The financial system is reaching a breaking point—global debt is skyrocketing, central banks are struggling, and gold is rising fast despite a strong dollar and high bond yields. What’s really happening? Jonathan Wellum joins our new host, Bristol Gold Group’s Trey Reik, to unpack:
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Jonathan Wellum 0:00
Gold and precious metals have become a much more mainstay part of our portfolios because of the monetary condition in the debt situation in the world. That’s what drives our decisions, because we don’t think that the fiat currency system is sustainable the way it’s been run.
Trey Reik 0:20
Hi, my name is Trey Reich of Bristol Gold Group, and I’ve spent the past two decades studying precious metals and precious metal equities from both the buy and the sell side, most notably at Sprott Asset Management. And because of that experience, wealthion has asked me to host a series of shows on precious metals, hard assets and monetary affairs. We’re going to start off this week with Jonathan Wellum, CEO of rocklink asset partners in Toronto, and because most wealthy on viewers are pretty familiar with John and his firm, we’re going to skip the lengthy intro and get right down to business. So it’s fun to get together and chat on days where there’s a lot happening. And this morning was Trump tariff day in so far as he imposed 25% tariffs on Mexico, including oil, 25% tariffs on Canada with a 10% oil exemption, 10% tariffs on China, on top of anything that exists. And we’re already getting some feedback from Justin Trudeau, tariffs on about 130 billion Canadian of of goods. And President sheinbaum has already said she has moved to Plan B. I’m not sure what Plan A was, but Plan B includes a mix of tariff and non tariff measures. So overnight, the peso was down at 1.3% I think it’s down 1.6 down the Canadian dollars down a full percent, and yet, gold is up $30 to a new all time high, which is probably not what I would have guessed, with the dollar this strong. But how do you read what’s going on today, and you know, what are the implications for markets? And how do you think it’ll all, you know, settle out.
Jonathan Wellum 2:24
Well, there’s a good to speak with you, Trey, and congratulations on the program. And I know, I know it’d be very successful. Great to speak with you today. And you’re certainly asking a loaded question. So let me just back up a little bit. Certainly being in Canada, we’re very concerned about the tariff threat, if you will, and it certainly appears it’s imminent. We’ll find out exactly what happens in the next little while, but we’re very concerned about tariffs. Clearly, 25% tariffs on all the goods that we send down to the United States, that’s a big impact on the Canadian economy. About 40% of our economy actually is open in terms of being, you know, trading, and a good half of that, or more goes to the United States. And, you know, in Conversely, in the United States, only about 10% of the US is actually open, and only about 1% comes up to Canada. So you get about a 10 to one ratio. Anyway. It’s a very large differential. So we do not want to get into a trading war for the United States at all. And so I think it’s very important for us in Canada to continue to talk to Donald Trump, to continue to get behind some of the issues that he’s that are concerning him and and to try to resolve those issues intelligently. That doesn’t mean that we can’t, you know, put a few tariffs back on and push back a little bit, but we should not be trying to go one to one with the United States of America. It’s a powerful country. We are much smaller, and we are ill equipped to do that. And so that’s why I think our dollar is clearly weak. And Canadians are very concerned. If you’re up here in Canada, you’re seeing a lot more nationalism. Now, Canadians are sort of banding together and thinking, you know, how do we how are we going to push back against this if it does happen? And how can we work together and manufacture more here, deal with other countries, diversify our risk, and so forth. But in terms of the overall capital markets, you know, I think if we, if Trump, President Trump, continues, to put tariffs on, it’s going to cause volatility in the markets, and I think the markets will come off, because it’s going to be adjustments. What does this mean? We don’t know what businesses are going to be impacted. We know that even the S P company, S p5 100 companies, about 40% of their earnings comes from overseas, outside of the United States. And so if the US dollar is on wheels and going straight up, that means earnings are going to be impacted when they have to repatriate, you know, their revenue from all these other countries around the world, and that’s going to impact stocks. And so with stocks trading at high valuations, I think that these tariffs, the threat of tariffs, the imposition of tariffs, will take the markets down, just a matter of how much and how we can protect ourselves in certain, maybe certain sectors that would be less impacted.
