This Has NEVER Happened: Gold And Stocks Both Exploding

0:00What's going on guys today we got a great episode I have a very special treat for you we have an exclusive interview with Phil Rosen. He is the co-founder of Opening Bell Daily, and he brought us a long, long list of data that unpacks what's going on in the U.S. economy, what's going on with gold, Bitcoin stocks, and he also explains whether you should be worried about a big market correction or not. We're live today from the desk of Anthony Pompliano. Here's my conversation with Phil Rosen.

0:33before we get into the interview i need your help my goal is to get to 1 million subscribers on youtube and we just crossed over 30 000 of you so hit that subscribe button and let's get into this conversation with phil all right phil i thought where we could start this exclusive sit down is uh gold is outpacing the s &p 500 by its widest margin in years what's your take from this this is not supposed to happen at all. We don't have a time in history that we have seen gold outperform like this when the S &P 500 is doing this good. So I think right now gold's up 50 % this year, right? And the S &P is up maybe 13, 14%.

1:08So that's a 35 to 36 % outperformance. And that usually only happens when stocks are doing very poorly. So gold is typically a hedge, right in your portfolio and it goes up during times of panic like during the 2008 crisis during the pandemic gold did very well but right now we have stocks going up gold going up and to me this is a sign that everyone is so optimistic that they're just trying to diversify their optimism right so usually instead of hedging against their uh let's say their optimism with gold they're just so optimistic they want two winning horses in their portfolio do you think that the the gold going up in price has anything to do with the fact that they're just like, okay, wait a second.

1:52They're never going to stop printing money. They're going to debase the hell out of this currency. And so in a weird way, stocks is the optimist view. Gold is actually a pessimist view of the government's out of control and undisciplined. Yeah. I think that's part of it. You could take that angle for sure. And also JP Morgan's note on the debasement trade, that probably brought a bunch of institution and retail demand just because suddenly you have a Wall Street firm giving it a name. So I think that always puts people into an asset. But really, we have no analog for this in history where stocks have been doing this well, gold has been doing this well.

2:26And yeah, this is not going to slow down anytime soon. So you also have this very interesting chart. If you put gold and S &P 500 returns together, you combine them. The average going back to 2005 is 24.5%. This year, we're over 60 percent yeah so if you've had gold and stocks last 20 years you've done very well so even if you are more of a gold bug or your only equities holding both has done extremely well for your portfolio but yeah this year it's uh the best year in 20 years if you're holding both and that goes back to this overwhelming optimism in uh markets in general right and you have central banks are buying gold.

3:07You have gold ETF demand that's been really high and retail is piling in because of this debasement trade. I think that China, they're strategically playing a decoupling game. On one hand, they're like, hey, let's keep being economic partners with the United States. On the other hand, they're preparing with their aggressive gold buying to not be as dependent on the US dollar. Both things can be true. They want to build a resilient base, but they also understand that there's importance for global trade between the United States and China. And that doesn't sound good in headlines. Like on one hand, they are decoupling.

3:41On the other hand, they want to stay married. And so it's like the nuance, the edges of the analysis is actually where the truth resides. Yeah. And those two, the US and China, they're going to continue competing on gold, right? And there's all this speculation that Bitcoin reserves are going to start coming into central banks. And I think it was only two weeks ago or three weeks ago, Deutsche Bank came out and said by 2030, global central banks will have Bitcoin reserves. So that's going to be part of this too. Okay. So speaking of Bitcoin, digital gold, or younger generations gold, Q4 is usually a really big year.

4:17People have been following me for a long time. They know fourth quarter, fourth quarter. Bitcoin has averaged a 59 % return in Q4 since 2015. That's a massive number. Q4 is by far the best quarter of the year historically for Bitcoin. What do you take away from why Q4 is so dominant and should we expect it this year? So Bitcoin investors, as you know, always talk about Uptober. They should be talking about the entire fourth quarter, right? Uptober, I think is about 20 % return on average the last 10 years. Fourth quarter is 60 % on average. So there's really no comparison as far as other quarters of the year.

