Ride

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Investment Trust Turmoil, Silver’s Surge, and Bitcoin’s Wild Ride · Merryn Talks Money

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Merin
• 0:19
  Speaker 1: Talks Money Market Rap, where we talk about the biggest
• 0:21
  Speaker 1: moves in the markets this week and what is driving them.
• 0:24
  Speaker 1: I'm Maren Thumsep, Web Editor at Large for Bloomberg UK Wealth.
• 0:27
  Speaker 2: And I'm joined Stevik, senior reporter of Bloomberg and author
• 0:30
  Speaker 2: at the Money Disturbed newsletter, Award winning multi.
• 0:34
  Speaker 1: Award Someone please give the podcast an award award, Please, please, please,
• 0:43
  Speaker 1: someone give us an award so we can be multi
• 0:45
  Speaker 1: award winning because being slightly slightly underneath John's newsletter messes
• 0:50
  Speaker 1: with my head a little. Anyway, It's been an exciting week,
• 0:56
  Speaker 1: right John been able to put the budget behind us,
• 0:59
  Speaker 1: now we haven't. We can never about the punche behind us.
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  Speaker 1: But we're not going to talk about the budget. We're
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  Speaker 1: going to talk about the excitements and the investment trust
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  Speaker 1: industry because we feel like we've participated in them. Just
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  Speaker 1: a little downing.
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  Speaker 2: Yeah, yeah, I feel that we should mention this one
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  Speaker 2: because this is the collapse of the mega merger between
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  Speaker 2: Hickel and Trigg. And obviously regular podcast listeners will remember
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  Speaker 2: that we had Chris Claudier of Capital Gearing Asset Management
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  Speaker 2: on the other day basically saying why the merger was
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  Speaker 2: a bad idea and now it has basically fallen through
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  Speaker 2: due to pressure from shareholders, which would have included Christopher
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  Speaker 2: and his colleagues cg EM and Yeah, to be honest,
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  Speaker 2: I mean, I think we would both agree that this
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  Speaker 2: was not really a great deal for shareholders, especially not
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  Speaker 2: Hickeld shareholders. And it's probably a good thing that it's
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  Speaker 2: gone by the way.
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  Speaker 1: Site and it's interesting that you know, shareholder is getting
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  Speaker 1: involved and a lot of activity in the sector, but
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  Speaker 1: Shaholder isn't looking at what's best for them analyzing these
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  Speaker 1: deals probably and nothing is just be waved through it.
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  Speaker 2: Yeah, it's nice to see. I mean, it is nice
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  Speaker 2: to see. I mean, you know, you talk about shareholder
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  Speaker 2: democracy specifically a lot, and the investment trust area is
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  Speaker 2: one place where I think we have seen a great
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  Speaker 2: deal of it this year because obviously it started off
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  Speaker 2: with SABA, the US activist Edge found you know, kind
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  Speaker 2: of requisition in meetings at seven different investment trusts and
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  Speaker 2: then losing the vote at all of them, but then
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  Speaker 2: also managing to make changes that arguably certainly in some
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  Speaker 2: cases were probably for the best. So I mean, I
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  Speaker 2: think it's from that point of view it has been
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  Speaker 2: a good year for investment trusts, particularly because the other
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  Speaker 2: issue is, I mean, the Hickeling Trigg merger is indicative
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  Speaker 2: of too much bloat in the sector that came about
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  Speaker 2: arguably during the zero interest rate era. And although this
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  Speaker 2: wasn't the way he kind of go about fixing that,
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  Speaker 2: I think, I mean, certainly most of the brokers think
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  Speaker 2: that it puts that sort of sector in play. As
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  Speaker 2: they say, so maybe someone else will come along in
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  Speaker 2: bed for Trig, or someone else will come along and
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  Speaker 2: I'm possibly even bid for Heckel, depending on whether they
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  Speaker 2: you know, had been thinking about it due to this
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  Speaker 2: merger taking place. So no, so I think it's I mean,
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  Speaker 2: it's pretty positive.
