Another 40% move in gold in 2021 is "very doable" says Frank Holmes, who is looking for a range of $2,200 to $2,600 an ounce. Cryptocurrencies will continue to do well; Bitcoin will be driven by increased adoption, while Ethereum benefits from the latest developments in DeFi.
should you be buying Bitcoin cryptos or gold? Well, our next guest is a proponent of both and sees value in both spheres. Frank Holmes, CEO of us global investors is back joining me on this beautiful Monday morning, Frank. Welcome back. It's great to be back. Miss you. Miss here too. Gold has been very volatile for the last couple of weeks.
Now, before we continue, you called it. You, in our prior interviews, you had set that short-term goal was a little bit overbought. You've expected more volatility. That was a correct call. And now that we have gone down to the low 18 hundreds touching the high 17 hundreds, are we done correcting Frank. I think we're pretty close.
What's happened since August in the summer is, is the 10-year government bond has gone from 50 basis points, low up to 97 basis points on Friday. Uh, that doesn't sound like a lot, but in percentage terms, it is huge. It's almost a double a, and that impacts because there's this trade that happens a parody trade between ten-year government bonds.
Are they a positive, negative, real rate of return and gold? And you can see a recalibrating. So what's happened is that gold has gone down over 20 trading days and 60, a one and two standard deviation. So we're getting close to that bottom period. Uh, interesting enough. Uh, we're seeing that the real interest rates inflation CPI went up to 1.4%, which I believe, you know, it's much higher, but, and I just noticed that as a businessman, looking for my insurance, my healthcare insurance, Mike corporate insurance, um, some of these prices were up at 50%.
Uh, so there's inflation in the economy. But more important for those gold trade. Gold is, is oversold. Uh, I think that going into next year, uh, the government's going to panic shell and we're going to get more money printing. And I think we're going to get a reset of the 10 year government bond, either CPI number jumps to reflect inflation or the 10 year government bond yield trades down that widening difference drives the short-term rate of goal.
And so now I'm asked all the time, what do I think the price of gold is going in next year? It is standard deviation says not magically, it's not event for gold to go up one standard deviation, which would be about 20% mode and the two standard deviation which happens so often now in the past 21 years, we can get between a $400 move and an $800 move in the price of gold.
Over the next 12 months, that would take 2200 to 2,600. Is the range I think is very doable. It's pretty conservative range, given that you have a $4,000 price forecast for the next three years. Yes, but it's, it has to do with the money pretty catches up. It doesn't happen in street law. Uh, even this secular bull market would be witnessed.
If we go back to 2001 to 2007, where the 50 days above the 200 day, there are many kinds of big drops in declines and then rolling to new highs and the new highs. So we're still in that cycle. We're still the 50 days above the 200 day moving average for me and the golden process still embrace of no debt loss.
Some people will call me with a hundred days while none of that. The technical people, Bob would choose 100 now the 200 day moving average, which is 10 months. So with that, uh, would just be normal for it to go through this trading range. Why I think gold has been trending down over the last three months.
Now I know that the vaccine news have been a little bit of an impediment to growth, but that only happened in the last month. If you look at September, October, trending down as well, was that what was the cause there? It's real interest rates. It's a spread. So the government says CPI is 1.3. And I went up to 1.4, which has only 10 basis points, but the 10 year government bond went from 50 basis points to almost a hundred.
So that's a big percentage move wise. And that gap between what is negative, real interest rates are to shrink. And that's what helps with them that basically the selling off of goal. But this has done this many times now and it's usually the best, best trade is, is to accumulate when this transition is taking place.
I, I, I wonder if the same macro drivers that have been driving gold, uh, and will continue to propel gold into the 2,600 range next year, you said are those same macro drivers also responsible for Bitcoins rally that we've seen in the second half of this year? Well, Bitcoins are different and respect.
There's the number of wallets, people that are embracing Bitcoin. That's been growing for the past three years. Nice steady growth. Um, but I think what's happened was the having, and historically, whenever you get a happening of your mining supply, It doesn't matter if it's gold. If tomorrow, if, if half of, uh, all the gold mines in the world said, we're going to cut supply by 50%, I can assure you go, it will be a 10,000.
Uh, so what we're seeing now would be Bitcoin in may is that having took place. And then all of a sudden that supply and demand is growing. And then all of a sudden you get these pops or is testing the $20,000 level again. So I think it's a supply and demand function. What we are seeing David in the commodity pits is copper copper hits an eight year hype.