4:51And look, generally Bitcoin does very well every year for the last decade, but in the fourth quarter in particular, it's extremely strong. And right now we have an unusual setup because look, there's been a recent pullback with some of the tweeting stuff with Trump and China, but really Bitcoin has massive ETF demand right now. And we have never sort of been at this part of the cycle with this new variable of ETFs. So we could even see outperformance this fourth quarter going into the next quarter as well. Now, one of the stats that you told me before, and I see you have the chart here, is Bitcoin continues to be at or near all-time highs, but the Google search volume is near five-year lows.

5:33Why? What's your take on that? This is the quiet bull market. You and I feel like Bitcoin is all we talk about, and we see it everywhere. Everyone we're meeting wants to talk about Bitcoin. But if you go outside this niche bubble of people that know anything about cryptocurrencies, no one is paying attention. And if you talk to friends that are not in finance and not in technology they have no idea what crypto is what bitcoin is and most of these people if they're investing at all maybe it's an s p 500 index fund so i you know i have friends that don't work in finance and if i ever ask them about bitcoin they're like no no that's that's gambling that's too much of a speculative bet and you know to their to their credit it's uh it's not a mainstream asset yet and um having google search trends at a five-year low what what else could that tell you well the interesting thing to me is um i actually wonder if uh people used to be searching like if you could break down the search volume how many people are searching like what is bitcoin you know why is bitcoin important things like that and then once you know that you don't have to search that anymore so now all of a sudden um maybe you just are actually viewing you know price as one example like if you go back to uh i don't know 2021 the bull market how many people were googling uh educational information versus pure price my guess is it was a lot of price stuff but But from a segment standpoint, the education was probably a higher percentage than historically is because there was a lot of new people coming in for the first time.

6:58There's still new people coming in now, but I don't think that it's anywhere near when the get the frothy market, you know, kind of like the price is the marketing department of Bitcoin. And so if you have a bunch of people coming into the market, they need to learn. So they're looking for a lot of that stuff. If you just need price, I don't know if you're going to Google for that price information. And so in a weird way, as Bitcoin's price goes up, we've already kind of like done so much education. Now, there's a lot to do still, but when we get to the frothiness, that's actually when all the new people come in.

7:25That's when the Google search volume will start spiking. And so it'd be interesting to see, could we get some of the price providers, whether it's the Coinbase's, the Robinhood's, or maybe the CoinMarketcaps, or Gemini's, Krakens, whatever, to actually show us the hit rate or the traffic to the page where people can check the price. Yeah. No, I think that's a good idea. And, you know, I published this chart a couple days ago and a reader responded saying that's because search volumes down because people are using AI. So it doesn't show up on Google search anymore. So I thought that was another interesting angle.

7:58It's like, well, it's not that people are searching it less. They're just using AI to find out about it. Maybe. But I mean, yes, there are certainly some people doing that. But I don't think that it's like 50 percent of people just took a U-turn and went and started using AI compared to Google search because you would see that across all search volume. Right. And that's not what you're seeing. I also think that people are drastically underestimating Google's AI summaries at the top of search results. Like I find that, yes, there are certain things that I will go specifically to chat GPT or perplexity or Sylvia to go and search for.

8:30But a lot of times, if it's a pretty simple search, I can just do it right in Google and their AI will give me a very similar type of answer. And so it hasn't completely captured me into the AI specific apps because Google has, you know, kind of fought back a little bit with their summary feature. Yeah, I think that makes sense as well. All right. So you got the American dream priced in US dollars versus Bitcoin. Since 2020, US home prices have soared more than 50%. So five, six years up 50%. But in priced in Bitcoin, they've dropped 90%. Two completely different stories. Yeah, this is the debasement trade in practical terms, I would say.

9:06Because if you look at, let's say, the S &P in gold terms or Bitcoin terms, Yes, it's down a lot. I think 90%. In Bitcoin, not gold. In Bitcoin, yes. Gold is down. Gold's flat, I think. Yeah. Well, I think gold priced in Bitcoin as we went over the other day. It's collapsed. Let's talk about homes and then we'll address the gold bugs. So if you had bought Bitcoin several years ago, that would have appreciated more than your home. and also this is when i saw this chart i think this puts the debasement trade more uh intangible terms right because if you say all right well this type of other asset class is worth less now if you denominated bitcoin it kind of it's kind of still intellectualized and it's kind of in the air you talk about a property then it's like holy moly the debasement trade is like it's very it's very much a real life thing.

