20 Planning Matters Radio - 2020 POLITICS GOLD & THE MARKET W DAVID MCALVANY

Planning matters radio. I David welcoming the program are a pleasure and and you have a weekly podcast for many years you've you've appeared on television as a commentator and and are giving your opinion on many different financial topics throughout the years and you you talk a lot about the relationship between politics and finance you talk about precious metals. You talk a lot about the direction of of the market or where we may be heading due to relative certainty or uncertainty moving into election-year probably a lot of uncertainty on the horizon right because we have not only what we have here domestically in the US, but also what are the consequences of the second drug of the description or those with warranty ministration or unknown variables which get tied to investors as you said earlier degree of certainty or degree of uncertainty there tends to be more risk-taking when he got to see what the future holds less risk-taking when uncertainty is present and you look at today's trade machinations and whether we can sort ourselves out with the Chinese and things of that nature. These represent elements of uncertainty and can also translate therefor into volatility and in the market now 2019 so far pretty good year 2020. Around the corner. What do you sort of expect to see play out if I if I can ask your kind of prediction of the future I see a mixed message in 2020, because although the US stock markets are doing quite well. If you look around the world and that reflects a fairly healthy economy here in the US if you look around the world. We have a slowing will economic trend and so that that's been interesting to watch because you note gold is kind of wanted indicators color barometer for a change in weather if you will and and so when storm clouds are or sort of gathering gold tends to do something. So why is it that goals of 20% in US dollar terms is at all-time highs in euros, British pounds, Australian and Canadian dollars if it hadn't actually quite a good run this year alongside a very good run in US equities.

What is that saying it it says there's a number of people who don't believe it can be followed through as we head into 2020 and 2021. Actually, the slowing global economic trends may come our direction here in the US, and that remains to be seen but there is certainly a hedging of bets and if nothing else, that's what we see in the price of gold hedging of debt so it just 2019 scraper that's nearly in the rearview mirror and so what will it look like is were heading to 2021, and we've got court." 2020 hindsight. My guess is that the gold was telling us something globally. There's been kind of a gobbling up of gold on and institutional levels. A lot of countries are buying and hoarding a large amount of gold are they not yet central banks have changed their direction because you know from the mid 80s through about 2010. Central banks decided that they wanted to play in the world of paper assets that really need gold anymore and from 2010. The present that trend is changed in each year you seen gradual increases in the amount that your world's central banks are acquiring gold as sort of a ballast asset something to bring stability into their financial systems so major about-face you you only have three main categories of buyers for gold industrial demand. The central bank demand and investor demand. So when one of those things is off significantly can impact the price and you had all three moving really the right direction. 2019 will central bank demand increasing investor demand, at least globally increasing, and frankly, that's not the case in the US investor demand in the US is been pretty tepid again.

You look in stock markets moving higher. Our economy is doing well and investors generally don't try to anticipate those things.

They are very reactive and so usually a little bit late so I actually a good move. If you're wanting to be proactive versus reactive is probably looking at hedging some of directly bets taking some money off the table, getting liquid having little more cash. Maybe adding a gold component as an offset to an equity portfolio. If you're proactive, that's what you be doing right now or you can wait and be reactive.

Keep in mind with this the longest stretch of economic growth in US financial history. That should tell you something were little bit long in the tooth in terms of the growth trend only really here because of central bank, promotion of that growth and it is normal. As you know, at the end of a long day would you want to do you want to go to sleep and and it's not uncommon for the markets to do that as well where you you had a good stretch in analogy to rest. There seems to be a lot of heavy marketing around gold. Would you agree out for sure.

Yeah, absolutely. My question has always been in. And gold is sort of been pitched as here's where you go if you're worried about the collapse of the economy, the collapse of the currency kind of being the big one if if the folks who have the gold are so certain that the currency might collapse. Why would they want my dollars for the gold that they have yeah I mean I think you're looking at sort of two different seams there.

One is the promotion of gold and the reasons why it's promoted that we've been in the metal space since 1972 were one of the first offer bullion and we found a tax loophole to do so. We are company. Our family business was involved in getting gold legalized in in 1974, 1975.

So we do have a long history there.

It's not really a question of a company like ours, you being we just defer facilitating a trade facilitating a trades and their reasons for that trade. I think as an investor. What you would want to look at if you're looking at St. equity portfolio and how gold complements and it's really does need to be an end of the world trade you look at 2008 2009 yet a major decline in stocks and it took some time for those stocks pulled himself back up again and in being the prophet a problem position. If you can avoid those major drawdowns, then you have to play less of the patient's game and that's where gold tends to perform well under. The address and it doesn't do anything when the stock market is is is performing handily. So what you would do is create a balance between those two asset classes so that your never seen major declines in having to play the patient's game so it it we've we've run the numbers. You know the optimal if you're talking about growth and equity portfolio. The optimal mix would be 75% equities 25% gold and that means that any major market selloff 2030 4050% in equities. You're more than offsetting those losses were games in gold the very important element in that and I in those numbers is that you rebalance the portfolio once annually and then you're kind of constantly moving towards the undervalued assets with the over valued assets and your performance relative to the S&P. If you have that 7525 mix is handily about you if you bring gold into a portfolio, your long-term performance benefits considerably because you don't have any of those major downside so is it more of an investment or an insurance I think of it as insurance because that's what it's doing in the period of decline. If you have 75% of your portfolio oriented to growth in their periods where risk is apparent in downside is in everyone's face.

Everyone's getting their heads handed to them. Someone who owns gold their insurance policies paying off and that is what is funding the purchase of more shares in the stock market at lower levels without annual rebalance of. I do look at it as insurance. I don't look at gold as an investment you can. But if for instance we just launched a program called vaulted.

