Yields cannot rise “hyperbolically” forever, and within the next 30 days they should mean revert, creating a very bullish environment for risk assets, said Frank Holmes, CEO of U.S. Global Investors. “The [10-year Treasury yield] has gone hyperbolic…it’s not like an airplane taking off, this is like a rocket going to space. Anytime you have something with a three-standard deviation move, it creates unexpected consequences in capital markets,” Holmes said “What we saw was the 10-year yield went above the S&P dividend yield and that automatically creates a flow of capital out of the stock market into bonds, and I think we’re going to get a correction here over the next 30 days, and that correction will be very, very positive for gold and silver, and the stock market, along with the crypto.”
We're speaking with Frank Holmes, CEO of us global investors. We'll be talking about gold cryptocurrencies and why you should have both Frank, welcome back. It's great to be with you, David. We've spoken about this topic a lot. And I know you like both asset classes, let's revisit this topic, given today's current price environment and tie that into today's price action.
First of all, you have a webcast coming up on this exact topic, gold and crypto there's room in your portfolio for both. Tell us about this webcast. Tell us about the thesis and why you're setting it up. We do it once a quarter. It's predominantly registered investment advisors who utilize ETFs in America and trillions of dollars of money being managed by these registered investment advisors across the U S in fact, you're seeing CIA funds out of Canada coming to the us to try to buy up some of these, and they've been successful in buying IAS.
So it's an important audience and there's this big debate on, uh, you know, what is it better? Or do you have an inclusive, I'm more of an inclusive per se, as you know, than one is exclusive of the other. Yeah. Okay. Well, they do serve different purposes, right? I remember you telling me. Yes, they do. And, uh, and you need electricity when you're going to trade so currencies.
And, uh, when you have gold on your body, you can always use it as some type of financial asset, which people have found all around the world when they're, whenever there's political stress. But we still see in India today, six times amount of gold worn by a women than there is in Fort Knox. Yeah. I like you to address this concern.
I still hear it. Uh, even, even today, Frank is that crypto's value is worthless because if your electricity goes out, as you know, you're in Texas, you have blackouts. If you have a blackout, you can't access your crypto. Why would I buy something that I can't access? If the grid just goes out, how do you respond to that?
Well, that's just the truth. And, and, uh, that's the reality of you need electricity, but I think if you're stuck in Venezuela and you cannot get gold out of the country or dollars, the only way to do it is to be able to get your money out of that country is to crypto the same thing in Argentina and Africa.
You're seeing those countries where there's tremendous stress, uh, where people are trying to get money. To protect their own families, et cetera, is using the crypto world. Okay. Let's talk about how they react to market movements now where big forces in the macro economic landscape, as you know, and we'll be talking about this in more detail, the 10 year yield has risen parabolically in your words, it has, it has had a big effect on gold, as you know, gold has dropped over the last few months, partly due to the rising yields.
I wonder if a rising IELTS. As the same effect on Bitcoin and cryptocurrencies. Frank, have you noticed any such effect at all? Well, a tremendous air pockets. And the worst thing you can do if you're flying on an airplane, uh, the turbulence is, has gone up dramatically. Uh, you've seen the same thing with Tesla, which has the same DNA of volatility, uh, Bitcoin and Ethereum.
But remember that Bitcoin, Ethereum are five to six times greater than gold on a daily basis on a 10 day basis. So that's just have to end traders have to recognize that, uh, what happened is that it's gone hyperbolic. I mean, it's literally straight up day, but like, it's not like an airplane taking off.
This is like a rocket go into space. And any company you've had something, a three standard deviation move. Uh, it creates unexpected consequences in capital markets. And what we saw was the 10 year yield, went above the S and P dividend yield. And that automatically creates a, a flow of capital out of the stock market.
Into bonds. And I think that we're going to get a correction here over the next 30 days, and that correction will be very, very positive for gold and silver and the stock market. Along with the crypto. That, what, what correction are you talking about? A correction in the stock markets or. No, no, no. That the 10-year government bond.
It just can't be it can't spike like this. Right. And state sustained, uh, looking back over 20 years of data, uh, it has a correction. It will mean revert and, and I'm amazed that gold has actually held up so well. And the same with silver prices in right off this or a parabolic move in the 10 year yields.
Okay. Understand the relationship between yields and gold? Uh, there's a, there's an inverse relationship between yields and goals for a lot of reasons, right? One it's probably indicative of higher inflation. We know there's a relationship between, uh, inflation and gold. I like to examine the relationship between yields and, and cryptocurrencies now.
Is there, is there supposed to be, um, a fi uh, definitive relationship? And if so, how. Well, it's not very much, it was a young, the process is very young when you're trying to look at data points was golden has been priced out for 5,000 years, you know, and this is a complete different analysis, but there is a strong pattern of negative, real interest rates.
And the buoyancy and the upward trend in cryptocurrencies. And when you look at the crypto world, you must really respect and study the Metcalf's law that says, basically, remember the supply of Bitcoin itself have last year it's every 10 minutes suppliers have, if you did this or the price of gold of gold supply from mine.
So they was to have. You would get gold at $10,000. So I think I can understand what's taking place with crypto and I can understand the millennials are all of a sudden becoming a slow game changer in capital markets. Like we've seen for price discovery. They're more of a quaint, a quicker propensity to buy into a crypto than a lot of 60 year olds.