Trey Reik 4:57
Interesting. So you. Brought up stocks, obviously a popular, I think, topic with all money managers. And at this point, looking forward, as investors are repositioning their portfolios for 2025 looking back on 2024 It was surprising in lots of different ways. It was certainly stronger than most people thought. At December of 23 Bloomberg strategist poll, the average forecast for the S P in 2024 was an increase of 1.4% which was the most bearish forecast in the surveys 25 year history. But instead, the you know, the market was up 25 as you know, and that was the second year in a row of plus 20% returns. And over the two years, the S P is now up 57.8 which is a pretty gaudy number. And of course, now forecasters and strategists are universally bullish, and in their December 24 forecast for this year, the average forecast was 11.7% which was the most bullish forecast since the COVID recovery year. So I don’t know, in my view, any broad based investor, balanced investor, you know, the big question is whether the S, P is going to go up a third year in a row. So what are your thoughts on that? Not,
Jonathan Wellum 6:35
yeah. I mean, excellent, excellent, excellent points, I think, is I’ve talked on previous wealthion programs too. Yeah. I mean, it caught us by surprise that we were up so much last year. We fortunately were invested in the market and did quite well. Having said that, it sort of surprised us, and that’s because, again, as you if you go back a couple of years, you remember we came off record low interest rates, and then we had this inflation concern, supply chains, too much government spending and so on, led to inflation and then interest rates, just we’ve never had a percentage change in interest rates that dramatic in such a short period of time. So you’re thinking, Well, of course, this is going to have to slow down the economy. This is going to have an impact on earnings. Cost of capital has gone up and so forth. You run all that through your models, and you go, there’s no way we’re going to get 25% type of growth, but we did and and so I think that really underscores, though, that we need to be particularly careful in 2025 not adjust our models all up and go. Let’s going to continue to party. I think that’s very irresponsible. I think you want to really double down on your models. Look at the companies that you want to buy, make sure they’re appropriately valued. Keep a little bit more cash around in your portfolios, and be careful with all of the things that President Trump is doing around the world, including tariffs, which we just talked about, that’s just another factor to destabilize and cause stocks to come off and to cause some headwinds, I think going forward. So I think again, investors need to be careful. I agree with many of the policies that Donald Trump wants to enact. It’s going to make the United States more competitive. It’s going to lower the cost of capital, lower taxation. Capital flows will improve into the country. All of that’s true, but valuations are high, and that money has to come from somewhere else, and it will put pressure on the global economy, so that Europe is going to feel it. Japan’s feeling it, China is feeling some of this. And you know, if tariff goes on in Canada, we’ll feel it in Canada. And so I think again, caution, caution, caution, don’t just don’t move your models up. That’s what we like to do. We like to base our the future off the immediate past, but I think in this case, there could be a dislocation and a discontinuity, if you will. And so in our business, what we’re trying to do is double down on the best companies that we think are trading at better prices, discounts maybe give us some hedges to the uncertainty. So we keep some as as you would expect in precious metals, places like that, and and be cautious. Be careful. Don’t cut, don’t don’t throw, throw caution to the wind in this environment. Thanks
Andrew Brill 9:08
so much for watching our discussion here on wealthion. If you would like help with your wealth efforts, please head over to wealthion.com/free for free. Portfolio Review.