If you go to Volta.com very easy to look at an end and can use is an alternative to savings. I still look at gold as an investment. I look at is a reliable currency and why would you want a reliable currency because it periods of time where a currency or a financial system comes under stress. And so, yes, whether you think it is as if the money to spend for thousands of years, or as an insurance policy where your offsetting losses elsewhere. I think that's a more appropriate way. Look at that point I bought $1000 $5000 in Outlook money I made I just I don't that's not the way I use it is either the more reliable currency. That's where we have a savings alternative in a program like vaulted or with the Royal Canadian mint. By the way it or just an insurance offset, maybe a little more secure than the crypto currency market of €5000 history every time you see both financial collapse and argue currency machinations. What you end up with people move in place like Linus and his security blanket. Nobody thinks about it because you've outgrown it in you and we are under. Stress and strain you just want something that's comforting. Look at the food trends of the last few years would back in 2008. Nine. The popularity of comfort food when off the charts. Why because people did want something that makes them feel better during. It's kind of rough and tumble gold is that line of security blanket is that comfort is that extra security in a period of insecurity and subnet but just it ends up being a supply and demand game and it's a very tightly supplied market, so any increase incrementally and demand.

That's what they call inelasticity of supply canned lighting that you can't go to the mines and have them produce double the amount just because you want to take a long, long time to increase the total supply of gold so that's what you tend to see price spikes under. Stress haven't found anybody with that my distance quite yet, but before the interview today off air David we were talking about previous shifts in the political party in power in Washington and how when the party in power does shift. There are some direct correlations, typically with what occurs in the market. Now we don't know for certain what the results of that election would be, but this might be a time that we look forward to the 2020 election and possibly could anticipate this yet and you know everyone is trying to judge what the future holds. If your corporate CEO or CFO.

If you're an individual investor, and you may have your personal preferences from in an a in a political standpoint, depending on how you you you you line up from a partisan standpoint I'd said to tell you the CEOs and CFOs as they look at their personal preferences.

They have a completely different judgment to make as well and met.

What are the implications of this change what's good for the bottom line what that's exactly right. Or we can enter an increase the expenses to deal with the increased regulation. We have increased or decreased tax burden.

Does that mean that we're going to have to hold back and not invest in much is as much in in these kind of capital improvements or R&D programs you know is right off go away. One of the implications we go back to those two words certainty and uncertainty. If it's very unclear what the future holds. Or you think is going to be significant changes and you don't know what the unintended consequences are then you know if you're allocating capital corporate or household you be cautious in cautious allocation of capital ultimately means a decline in pricing and market and if you have certainty you just use the clear blue skies ahead. That's where you see risk on and in the stock market doing quite well there. I think there are good reasons to look at 2020 as a period of time where there's some uncertainty about what happens what happens with that the full exploration of the Horwitz report what happens with the full you we we don't we don't know if this could be a different outcome between the house and the Senate with the impeachment hearings which so what is the election look like on the other side of that we don't know how the markets go I do not have the markets can respond if Elizabeth Warren gifts you nominated to the Democratic Party. You see panic on Wall Street.

So here the US economy doing quite well is no reason for the stock market crash and yet the nomination from Elizabeth Warren ends up being very re-distributional for Wall Street sky ions in a major change in terms of our capital markets. That's called uncertainty. Yes, you'll see risk off in that environment, throw into the mix, the Federal Reserve, how could they may be direct policy. One way or another and and therefore the market yell absolutely and in the Federal Reserve use is sort of the elephant in the room they have lowered rates to nearly 0, and then as you recall fourth quarter of last year started to raise rates and what is not to a cause to nearly 20% climb stock market fourth quarter 2018 was horrendous and that only stopped when when Jay Powell got out the first week of January with prepared notes, something that he rarely has, and starts reading and says okay we are lower rates were doing an about-face, a 180 and Marina company to markets and lo and behold reasonably good year in stock so yes what the Fed does is hugely concert consequential hugely consequential.

David Mackle veiny. He is CEO of Mac Devaney financial group, author of the book the intentional legacy tell us about the book, David. If you would. What is the intentional legacy of 50 years of business we've done business with tens of thousands of clients and over and over again we see some missteps that people make when they're dealing with their states and I'll tell you it doesn't have to do with money it has to do with relationships and so one of the biggest things people missed in the midst of creating what they view as a legacy data from a monetary standpoint, is they don't invest enough in intangibles. How do you cultivate between siblings loyalty and trust and camaraderie and love, yet you might think what is that have to do with with a legacy. All I can tell you is that of the tens of thousands of people we worked with at the reading of the will. We typically see you know, the bearing of teeth and the revealing of clauses almost a Darwinian moment where you know everyone is out for what they can get. And it's not very simple, not very kind and so you will we see lacking is adequate preparation and really what I try to do in the intentional legacy is redefine what legacy it. It's not a sum of money that you leave at the end of your life. It's the sum total of all the small decisions you make on a daily basis.

It reflects your values. It reflects the things are most important to you the things that you say yes to you stating no to what you come out in terms of a set of values with in your life as an individual as a single person or as a family and so for us. Legacy is much more about management of resources that have nothing to do with money management of the intangibles. Yes, of course acids have something to do with it but we see a lot more attention put on that and what is often most often neglected are the things that bind hearts and lives in relationships together money important but it is important because it's a tool to support what is actually most important to us, our values, our goals and our family lifestyle. He is again pretty much like David Mackle veiny. He is CEO, founder of procedure time program.

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