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It's My Money with Andre Basson · Strictly Business

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  You're listening to Strictly Business Podcast with Lindsay Williams.
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  This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
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  for global wealth creation.
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  Welcome to It's My Money.
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  It's My Money is brought to you by Brenthurst Wealth, South Africa's
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  multi-award winning boutique wealth manager.
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  With me from Brenthurst Wealth this week is Andre Besson,
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  and we're going to talk about something that I've spoken about many times in
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  recent weeks and even months.
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  but continues to fascinate and that is gold.
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  Andre, you couldn't resist, could you?
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  You couldn't resist, I can't resist, we had to talk about gold.
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  Yeah, no, it's like the gold rush, everybody wants to get in.
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  It's a fascinating topic and especially if you dig a bit under the bonnet and
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  understand why things happening
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  in the way they are.
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  Okay, let's examine that first of all because it's my contention.
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  that a couple of years ago, maybe even further back,
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  central banks and smart money started buying gold because of various reasons.
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  I'd like to hear your opinion first, please.
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  Yes, Janne, 100% correct.
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  If you look at the Russians, they knew if they would do something naughty, then it
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  will be with sanctions,
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  because it's not the first rodeo.
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  they in the Crimea
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  annexation the u.s government has hit them with sanctions so the first
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  thing they did after that was they started to sell their u.s treasuries and then buy
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  gold with that so by the time they
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  invaded ukraine there
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  was no u.s treasuries on their forex balance sheet and a lot of gold so yeah
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  it's not something that's
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  happened only the last week or month no and the other thing is in my opinion,
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  and you can shoot me down if you want to, that certain governments,
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  certain regions are in such bad debt, the only way they can get out of debt is to
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  reflate.
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  And it's Japan, it's Europe, it's the United States of America.
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  And if inflation starts to pick up, then people go for gold.
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  So that's why they started this amazing run.
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  And I think it was early 2022 that gold went through 2000.
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  And here we are, late 2025,
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  briefly went to 4,390 last week.
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  It's come back a bit now, but it's been an astonishing movement.
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  Yeah, so it's quite crazy, you know, just from 3,000 to 4,000, that's been very
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  quick.
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  So if you look back, so I'm not shooting you down on that.
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  If you look at the U.S.
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  debt, you know, and...
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  Just the income and money that comes in through taxes and goes out through
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  expenditure.
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  They, one commentator say,
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  it's been like more than 20 years that they are in a deficit.
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  They haven't made more money than they've given away,
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  like through just to people or in expenses.
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  So, and the COVID crisis has just, or pandemic has just exaggerated that.
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  So there's a lot of debt and that plays into three themes.
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  Currently, gold is running because central banks buying, the debasement trade,
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  people trading away from the US or de-dollarization.
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  And then the third one is basically gold as a neutral foreign reserve currency to
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  trade with
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  other partners.
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  So, yeah, it's basically those three as a mainstream.
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  Yes, of course.
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  Now we've got to look at the way that people have been investing in gold.
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  I mean, you can buy an ingot of gold and use it as a paperweight or just look at it
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  and rub
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  it and just generally enjoy the beauty of it.
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  But that's very old school.
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  What we have to look at now is things like ETFs, for example.
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  But you're going to go through the ways to invest in gold and how you're advising
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  your clients, please, Andre.
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  Yeah, so the way we invest, I think you can look at one.
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  One of two ways, either you buy in gold as an age or insurance premium,
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  and then you can either buy physical gold, Krugerrands, or
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  ETF that you get exposure to the gold price.
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  The other more aggressive option is to buy gold companies or companies that produce
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  gold,
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  which earn a dividend from,
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  but the reason why that is more aggressive is because the costs are fixed.
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  and they leverage up so they will loan money from the bank and then do more
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  operations to get more money
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  or more gold from the ground.
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  So if the gold price goes up with 5%, typically the share price will go up 10 or
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  15%.
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  But the other way around is also true, gold price drops, the share price drop
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  dramatically.
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  So gold shares on average are three times
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  more volatile than just the general equity fund or shares or the JSE
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  for that matter.
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  So it's really an aggressive play if you go that route.
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  And then even within gold companies, you really need to know what you're doing.
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  Anglo gold is more the old school one.
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  And if you look at a conservatively run and if you, and that's not highly priced,
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  you look at some left field option,
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  DRD gold, they take money.
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  sorry, gold from dumps and recycle that and clean it up and take lower grade gold
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  from that.
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  So it's very different.
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  And then how many gold has been, you've got the gold play, but they're also taking
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  money and reinvesting it in copper mines.
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  So not all gold are pure gold, so pure gold play.
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  So you really need to know what you're doing.
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  What about Sibania?
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  You didn't mention Sibania.
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  Is that something that you wouldn't recommend?
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  Is that something that you've looked at?
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  So, yeah, most of our clients...
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  funds are invested in unit trust funds that that manager decides which to buy and
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  with not um but i i like to track the
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  the companies just for interest sake also so sibania have been intriguing me for a
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  very long time because i really like neil ferneman which
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  they used to run the company for a long while but sebanya basically has a big
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  platinum play
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  also and platinum is very interesting because platinum prices have gone up a lot
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  and sebanya has a lot of
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  exposure to platinum The tricky thing with platinum though is before the recent run
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  in the platinum price,
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  which was not driven by the same drivers that has driven the gold price.