Why is that? The supply of mines has been falling because of two things, the greatest declining and there's been strikes. So that's had a big impact before I went home, brings on all this rich. Production out of the Congo, uh, that supply imbalance has been very bullish for copper prices. Uh, I think that's, what's happened with Bitcoin now with the theory amongst different themes, new demand has come from this deep by decentralized finance, which happening in that ecosystem of cripples around the world.
Uh, that's, that's basically improving the demand for uranium coins because a lot of these DPI are in the backbone of it. On the supply side restriction is now they're going to what they call a theory and 2.0, where they're basically saying we're no longer be mining. Those that want to state, they can deposit their Ethereum.
They can never get it back. And then we'll get a yield. They'll get a return on those, on those, uh, Ethereum that they deposit. So what's happened. There is that the supply has all of a sudden shrinking. And the man is growing, uh, and defy continues to grow. So I think that, uh, uranium can actually trade much higher.
Reminds me of the trade was silver and gold. Earlier this year, gold takes off silver. The languaging, the spread goes over hard to one and all of a sudden, bingo, the silver ratio changes. Silver takes off. It's all performing gold. I think we'll get that back with Ethereum in 2021. So a theory M is like the, uh, silver of the crypto space.
That's a, that's a pretty good analogy. Let's talk about hive now, your company, how has it done this year? And what were the drivers of growth? Well, I'm so thrilled. You know, high block chain was covered. The debut of launching high blockchain was on kickball. And it was basically, there was so many gold investors that were skeptical about it, opening an exchange account and deposit money to own Bitcoin or in theory, because of all the negative hacking news, et cetera.
So what happened in that imagination is that high became a proxy. And it'd be, and they start to grow. And we went out that logically raised in three months, over $200 million deploying, building out the cities in Iceland and Sweden. And now hive is basically in Canada. Uh, it's expanded in Quebec is looking at expanding with the next transaction, uh, when it closes subject to final due diligence and new Brunswick.
So we've become the darling of this space, but most important is what we're recorded. In the quarter where we actually took total control of the facilities away from those strategic partner, that was the company started with now, we're running it. And we had record earnings and that's something that's propelled the stock.
And like a bull stock, a gold stocks are, have high free cashflow. They have higher earnings and Gold's rising postdocs borrow perform the underlying commodity. Um, if theory is basically had a great lies, Bitcoins out of Panola rise this year, and hive is basically participated in that. I think that calculation year to date in Canada, we've traded a 1.5 billion shares or some number of very close to that.
You add over the, over the counter in the U S and in Germany, we're pushing to close to two big insurers of trading. So it's become a proxy. For those that want to play a Bitcoin Ethereum, but do not want to go and buy the coin itself. They're using us as that proxy. I got asked this question by a viewer and the question was, are there companies in the crypto space that are functioning like a Franklin Nevada for the gold space, like a royalty for cryptos?
Well, right now, I think we're probably the closest to it. If you look at the revenue per employee, uh, there's only a handful of employees, otherwise we consult. Yeah, contract everything out. So, uh, I really liked the fact that, uh, uh, hive has high revenue per employee, much, much higher and much more towards the direction of a royalty company.
Let's touch on the drivers of Bitcoin. One more time, Frank, and let's talk about the technical details about why you think growth is going to happen next year. There's an adoption. So some of these big owners originally whales had been selling is, and companies like gray scale. And three IQ and Canada have been raising capital and, uh, last week.
Uh, gray meal, I think purchase through their closed end corporate fund in the U S $140 million with a big point. So you're finding that the, that the Bitcoin owners are showing up in the field of a closed end type of fund. Uh, and, and so it's being taken away from the crypto space. So we're getting the securities are basically reinventing themselves.
Uh, and I think this is another part of that demand. Do you think Bitcoin and Ethereum for the next year have more upside potential than gold? I mean, gold, you said it's a, let's give it a 2,600 target. That's 40% increase from today's price is about. I think there's just which up there embracement, that trend could be higher, but the volatility is much greater.
David it's much greater. So anyone is going to go into this space. Must respect that DNA of volatility over one day over 10 trading days. Is just substantially greater. So any type of correction, uh, hive went up to $6. It fell back down to under 10 cents. And now it's back over a dollar. I mean, these are incredible moves.