Trey Reik 9:16
So you brought up one of my future questions, so we’ll skip to it now. What role do precious metals and hard assets play generally in rock link portfolios, and how have you adjusted that exposure to the current conditions? Yeah,
Jonathan Wellum 9:35
good questions. You know, if I were just really quickly to go back in my career, so I first got in the investment business was back in 1990 so I’ve been 90 so I’ve been doing this for 35 years. We were loaded into Financials, anything you could leverage up in the 1990s went straight up. It was a great play. No one cared about gold because interest rates were coming from, you know, 18 20% down to, you know, four or 5% type of thing. And gold was, like, $300 and, like, why are you gonna. You know, deal with this. But Trey, as you know, over that period of time, then into the 2000s which just got worse when you hit 2008 we loaded our balance sheets, corporately, government wise, sovereign wise, and also personal. We just loaded with debt. We just debt, debt, debt, debt, right? And so I think over the last 10 years, and certainly since I’ve been running rocklink For 15 years, gold and precious metals have become a much more mainstay part of our portfolios, because of the monetary condition and the debt situation in the world. That’s what drives our decisions, because we don’t think that the fiat currency system is sustainable the way it’s been run, and so every year that’s gone by since 2010 when I started rocking, we’ve just slowly added to our positions in the precious metal starting with five 6% now we’re up to close to 18% of our portfolios and and that’s simply because we don’t trust the system. It’s not sustainable. I would argue that a lot of the changes that Donald Trump’s trying to do to do to the states is that he acknowledges that the current course for the US is not sustainable. You cannot add a trillion dollars to your debt every 120 days, which is what Biden and Harris were doing in the last year. And so at $36 trillion with the most important country in the world, the reserve currency in the world, with 36 trillion in debt, and also growing. They’ve still running, you know, still running, obviously, large deficits. He’s just been in there for two weeks and 100 trillion in unfunded liabilities. The system is not stable long term. And so when that blows, and when you know exactly what happens, we don’t know, but we love to own some gold, some silver, some hard assets. We have some, you know, in some of the energy places, like uranium and also some of the strategic metals, like copper and nickel, also we’ve got, but, you know, we’ve bought that in a lot of royalty companies. So we buy those, those assets as strategic, long term asset plays in a world of fiat currency that cannot hold its value without dramatic changes in policy. And again, we don’t see that happening other than what Trump is now starting to do in the US. Do
Trey Reik 12:07
you look at gold as a hedge, or do you own it for sort of nominal reasons? If you know what
Jonathan Wellum 12:15
I mean, yeah. No. We very good, very question. Yes, we own it for both a hedge and for growth. So we actually look for companies that can, even if gold just stayed the same price as it is today, around 2800 US, we actually have growing cash flow. So that’s the beauty of owning, I think, royalty companies that have got deals that are in, you know, perpetual deals and and are working with great partners that can continue to develop their resources and increase their gold production, silver production, copper production, so forth, and also some miners. So we do own a couple of miners, our largest position, thankfully, and I may say we’ve added this. We’ve had this for a couple of years, and out of admiration for Sean Boyd, and that’s agniko Eagle, and we’ve been very fortunate there, because he just continues to blow everybody away in terms of his acquisitions and the ability to run that company efficiently. And so we’ve owned Agnico ego down, you know, it’s $50 and you know, Canadian now it’s trading, you know, close to 140 and that’s an environment where, you know, Barrick and Newmont have, you know, basically done nothing. And so we do? We do? We do look for growth. So it’s not just about staying put and just protecting purchasing power. We want to grow our purchasing power with our exposure in the precious metals by buying really well run active companies that know how to allocate capital and compound that growth. I mean, if you take another example, Franco, Nevada, they had a tough time in Panama, maybe, maybe a Marco Rubio down there twisting their arm on the Panama Canal will get them to smarten up on their copper production too. But we own Franco, Nevada. We’ve owned it for many years. Back in my mutual fund days, we were the largest institutional shareholder in Franco so we, I’ve been in and out of it since the 90s, but that’s a powerhouse, and they took a bit of a down stroke last year, a little over a year ago, when they shut down their the big mine, Cobra, Panama mine, that, at first, quantum was running, but again, that will eventually come back. But they just continue to grow anyway, right? And now that’s back over $200 Canadian, $100 $140 US and and we’re making good money on that. And today it’s up nicely in a down market. So I think there’s opportunities like that, if you really buy well run capital allocators, and they’re in areas that can hedge your risk, you know, political risk, economic risk, which I think we’re going to see a lot of that in 2025 as the world kind of recalibrates around some of the policies of Donald Trump.
Trey Reik 14:37
So you were, we’ve ended in the gold sector, which is such a surprise. No, just kidding. So in 2024 you know, 10 year yields increased 18% from three, nine to four, six and the dollar index set new. Two year high was up 7% over the. Course of the year, we had stocks up 25% as we’ve already discussed. And yet, if I had told you those three things, what would you have guessed gold would be up for the year? I don’t think the answer would be 27.2% on spot gold. So not you can explain everything in the universe, but why do you think gold is breaking from these historic correlations that so many people have watched for so many years?