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  Platinum was really a recovery from an all fall down scenario where people thought
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  the industrial
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  or internal combustion engine will just completely disappear over time and be
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  replaced by
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  electric cars.
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  That has not been really the case.
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  There's a demand for a hybrid.
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  kind of car which uses both and for that you also still need platinum in the car,
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  in the engine,
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  while a full electric car doesn't need platinum at all.
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  So almost 60% of platinum mines was running at a loss and now at today's price
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  around 50%
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  of platinum prices are running at a loss.
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  So it was really just a recovery and there might be still legs in that,
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  but it's not the same kind of strategy or reasons that you would buy gold.
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  No, just to finish our gold share discussion, gold shares are very,
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  very highly geared to the gold price when it goes up and when it goes down.
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  And I've always thought that if you see the gold shares not performing as well as
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  the gold prices,
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  that the gold shares, the gold miners tend to know what's going on.
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  That's just sort of an old school theory.
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  So time to get out of gold if the gold shares don't confirm.
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  the rise in the gold price.
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  That's just an aside.
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  And that is not a recommendation for your clients, Andre.
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  The other thing is very finally, is that somebody said to me, the South African
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  gold miners, for example,
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  are making so much money, and they're not going out and buying other gold mines.
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  They're not expanding like they used to and spend all the money recklessly.
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  So there may be some dividends or even special dividends coming up.
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  But again, Again that's pure speculation.
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  ETFs and funds versus general equity funds.
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  What would you do in the publicly traded funds that are available?
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  And there are so many of them.
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  So I would just stick to a very well run general equity fund manager that has
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  proven to outperform the JSC over time.
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  Because if you buy the top 40 or just the JSC as a whole now, you're almost getting
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  25% in gold,
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  the weighting that the gold shares as.
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  But Getting in and out of that, I can't do that.
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  I don't have the expertise to get in and out of gold.
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  If you buy a pure gold fund, limit that to a certain percentage, but don't try to get
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  in and out and you're in for the long run.
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  If you use a couple of general equity funds, they will provide you with, let's
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  say,
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  10 or more percent gold in that NL, and they will know which ones to buy and which
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  ones,
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  as fiscal prudence, will reinvest or pay out the money they make in dividends.
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  But yeah, so for the midway kind of run of the mill portfolio,
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  I would recommend a general equity fund manager.
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  And if you're a bit more concerned about World War III or some other things, then
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  add a bit extra.
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  Yeah, one mustn't get caught up in it too much.
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  If you're not in gold now, don't get into it simply because of the fear of missing
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  out.
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  Go with your financial advisor's advice.
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  Do some research yourself and see what's happened.
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  Consider that this thing has quadrupled in a decade,
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  and it's doubled since early March 2022, I think it was, whatever.
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  You can look at the graphs yourself.
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  But the other thing is, it's not just an inflation hedge or a geopolitical hedge
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  anymore.
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  It's actually a serious asset class that people are taking seriously and using as a
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  valid part of their
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  portfolio construction.
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  Yes, so I think the tide has shifted really, if you understand global
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  economics.
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  So I used to think about gold just as an insurance or, you know, a hedge.
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  But if you look at China, was the biggest buyer of gold the past, let's say, year.
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  The economics was weaponized after Russia invaded Ukraine.
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  Russia was sanctioned and they couldn't access the foreign assets, which included
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  specifically U.S.
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  assets.
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  So now they're sitting and saying, all right, we have U.S.
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  treasuries or bonds on our balance sheet, but what if we can't access that?
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  That's a problem.
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  It's not risk-free anymore.
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  So let's buy gold that we can trade with other partners that has been a currency in
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  previous world
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  wars and crises.
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  So now China, if you look at it, the data I got is they only have 8%
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  of the foreign reserves in gold, while a country like Germany or other developed
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  market countries...
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  countries as a up to 70%.
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  So they've got a long way still to sell down some of the US assets, US bonds, and
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  buy gold.
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  And we don't really know what we know from China.
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  Their data is sometimes vague, but I think they still have a lot of buying to do.
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  And the way the US debt is still very high and interest rates won't come down to 0%
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  or 1%
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  like we used to, that creates a scenario where the globe is also shifting a little
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  bit away from U.S.
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  And that creates a demand for other currencies.
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  But what are you going to buy now?
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  Are you going to buy euros, yen?
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  The world is not going to buy renminbi, you know, on a whole.
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  So that creates a demand for gold.
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  So I think gold has a long-term play in your portfolio.
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  But again, don't buy because you're greedy or FOMO. Yeah,
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  just see it as a part of your diversified portfolio.
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  Good advice, Andre.
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  Now, the headline of your article that you kindly sent me and what this podcast has
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  been based on is, will gold continue to shine?
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  So I've got to pin you down now.
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  It went to nearly 4,400 last week.
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  It came down to 4,250 after that.
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  It's around about 4,300 as we pre-record.
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  Is it going to continue to shine?
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  Yeah, I think long term, yes.
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  Within a week, you might go down 10%.
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  I don't know.
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  Okay, Andre, very conservatively finished.
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  Well done.
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  Andre Besson is from Brenthurst Wealth, and that was It's My Money.
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  It's My Money was brought to you by Brenthurst Wealth, an award-winning
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  boutique wealth management company.