I understand. Okay, let's talk about this correction in yields. Now you said the immediate effect will be, um, a gain in stocks, gold and Bitcoin, because of, uh, of a falling yields. Are you not concerned about some people are saying, but cryptocurrencies for example, were hitting and resistance of around $50,000 and you're saying we're going to breach the assistance.
Is that possible? Yes, absolutely. As long as you believe in Metcalf's law and remember that people can buy fractals, and if you can buy fractals of a, you don't have to spend $50,000, you can buy a thousand dollars worth of Bitcoin, just like you can buy fractals of a, of a thousand or stock price. So that allows more and more or people to speculate and to speculate and owning crypto.
As a way to diversify the portfolio. And we're seeing that we're seeing, uh, great fund managers with spectacular track records, even in the debt markets who went long goal and a couple of years ago, uh, from a double line, your turn around and see all of a sudden looking at crypto as an alternative asset class.
Okay. Uh, since we're talking about stocks gold and big one, I love this discussion by the way, because we're talking about all three asset classes and wondering if you were getting a three for one Frank, but, uh, I like to discuss the concept of a store of value. I've I've been hearing this from a lot of different people and I like to get, first of all, your take on what the definition of a store value is and which of these three asset classes you think fit this definition, the best stocks, gold or Bitcoin.
The last school or Bitcoin, I would probably say, you know, say the longest as being bold, then it'd be stocks and then it'd be Bitcoin. Um, stocks been around a long period of time. Uh, there's much bigger investible. It's a sheer size of it. Gold is, is, is the fourth most liquid asset class in the world. So it isn't owned by central banks is owned by love is owned by fear.
It has a greater dynamic system, but the fastest growing. It was no doubt crypto. And if you're playing momentum and change transformation periods in capital markets, clearly it is Bitcoin and Ethereum. I understand let's talk about the love, Trey. You just brought it up. Jewelry demand. Very important. We haven't talked about this in the wild.
What's the latest in the jewelry front, on the physical front. Are you seeing any pickups? Is it slow still? It's still slow. What's the story? The highest correlation is GDP per capita. And you really have to look at China, India, Southeast Asia, and the middle East. Now with the price of oil, $70 a barrel, the middle East is all of a sudden populating, stronger cash flows.
Uh, that's usually very. Uh, healthy for the growth in assets there of gold assets. Uh, and I think that China itself it's PMI is a very strong, this is a very, very important indicator for employment, uh, for a rising salaries and incomes. So I remained very positive, uh, doors. Uh, this, this concept of, uh, jewelry demand really is all about love.
When you go to Asia. I have a, I have a question more of a follow-up, um, from, uh, from our last interview. And, um, you know, I'm wondering, because you've been involved with both physical miners, gold miners, and now you're chairman and CEO of hive. So you are a crypto miner as well. And I'm wondering, you know, just very, very, just in general terms, outlined the differences and challenges for operating different mines, diff different miners in different spaces here, which one is high, which one is harder to maintain higher margins.
Which one is more difficult to, uh, to sustain operations at a affordable rate. Can you, can you walk us through your mentality here? Well, if you're comparing Bitcoin Ethereum for mining, um, it is the technology you've got to have inexpensive energy and hive is only a green energy. And most of the Bitcoin mining that comes out of China is actually coal.
Kazakhstan is coal. Uh, whereas we're only focused on green energy, uh, and inexpensive energy. After that it's the competition with your is very, very key. So if you have the latest machines, then you're faster. Uh, if you have a six 19 pros, uh, in the same thing, if you have Invidia, but what we're seeing now is there's this shortage of.
Of GPU chips, async chips. We're seeing the shorts for the car industry. We're seeing it for the gaming industry. And we're seeing for crypto mining, we're seeing that all the async, uh, providers are basically sold out this year. You have to be re reaching out to next year to be able to get new equipment.
So I don't see the Grady, uh, competition. In the Bitcoin mining industry. So they call that difficulty, which impacts your profit margin is not escalating like it normally would, but period is getting more competition. Uh, but I think that it will probably stall here going into the next six months. You know, what's interesting Frank, cause I'm looking at your stock and I know you mind, primarily Bitcoin and Ethereum, Bitcoin is down a little bit.
Today was flat in the, in the crypto world down 0.3%. It's flat, but your stock is up 11%. There's a huge discrepancy there. W w what's your stock driven by how is it up? 11% with Bitcoins flat.
W w what happens there is that we just have more volatility. If you look at your goal was up 25% and Bitcoin was up 300%. Any theory was up 470%. Uh, any theory was highly correlated to its growth in demand, right? Is defined, decentralized financing and stable points by big banks coming in with their own crypto sort of money market fund type of product or all in the algorithm of using Ethereum.
So there's bigger demand and hype was up 5000%. If you look over 12 months, but for last year it was up 2,500. So when we had this incredible leverage and we showed being the most profitable company of all the crypto miners at the end of December, Uh, and because we mind both, we had very high margins of particular okay.
Frank, excellent update as usual. I want to thank you so much for giving us your thoughts today. I look forward to speaking with you soon more market action. I'm sure to talk about next time. Thank you, David and happy investing. Thank you very much, Frank. And thank you for watching Kitco news. I'm David Lynn.