Jonathan Wellum 15:30
Again? Good, great question. And I think that, I think the the main reason for that is that, because even though the US dollar is going up, people are seeing through. Ultimately, all fiat currencies are weak. The fact that US dollar, on a relative basis, is better, and indeed it is, because it’s, you know, they have the deep capital markets, and they’ve got tremendous liquidity. And you go, and you’re like, do you really want to own euros? Do you want the pound? And now the problems they have there, do you really want to own the yen? So you get to so. So I think that what it’s showing you this, despite the US dollar being strong, gold is still much preferred asset over all of the fiat currencies. It’s overwhelming the fiat currencies, and I think the BRIC nations are often talked about, and of course, Donald Trump has threatened them also, that if they, if they try to get rid of, you know, the the reserves that, you know, they try to get in run the US dollar, so to speak, that he’s going to put 100% you know, tariffs and those kind of threats. Well, they’ve already found gold. They’re loading up on gold. They’re getting ready for the day when, if they have to flex their muscles against the US, and I don’t think many of them want to be doing that anytime soon, but if they have to, they’re going to have a lot of collateral. They’re going to have a lot of collateral behind their currency. And so India, China, Russia, and other, the other, you know, key, key components in the in the BRICS country, Brazil and so forth. There they’ve been buying a lot of gold. And so I think that overwhelms the support, the strength of the US dollar. And so what, I think, what it’s telling you is, beware that the global economic order is under stress period, and I think in 2025 reason why I’d be still bullish on gold, even though it’s gone up it’s trading at good valuations, is because that stress is only going to be enhanced by Trump trying to realign the world and trying to pull that manufacturing back to the US and to suck the capital out of other parts of the world back to the US. That might be good for the US, but it’s going to cause more stress in the global environment. It has to. And so with that in mind, I think the best way to sort of protect that is, is probably precious metals in gold. And so I go back to that’s why I think it’s outperformed and surprised probably all of us.
Trey Reik 17:43
So going back to the miners for a minute, the gold price move in 24 was up 27.2 silver was up a little more than 21 and I’m sure you remember in mid October, I always have times during every year where I tell my wife, we can buy the Mercedes, the GDX was up 44% and GD XJ was, I think, 41% or something like that. And between October and the end of the year, because gold stocks were up so much, in other words, the 100% was 144 a 20% downturn really collapsed that year to date, performance number, as I’m sure you know, all the way down to 10% so we have gold up 27% and the GDX up 10 we didn’t buy the Mercedes, and I think GD XJ was up 15% How do you explain that differential, and does it? Doesn’t it, not to ask a leading question, but doesn’t that present a catch up opportunity in q1 for high quality gold miners, even if gold stays where it is? Well, if you buy
Jonathan Wellum 18:54
that Mercedes, better make sure it’s made in the United States, or you could be paying an extra tariff on it right coming into the US. Trump slaps it on from the EU but, but no, you’re in terms of your question. I think, yeah, no, I think there is catch up on the well run miners, on the well run miners. I just saw a report this morning saying that, on average, this is across quite a you know, the large number of miners, their average cost, all in sustaining costs, are running around $1,500 an ounce. Well, I when you think $1,500 an ounce, all in sustaining costs, if you can find one that’s trading even below that, or even at 1500 and you’re and you get 2800 on the on the on the commodity price, the spot price, plus, plus, that’s a beautiful margin, and they should be, you know, just generating tons of free cash flow. And the issue would be finding the companies that, first of all, have the margins, know how to run their business. And secondly, Trey, as you know, they are good capital allocators, because one of the worst things that happens with these companies is they generate lots of free cash flow, and then they go and they squander it. They buy things too expensively, or they get, you know, properties that are not a. Lucrative properties and so forth and and so that’s why, again, you be very selective on the companies that you’re going to buy by the best management companies with proven track records in this environment. They should be make a lot more money. And I think you can do, you know, get Make, make multiples of the of what the gold price of gold is going up. You should be able to make multiples on the stock. And so I agree that there should be catch up, but be selective, be careful. Because, you know, I think was Rick Rule, who I had great admiration for in his, you know, stock selection, and follow what he said so forth. I think Rick Rule pointed out I could get it