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  Speaker 1: And what about the other big thing that happened this week,
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  Speaker 1: which is the proposed merger between Bailey Gifford US Growth
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  Speaker 1: and Edinburgh Worldwide Investment so two to Bailey Gifford Trusts
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  Speaker 1: and they proposed a merger both being a real discount.
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  Speaker 1: Sort of similar things going on, and SABA has has
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  Speaker 1: shared in those as well and immediately said that they
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  Speaker 1: weren't mad for that.
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  Speaker 2: Yeah, well, this is an interesting because this is SABA
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  Speaker 2: sort of coming back to the headlines there were this one.
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  Speaker 2: I mean because obviously Edinburgh Worldwide Investment Trust was one
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  Speaker 2: of the trusts they took a tilt at the start
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  Speaker 2: of the year. Basically they've come back this. I mean,
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  Speaker 2: this is a kind of tricky one because SABA owns
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  Speaker 2: about thirty percent or certainly is it has stakes about
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  Speaker 2: thirty percent, and each of these trusts clearly is quite
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  Speaker 2: keen to get hold of them. I think probably one
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  Speaker 2: of the most interesting things about the trust is they
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  Speaker 2: both hold quite decent stakes in SpaceX, which obviously the
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  Speaker 2: long masks big satellite company. It's one of the few
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  Speaker 2: private companies that you know, people probably value it more
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  Speaker 2: highly than you know, it's paper and I have would
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  Speaker 2: be because everyone's so excited about it. So I can't
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  Speaker 2: help but think that this is the prize for SABA
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  Speaker 2: and the difficulty then as well, you know, is any
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  Speaker 2: of this best for the other shareholders And obviously, I
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  Speaker 2: mean it's up to the other shareholders to vote on that.
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  Speaker 2: Because sabas now requisitioned the general meeting to oust the
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  Speaker 2: current board of WI and replace it. Now I'm sorry,
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  Speaker 2: I'm wondering why this will go any differently to the
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  Speaker 2: previous kind of vote. But then again, Sabat owns more
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  Speaker 2: of WI now than.
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  Speaker 1: It used to and is nearly Christmas around's a little distracted.
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  Speaker 2: Yeah, that too, So we'll just need to see what happens.
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  Speaker 1: This is one to keep an eye on, definitely. Now
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  Speaker 1: moving on to a subsector of our favorite subject. So
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  Speaker 1: the gold price has been marvelous recently. We're firmly above
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  Speaker 1: four thousand again and staying there and with a little
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  Speaker 1: bit of volatility. But relative to digital gold, your bitcoin
• 5:16
  Speaker 1: digital tulips, I think we'll call it now, depends which
• 5:19
  Speaker 1: you want to go on this, but relative to that,
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  Speaker 1: gold is an absolute bastion of stability and value. Right,
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  Speaker 1: So that's all going fine. We've talked about gold a
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  Speaker 1: million times in this podcast. Everyone knows what's going on there.
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  Speaker 1: But one thing that you've been saying for ages is
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  Speaker 1: that the excitement really starts when silver starts moving. And
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  Speaker 1: I think listeners will remember quite how excitable you got
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  Speaker 1: when the silver price went through fifty dollars and more,
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  Speaker 1: hasn't it. Yeah, everyone needs a hobby, you know, everyone
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  Speaker 1: needs a hobby of some bit of tennis, archery, riding,
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  Speaker 1: I don't know.