10:06So we can pull up the chart of gold priced in Bitcoin. This set off an absolute firestorm. So just so we're clear, I like gold. I understand why people own gold. I think of the gold bugs and the Bitcoiners as brothers in arms against the fight against currency debasement. I am sympathetic to their cause. I think they're sympathetic to our cause. I have a lot of friends who own gold. I'm not a gold hater, but I'm also, somebody's a math guy. I like looking at the data. And so over the weekend, I messaged Phil and I said, hey, Phil, can you create a chart of gold priced in Bitcoin? And I knew that the gold bugs were not going to like it, but I thought it was an important contribution to the public conversation.

10:47So Phil cooked in the lab, made up chart. I tweeted and I said, gold has been a disastrous investment. I think disastrous investment probably got people a little upset. That's okay, it's true. Priced in Bitcoin, gold is down 84 % since January of 2020. So if you compare that, the S &P is down 88 % priced in Bitcoin since 2020. That's pretty much no difference, right? Now, gold, yes, in dollar terms is up a lot. It's up 50 % this year, but it was pretty much flat through a number of those early years of 2020 till today. And so my point being that gold still has some inflation to it. And Bitcoin is a finite asset.

11:28That finite asset, yes, there is this disinflationary supply. but Bitcoin is actually the measurement stick. It's the Bitcoin rate of return. So gold's Bitcoin rate of return is negative by negative 84%. So if you are an investor, has gold done well? Sure. So if you had an apparatus of assets to choose from, you put stocks, bonds, real estate, gold, gold's done very well. But if you then add in Bitcoin, you pretty much didn't need any of the other assets. Bitcoin was the dominant one. So a lot of people say, well, just buy both. Well, that is kind of like a safe answer, right? It's kind of like, oh, put 1%, put 1%, right?

12:04But in reality, the data is overwhelming. Bitcoin destroys gold in terms of a return. If you denominate gold in Bitcoin, it loses tons of its purchasing power. Doesn't mean that you should go and buy only Bitcoin. I understand why people still might want to buy gold, right? There's all kinds of things around, drawdown protections, all this kind of stuff. But if you are purely looking for which one is going to outperform on a return basis, Bitcoin versus gold, it's not even close. And so I think that is the big thing, is gold is up like 150 % since 2020. Bitcoin is up like 1 ,500%. It's kind of no competition in my opinion.

12:40It's when you denominate different assets in Bitcoin, it looks so obvious in hindsight, right? And that is kind of the story in Bitcoin. If you got in early, you destroyed every other asset class. Now, what I will say is there's always like the troll or the smart ass on the internet. And they'll say, oh, well, if you denominate Bitcoin in Nvidia stock, then Bitcoin has lost 50 % of its purchasing power. True. I tell them immediately. True. That is true. The question is, will that continue for the next 10, 15, 20 years? Because I think Bitcoin, similar to gold, is an asset that's going to store value for a very long period of time.

13:18As we know with companies, there's this creative destruction that happens. And so if you want to bet and you want to live your life with Nvidia being your denominator, go ahead. I don't want to do that. I don't think anyone wants to do that. But I actually do think that there's a growing cohort of people, tens of millions of people, who are saying Bitcoin is my hurdle rate. Bitcoin is the thing I'm going to denominate my returns in. Bitcoin is the thing I'm going to denominate how I think about buying goods and services, all this kind of stuff. So as that group gets bigger, I think that Bitcoin rate of return is going to become a more important data point in finance.

13:50I think that's true. And you're pushing the pace on that. All right. S &P 500's CAPE ratio officially hits.com levels. Explain this. The CAPE ratio essentially measures valuation, right? It's kind of a legacy measurement. And what's interesting is that it's hitting dot-com levels when interest rates are on their way down. So I don't imagine the CAPE ratio is going to come down as we keep getting more Fed rate cuts. So this is a very easy indicator to point to and say it's a bubble, right? AI is a bubble. It's a dot-com analog, and we're about to pop or fall off a cliff. the thing is um we've never seen businesses like this and you talk about this all the time these are the biggest balance sheets in history and they're not shrinking anytime soon right the demand for the products of the mag 7 are astronomical nvidia is not going away and ai is going to i believe deliver plenty of roi on the technology so there's a lot of speculation Well, these S &P 500 AI mega caps, they are now spending as much of their balance sheet as the typical utility stock, which is a crazy stat.