The best part is it's correlating with movements and comparing them Bitcoin, that hive is participating on a day in day out basis. The way a gold stock is moving with the price of gold. Hm. Uh, we we've talked a lot about your views on their show about various assets, but I'd like to know how you're allocating your assets personally, uh, with your fund as well, going into 2021 with the macro economic environment that we have with the administration that we have coming into January, what do you think.
Well, I'm a sophisticate. So me having a greater exposure to gold, uh, I think the average person out there, uh, shouldn't have the golden rule. That's 10% exposure to gold or gold stocks or buying. I always recommend buying numismatics or some wafers yourself. I think that's just smart. So our goal, uh, and then only quality gold stocks.
Um, and otherwise I think that, so for myself, I have a greater weighting because I control a vehicle, call us global investors and it's in that business. So from that end, I have a different perspective, but I think for the average person who is six years old, uh, as a listener to your program, that, uh, being, having 10%, we wait waiting is just prudent.
If they're more sophisticated, they can go to 20%. But the largest hedge fund in the world, which has about a 10% on average, the Bridgewater written by Ray Dalio is about 10% goal related bullish on stocks while you were a couple of months ago. And do you still feel that way today? The Dow's already ready past 30,000 points.
I'm so bullish. The only thing is going to rail this at Biden, coming out with an announcement as to increase taxes and Reese regulations. And that has always been, uh, a factor that impacts becomes a headwind right now. Global PMI in particular, China and America are above 52. The robust or strong, uh, Europe is going to spend more money, trying to get those above 50.
So when you have China and America, which has 40% of all global trade in a bullish trend, that's extremely bullish for all commodities and for job creation and the global trade. So I think we're on a nice pair here, uh, at least until the end of January. Well, wouldn't the tax increase also be bad for gold.
Frank, what did, I mean, essentially you're shrinking the money supply. Well, it has a bigger impact on gold stocks. Um, I think what the biggest impact short-term w really is this taxation that takes place in India, it's on our off because India is such a big gold consumer. And we see this morphing that takes place every time they slap on a duty tax and take it off.
So I think it's much more important there. What's important for your listeners. Is that 40% of all the poppet world's population is China and India. And when you throw in the Southeast Asia, we're now 50% of the world's population. If you go back 30 years ago, China, India were 10% of gold peak demand predominant for that love trade.
Today, they're over 53% and it's highly correlated to wising GDP per capita and that cultural affinity. If you look at Southeast Asia and you look at new trade agreements, there's, China's entered into, and you look at the region and you look at GDP per capita, every time gold sells off the, the love trade kicks in.
They just start buying every time. Gold has this big panic trade and trades up to 30 VHN they slowed down. Now we're in that correction mode. I remain very bullish for seeing that, uh, that, that Asian whole group of Asian countries basically buying gold when it goes onto a discount. Yeah. Is there anything you don't like Frank?
I mean, you like equities, gold Bitcoin. Yeah, I love it. I said earlier government policies are precursor to change negative, real interest rates. Rising money supply is very bullish for overall stock market and in particular for gold. And we're seeing the growth in crypto as a new sort of ecosystem is growing because we're seeing new millennials coming into investing.
In the stock market I'm precedent. Well, they were early on the whole crypto drive. So we're seeing this sort of, you know, broadening markets, both for stocks and for crypto. So that remains very bullish headwinds have always been rising, real interest rates, rising taxes, rising regulations right now is full throttle belong or you'll be wrong.
So these three asset classes. Cryptos equities and gold. If you were to take, let's say a millennial investor where maybe a gen X investor who has a bit of cash right now, he wants to invest and he has, you know, he has trouble allocating his assets. You can't decide what percentage he wants to put in stocks, Bitcoin or Ethereum.
And we're precious metals. H w w walk us through your thought process. Well, if you're 30 years old, 70% should be long in an equities growth stocks, more speculative ventures. If you're 60 years old, it should be only 40% should be into looking at these types of investments where there, uh, equities and, uh, more speculative investments.
She have to shrink that as you get older, you want to have a greater levels of different sources of, of higher income. Um, versus when you're young, then you should be actually be more adventuresome. And looking at those growth ideas. Yeah. The, uh, do, do you consider crypto's a, uh, a speculative asset where store of value?
Oh, no, it's just, it's totally speculative. Uh, no, it's, it's very speculative and whenever you have a new industry, uh, it's always going to be much more speculative and it shows up in its volatility. Okay. Fantastic. Frank, thank you so much for coming on the show and I look forward to following up with you.
And happy holidays. Happy holidays to you too. And thank you for watching Kitco news. We'll have much more for you.