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  Speaker 2: But for John's watching the silver price, yeah, it really
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  Speaker 2: is just watching it because again it's one of those
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  Speaker 2: things when I say win. Any So, the last toy
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  Speaker 2: that silver's got anywhere near fifty dollars announce it collapsed
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  Speaker 2: in a massive bear market shortly after US. That's nineteen
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  Speaker 2: eighty and twenty eleven. But this time around, silver's not
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  Speaker 2: only got up to fifty, it's nice to kind of
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  Speaker 2: sol through it quite convincingly. And I think as we
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  Speaker 2: speak about fifty seven, we gotup to fifty eight yesterday
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  Speaker 2: or the day before, and it mostly seems to be
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  Speaker 2: I mean, the immediate move mostly seems to be down
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  Speaker 2: sort of because there's been all this talk of tariffs
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  Speaker 2: on rare earth metals and other industrial metals, and silver
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  Speaker 2: sort of ended up on that list. There's also been
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  Speaker 2: all of this kind of movement to silver out of
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  Speaker 2: the out of London, which is the main market, was
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  Speaker 2: traded in twenty other markets.
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  Speaker 1: So basically is it physically moving out of London?
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  Speaker 2: Yeah, yeah, no, physically. So there's been one of a
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  Speaker 2: couple of colleagues, one of the Commodities desk, and they
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  Speaker 2: were writing some very interesting stuff about this, where it's
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  Speaker 2: actually at one point dead become what people actually flying
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  Speaker 2: silver over because silver isn't normally like you might charter
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  Speaker 2: a flight to fly gold over because obviously gold, you know,
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  Speaker 2: you get a lot of value per pound of gold,
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  Speaker 2: whereas if you're going to charter a flight to fly
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  Speaker 2: a load of silver ringletch you're not actually able to
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  Speaker 2: put that much weight on the plane. But actually it
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  Speaker 2: was worth doing it kind of recently. But that's all
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  Speaker 2: I mean, that's all the kind of technical stuff about
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  Speaker 2: you know, silver not quite being where it needs to be,
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  Speaker 2: and that's all down to, well, there is actually kind
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  Speaker 2: of jewelry and industrial demand, there's also added investment demand,
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  Speaker 2: so the ETFs needs silver to you know, be located
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  Speaker 2: in certain places. But beyond that, it's also the fact
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  Speaker 2: that Donald Trump has kind of dropped a very heavy
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  Speaker 2: hint that the next Fed chief is going to be
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  Speaker 2: a chap called Kevin Hassett, and the market assumption is
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  Speaker 2: that he's going to be much more you know, keen
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  Speaker 2: on lower interest rates than they've got got so be
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  Speaker 2: basically an easy money fed because gold did bounds too.
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  Speaker 2: It's just gold hasn't gone quite as kind of nutty
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  Speaker 2: as silver because basically the market is larger and more.
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  Speaker 1: Liquid about silver as a monetary metal.
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  Speaker 2: Well, definitely, yeah, I mean, I think one of the
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  Speaker 2: things that I mean, the interesting thing about silver is,
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  Speaker 2: as well as being a very kind of small, kind
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  Speaker 2: of fairly you know like type market, it's the fact
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  Speaker 2: that it's unlike gold, it is industrial, a lot of
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  Speaker 2: it is used in industry, but like gold, it actually
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  Speaker 2: has a monetary component, which basically none of the other
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  Speaker 2: precious metals to I mean, like Russia once tried to
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  Speaker 2: make it back to platinum coins, but they didn't take off.
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  Speaker 2: So basically gold and silver are the only precious metals
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  Speaker 2: that I've ever been used as money for a prolonged
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  Speaker 2: period of time. I think the way the way I
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  Speaker 2: put it the other day and Money Distilled, is that
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  Speaker 2: their monetary salience has gone up as people have become
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  Speaker 2: more concerned about the you know, the current global financial system.