slightly wrong, but between 2001 and, you know, 2010 the price of, you know, gold went up. You know, what, five, five times, or, you know, six times, or something like that, or more, and the free cash flow per share on the big miners went down. And you say, how is that possible? Well, it is if you, you know, don’t have to run those businesses, and you buy everything at the top, and you spend way too much capital, and you don’t get anything for your capital spend. So be very, very careful. But I do think there is catch up, and there’s a big opportunity, if you’re careful in terms of the companies you’re buying, or maybe buy, you know, if you’re not good at that, buy some ETFs, maybe, like Sprott ETFs, there’s different companies where they hand pick some of the best miners with good balance sheets and good prospects, and they put some screens on them, and so you can get, you know, maybe the top 10 or 12 or 15 gives you a bit of diversification, because, you know, mining is a tough business, and there’s political risk, and you can have the best, best, you know, best mine in the world. And all of a sudden, you know, Leon DiCaprio comes along and starts complaining about the environment. They say did in Cobra, you know, Panama mine, and they shut the thing down, even though it’s a beautiful, beautiful mine, and producing very necessary resource, copper. So that’s why I say diversify and just really make sure you’re buying great companies in good, good jurisdictions with less political risk.
Trey Reik 21:50
I know that it rock. You don’t own bullion for your clients directly, because it’s so easy to do. Everybody can buy GLD and they nickel a share. But for those who aren’t your managed clients and they are interested in getting precious metal exposure, is there a sort of a rough paradigm that you would recommend in terms of how to get involved in gold bullion or equities, or how to balance it, or what the the the person following along at home, how to get good, good gold exposure?
Jonathan Wellum 22:33
Yeah. I mean, it does depend on the individual and their comfort level with with gold. We have some clients who love they want half their assets are more in gold related gold presses, metals related securities, and that’s fine. We walk through that with them. And to be quite honest, I don’t have any problem owning a large percentage of my financial assets in that space, but it’s not for everybody. So we try to, again, that’s the key. When you’re doing investment management, know your client, understand what their risks are and what their needs are. But I would suggest, I mean, basically back of the envelope, we say the client should get have at least 15 and even up to 20% exposure in this environment. And that means about 5% of that could easily be in bullying itself. And then we can own some royalty companies and get some exposure through the businesses the way we suggest that they do it, because we don’t add much value just owning the bullion is that they can go and buy it directly from spot money up here in Canada, also in the US, and we also have relationship with SWP, strategic wealth protection in the Cayman Islands. And they have a great process down there. They’re a wonderful company, and know the principals been to their facilities, and that’s a great safe place. You can’t get gold off the little island very easily. If you’re gonna You can’t steal that very easily. When you’re on an island, it only has an elevation of about eight or nine feet and and you gotta carry that gold around. But they have a great business model, and they’ve just expanded their facilities there, I think, by far the largest in the Caribbean. So we encourage people, if they’re going to hold some of the gold, they might even want to hold it outside of their home country in order to for protection from expropriation. You know, we had some crazy things go on here in Canada a couple of years ago when our governments shut down people’s bank accounts and so forth. So Canadians are a little bit more sensitive to that and and making sure you have a little bit more protection. So I think you have 5% even up to 10% if you have a good appetite for it, and you can go directly to players that will sell it to you. My caution is try to minimize derivative exposure. That’s I think, if you want gold, you want to own gold. If you want silver, you want to own the bullion. And so you can go to companies like Sprott, where you can buy even the funds where it’s backed one by one for one in gold, in a safe spot, audited and owned by reputable people. And that’s very important, too. One of the downsides of buying your GDX and things like that is, you know, you can get a lot of derivatives. And I know people are if you’re comfortable, if that’s fine, but if all of the proverbial stuff hits the fan at some point, you. You really need to make sure you’ve got it. You want to make sure you actually own the physical and I think that’s important for investors
Trey Reik 25:08
in terms of rock link portfolios, do you stay in the monetary realm of gold predominantly, or does silver play a role in your precious metals exposure as well. We
Jonathan Wellum 25:24