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  Speaker 2: I mean, I think one thing I always think it
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  Speaker 2: is interesting if you look at the absolute bottom for
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  Speaker 2: gold during the free floating standard that was in the
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  Speaker 2: late nineties, and gold hit rock bottom just about at
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  Speaker 2: the same time as the Euro was launched, and I
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  Speaker 2: think the Euro, if you like, is the kind of
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  Speaker 2: the symbol of a heupistic belief in fi currency and
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  Speaker 2: the ability of governments to essentially, you know, create a
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  Speaker 2: single currency that was bolted from all these different nation
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  Speaker 2: states and gold kind of reaching it's in the deer
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  Speaker 2: at that point. I think it's just almost is very
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  Speaker 2: symbolic of what was going on at the time. And
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  Speaker 2: now we've got gold at a record high, when you know,
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  Speaker 2: the US dollar standard itself is in doubt because it's
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  Speaker 2: kind of fracturing. It's no longer viewed as a politically
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  Speaker 2: neutral standard. It's now you've got to be. The friendlier
• 9:53
  Speaker 2: you are with the US, the more the US dollar
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  Speaker 2: system favors you, and vice versa. So yeah, So basically,
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  Speaker 2: I think that the monetary celions of gold and silver
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  Speaker 2: has gone up and that's being reflected in the place.
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  Speaker 1: Okay, interesting, that should bring us, I think briefly, briefly
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  Speaker 1: onto bitcoin. I mean, we mentioned it briefly at the beginning,
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  Speaker 1: but you know, it's had a very very volatile few weeks,
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  Speaker 1: right and the beginning of this week, you know, down
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  Speaker 1: eight percent, then back up to pretty much where it
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  Speaker 1: was before. And there's long list of ideas about why
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  Speaker 1: it is that it might have gone up again, what
• 10:29
  Speaker 1: it is that it went down in the birthplace, and
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  Speaker 1: you know gold didn't follow it. And I've been looking
• 10:35
  Speaker 1: through the list of things that people think might have
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  Speaker 1: forced bitcoin down, and then you know, it's it's everything
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  Speaker 1: for every it's profit taking. Is it about? Is it
• 10:44
  Speaker 1: about what we usedpeak called micro strategy, now called strategy,
• 10:47
  Speaker 1: and about the possibility that they might sell some bitcoin
• 10:50
  Speaker 1: we think it was said that they never would, or
• 10:52
  Speaker 1: some of the other treasuries might have to sell some
• 10:53
  Speaker 1: bitcoin suppliers more than you thought. Is it about, Oh,
• 10:57
  Speaker 1: I don't know, And we did. We did a conversation
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  Speaker 1: the the day that you will hear on the podcast
• 11:01
  Speaker 1: in a few weeks with that nice man from Saxo
• 11:04
  Speaker 1: Bank about the unexpected, unexpected things that might happen next year,
• 11:08
  Speaker 1: and one of those was that QDA might come earlier
• 11:10
  Speaker 1: than you think. So suddenly quantum computing takes hugely forward
• 11:14
  Speaker 1: and all your passwords are completely irrelevant, there's no encryption left, etc.
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  Speaker 1: But one of the other things that everyone's talking about
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  Speaker 1: the moment is the yen carry trade, which you and
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  Speaker 1: I've talked about before, but now seems to be really
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  Speaker 1: beginning to kick off, or rather reversal lot. So it's
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  Speaker 1: been going on for years. When cheap money flows out
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  Speaker 1: of Japan, people use that cheap money to invest or speculate,
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  Speaker 1: their makes some money, they pay back the debt, they
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  Speaker 1: keep the change. Very easy trade right going on forever.
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  Speaker 1: But it's based on the assumption that interest rates in
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  Speaker 1: Japan remain very very low, you know, close to zero.
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  Speaker 1: And don't forget it wasn't that long ago the interest
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  Speaker 1: raised in Japan but negative. So the trade relies on
• 11:51
  Speaker 1: verging on free money. And of course Japanese rates are
• 11:55
  Speaker 1: now going up sharp, rising JGB yields, and there's lots
• 11:59
  Speaker 1: of discussion about with the Bank of Japan will actually
• 12:01
  Speaker 1: raise interest rates this much this month, So when that
• 12:05
  Speaker 1: happens suddenly, I'm in Albert Edwards, who he had on
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  Speaker 1: the podcast a few weeks ago. I know he's a
• 12:09
  Speaker 1: perma bear, but nonetheless his is a clever one. He's
• 12:12
  Speaker 1: a clever one. The unwinding of the carry trade could
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  Speaker 1: cause a loud sucking noise in US financial assets, and
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  Speaker 1: of course particularly in those that are very heavily leveraged,
• 12:21
  Speaker 1: and a lot of people who buy bitcoin do it
• 12:23
  Speaker 1: with that so very heavy leverage trade in lots of cases.
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  Speaker 1: So maybe that has something to do with what happened
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  Speaker 1: to bitcoin, and maybe that was some kind of canary
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  Speaker 1: in the coal mine for what happened. As Japanese rates
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  Speaker 1: continue to go up, what might happen across the board.
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  Speaker 1: I mean, Albert says, if you're going to learn about
• 12:40
  Speaker 1: anything over Christmas, make absolutely sure that it's how the
• 12:46
  Speaker 1: yen carry trade works. Be sure you understand how that
• 12:50
  Speaker 1: fits into the financial system, because you may well need
• 12:53
  Speaker 1: that information.
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  Speaker 2: Yeah, I mean, I play it all in two thousand
• 12:56
  Speaker 2: and eight. Absolutely, Yeah, it's therefore as one he can
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  Speaker 2: I keep an eye on joined.
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  Speaker 1: Well, it's very complicated. I mean, you know, it's like
• 13:03
  Speaker 1: it's like all these things. You can make it as complicated,
• 13:07
  Speaker 1: but it's really in essence, it's very straightforward. In fact,
• 13:10
  Speaker 1: I think I just I think I just explained it to.
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  Speaker 2: This podcast a couple of times.
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  Speaker 1: You'll be fine, Yeah, this is not complicated stuff, although
• 13:19
  Speaker 1: obviously it might feel complicated. It's your portfolio collapses right anyway.
• 13:27
  Speaker 1: At this point, John You're sorry you don't have steal.
• 13:29
  Speaker 1: You're sorry you don't have as much gold as you like.
• 13:31
  Speaker 1: Be quite glad you haven't got bitcoin, aren't you.
• 13:33
  Speaker 2: Yes, Like I said, it still needs to fall ninety
• 13:37
  Speaker 2: five percent for me to be in the money technically,
• 13:39
  Speaker 2: but it's it's a start.
• 13:42
  Speaker 1: I mean, it is important to remember every every time
• 13:44
  Speaker 1: Bitcoin has these these volatile moments, as it just did,
• 13:48
  Speaker 1: and you go look at that, look at that down
• 13:50
  Speaker 1: eight percent, down sixteen percent, et cetera, you've got to
• 13:52
  Speaker 1: remember that in the last five years alone, it's still
• 13:55
  Speaker 1: up four hundred percent. So the bitcoin naysayers that are ees,
• 13:59
  Speaker 1: we still look ridiculous.
• 14:00
  Speaker 2: Oh yeah, And I mean it's collapsed quite a few
• 14:03
  Speaker 2: times and it has so far always come back.
• 14:06
  Speaker 1: So at the harving, John, it's all about the harving.
• 14:10
  Speaker 1: The it's sorry the hovening. Yeah, that one. See, we
• 14:18
  Speaker 1: know we are done with the kids.
• 14:20
  Speaker 2: We know a trip to we do.
• 14:24
  Speaker 1: We have to stop that, We have to Thanks for
• 14:33
  Speaker 1: listening to this week's Marin Talks Money Debrief. If you
• 14:36
  Speaker 1: like our show, rate review, and subscribe wherever you listen
• 14:39
  Speaker 1: to podcasts. Also, be sure to follow me and John
• 14:41
  Speaker 1: on ex or Twitter, at Marinas w and John Underscore Steppe.
• 14:45
  Speaker 1: This episode was produced by Sersadi Productions, supported by Moses
• 14:49
  Speaker 1: and Questions and comments on this show and all our
• 14:51
  Speaker 1: shows are always welcome. Our show email is Merimney at
• 14:54
  Speaker 1: Bloomberg dot net