have a couple of silver companies. And we also own Wheaton precious metals, which still somewhere around 50% it used to be Silver Wheaton, which was predominantly silver, but they came too large. They couldn’t, you know, the silver marks not large enough to allocate in there. So we like having some exposure to silver. We have some Sandstorm royalty, and they’ve got exposure to silver also. So most of the gold companies, royalty companies, not all of them, would have a reasonable exposure to silver also. We also own Pan American directly as a silver stock and a couple of clients who really like the silver we own some mag and some silver crest in our portfolios. Those are also well run silver companies. And I think, you know, silver again, does is more volatile, and it certainly appears, I mean, people have been saying this since I’ve been following silver, right? Silver should be trading at, you know, 10 to one ratio of 15 to 121, they all these different multiple ratios. I don’t know what the ratio should be, but it’s certainly when you look at Silver, there’s no question in my mind that the production is not really meeting this, the demand that’s out there, and there certainly seems to be a shortfall. And if we continue to, you know, go EVs and solar panels and so forth, which we’ll see how fast those sell, we’re going to need more silver. We need more silver on the electrical grid, AI all of that, and it doesn’t seem to me that we’re producing enough, and there seems to be a deficit. If that’s the case, yeah, I mean, silver could be explosive, and we could make a lot of money in silver. So we don’t do a lot of direct investments, but I certainly admire people that are in this space. And I think there are some great opportunities if you’re smart and you buy the well run companies, but we get it indirectly, through a lot of the companies that have exposure to it and do gold equivalency with silver. And so most of our, as they say, our royalty companies have probably 15, even 20% coming from silver. And I like that. I copper. I like also nickel. I like, you know, we the interesting thing Trey, we live in this world where we think it’s all digital and it’s all virtual, and we don’t have to dig any holes. And the interesting thing is that we, our energy demands are growing at such an amazing pace that we have to, and we should embrace mining. We’re gonna have to embrace mine. We have to dig a lot more holes. We have to extract a lot more metals and minerals out of the earth. And this is the irony that this generation, many of these you know the Green Revolution, well, you can’t have the Green Revolution unless we have a mining revolution. And we have to, we have to find a lot more Mines, Minerals and so forth. And this is critical. And so I think that the biggest story going forward is, why not buy some of these critical assets in commodities, where you can buy them at a fraction of the cash flow, literally a fraction of the cash flow of these chip companies, which have all gone straight up over the years, because you can’t have chip companies without mining. And so again, I think that’s that’s going to be an opportunity at some point, and be be positioned now and buy some of the best companies that’ll give you that opportunity. Great,
Trey Reik 28:30
yes, and I’m sure you saw the JP Morgan study recently that one half of 1% of investment assets are in precious metals and precious metals, equities, and even the median over the last, you know, 100 years is somewhere up around two. So that would put quite an upward push on some of these names, and there’s not a lot of capitalization to go around.
Jonathan Wellum 28:55
That’s exactly the case. At some point it will be explosive again. We don’t make those predictions, we’re in there already, and we’re buying it for other reasons, and we think that we can continue to compound. Could we? Could some of that go parabolic at some point? Absolutely, the market cap of the gold and silver companies is insignificant. I mean, it’s just a fraction of what you know, Apple is trading at a $3 trillion and yet, these companies are essential. We need them. And and again, you look at copper and nickel, others, other, other core other core products, uranium is another one. If we’re going to power all these, you know, AI, the AI and the data centers, we’re going to need more uranium in Canada, up in Cameco, up in Saskatchewan, we’ve got more uranium than you know, that we know what to do with for the next 150 200 years, right? And and so this is again, opportunities, I think, for investors, might not go straight up tomorrow, might not go up in three months, but build positions be a capital allocator. That’s the way we go about it. You know, we’re not trying to time the market. We’re not smart enough to do that. But if we can buy great companies. In with products that are needed and are growing. The demand is growing over the next number of years, and they’re well run companies by really intelligent people who are watching the balance sheet and being careful how they run them, then I think you can make some serious money, and it might come in fits and starts when you least expect it, and that’s fine, but you want to be there. You want to be there when the action starts.
Trey Reik 30:21
So that was great. I think we have a little time left. So I wanted to get back to sort of the big picture with one brain teasing question. So since the Fed’s first cut in September of the 50 basis point cut, we’ve now cut rates 100 basis points and through the middle of January, the 10 year yield, I think, peaked at 480 so we were up 120 basis points from the 360 when the Fed started cutting. So we have cut rates on the short end, 100 basis points, and on the long end, the 10 year treasury yield has gone up 120 basis points. And I’m sure you’ve read that that’s never happened before. That is the steepest increase in long rates following an initial fed cut. So I think what all we do with gold and hard assets? It’s all sort of related to this question. Why do you think that’s happening?
Jonathan Wellum 31:18
Yeah, I think it’s because, ultimately, the the accumulated debt in the world is just so massive and and so you take the situation with, you know, just the US funding situation this year, my understanding, again, if you look at the US, it has to roll over, over ten trillion in the marketplace As to refinance because the genius that was the head of this treasury, Janet Yellen, who used to be the head of the Federal Reserve, thought that you just going to keep all your money six months in a year, and, you know, two years all short term. So you just never heard about, you know, putting money out longer term at low interest rates, right? And so the US just, use as an example, the refunding of debt is so large, I think the markets looking at that and going, you know, we’re not going to be buying that stuff at 3% we’re going to buy that at four and a half or five. It’s just too much risk. So I think it’s telling us there’s risk out in the world. There’s concern about ongoing inflation that we haven’t wrestled it down and and so there they want a premium as you go out on the yield curve, which I think is perfectly reasonable, and it’s interesting, because as we started going back 12 months ago, everybody said, load into long bonds. You’re going to make a ton of money as interest rates come down. We’ve kept short, and it’s not because we’re geniuses on interest rates. I’m looking at and going, I’m not sure how this is going to work out. Sometimes you just have to be honest and say, I’m not sure, so I’m just going to double. I’m just going to make sure I get a guaranteed return. And you know, it’s not worth losing money. But the reality is, this is different this time. We’ve got so much debt to refinance, there is more risk. There is the problem of ongoing inflation, because we’ve printed so much money around the world, and that’s not hasn’t gone away. So I think the market, the the mod, the bond vigilantes, if you will, the bond market is very astute, and they’re saying, No way, Jose, we’re not going for this. We want higher rates. We’re not going to get suckered into, you know, buying all this stuff at 3% and then watching it blow out on us. And so I think that’s what it’s telling us. It’s telling us that the situation in the globe is a bit more unstable. Inflation is a concern, and there’s just too much refinancing of debt that has to take place, not to mention also, not to mention also Trey. I mean, the US again, hopefully Trump will change this. But on the current course, you guys have to fund another 2 trillion just in deficits, and this has to stop. And again, I think it goes back to why you’ve got Donald Trump, you know, basically using a wrecking ball around the world and disturbing the global order somewhat. I mean, there’s a number of reasons for it. I think part of it is that things have to change and and that’s what we’re seeing. So
Trey Reik 33:56
on a scale of one to 10, where is your confidence in the Fed?
Jonathan Wellum 34:03
I Yeah, my confidence in any of these central banks is exceptionally low. I put it maybe one or two. I just I’m not a person that really looks to the central banks. I think that I love free markets. I think the price of money should be set in the markets, not by the Fed. And so I would be much more of a libertarian. And I think since 1913 if you look at the loss of purchasing power in the American dollar, and the same thing, if you look at what’s happened in Canada or any of the any of the major Western countries, it tells you that the central banks have not been very good at their job.
Trey Reik 34:35
Totally agree. Well, this has been spectacular. Thanks for spending time with us. I always enjoy your indomitable spirit, and I wish you the best of luck in 2025 and we look forward to talking again soon.
Jonathan Wellum 34:50
Terrific. Thank you so much, Trey, excellent job, and look forward to speaking with you, perfect. Have a good day. Okay, bye. Now that’s
Andrew Brill 34:58
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