15:02And part of that is because they've come up, they became such valuable companies because they were asset light businesses. And now they're going to be moving into asset heavy businesses because they're building all this infrastructure and data centers. But I trust that the executives and the PhDs and the geniuses that are running these companies, they're not going to mess this up so badly that the whole world is going to collapse because AI turned out to be a losing bet. I don't worry whatsoever about the valuations. I think that people have lost their minds. They don't understand monetary premiums.

15:35I think that they are completely oblivious to the fact that there's two inputs about worrying about valuation is what's the valuation level and do the company deserve it? Everyone's focused on level, no one's focused on does the company deserve it obviously they've improved as you mentioned and uh i think it's just like a lazy way to point like ah fear fear fear fear um and uh let's see what happens well if you ever use one indicator to make an entire world view you're already wrong oh phil don't cook like that that is what that is very true that's very true all right google search trends show a deteriorating labor market and strained job security so this chart is obviously very bad sign for the labor market but i'm going to come back to this it's a very bullish sign for asset prices uh we have part-time second job job security and new job all these search terms are at record highs and we know this because the labor market has been deteriorating all year the fed arguably i think correctly has been uh laid on rate cuts right you and i've been saying that for months and uh they should have been cutting a long time ago because people are struggling to find jobs and also earn a living.

16:41However, this to me is a bullish chart for asset prices. It's not a good thing for people looking for jobs, but for investors specifically, this is essentially guaranteeing we're not going to get a, we're going to get more rate cuts than we think, or at least as many as we think, which is good for asset prices. So if you have some people saying the The economy is doing well enough where we don't need the rate cuts, but I think the cracking of the labor market says otherwise. So to me, this chart is markets are going higher from here. K-shaped economy? Yes. This is the bottom part of the K. These people are not in good shape.

17:21Understandably why, but to your point, the upper end of the K, those people are doing very well. And I think that we don't want to live in a society where people need two, three jobs to be able to make a living. But we need to retrain these people. We need to get them in a better position. Starts with education, right? And carries kind of all the way through their career. But unfortunate. But if you see, it didn't just start this year. I mean, this stuff started in 2020, 21, 22, and it's just continued to accelerate. So I think it's less about market conditions today. And it's much more about kind of these long-term technology trends, these long-term kind of debasement trends that are contributing to the problem more so than any one month, quarter, maybe even year of market condition.

18:03All right. We're going to let you do a little victory lap here. You run Opening Bell Daily. Opening Bell has the Best Ideas Club, which maybe my description to people when they ask me about it is you go interview one person per week and you ask them, what's your best idea? Pretty simple. Your best investment idea. And they basically give you a pick. They say, hey, I like this stock or this company, here's why, here's what the risks are, here's what I think is going to happen, blah, blah, whatever. You have this chart here. And what it shows is a paper portfolio that every single time you have published, if you had put an equal number of dollars into that idea and you go from, what is it, February of this year?

18:48Yep. February this year to today, those ideas have doubled the S &P 500 return so far this year. That's crazy. This has been, to me, it's not surprising because if you think about asking the smartest people you know what their best investment pick for the next 12 months is, why would it not beat the S &P 500? So, so far we've done 36 interviews and 36 stocks. Okay. Are they all winners? It's about a 65 % win rate. That's pretty high though. But the winners have been massive. Okay. So some of the stocks - Plays like a power lot to it. Yeah, of course. So some of the stocks are up 90 or 100%, right?

19:25And some of the losers, I think some are maybe down like 10%, 12%. So it's not massive underperformance for the losers, but overwhelmingly, this has been a home run. 65 % win rate would be incredible for a hedge fund. Like they're trying to eke out 52, 53%. They're happy, right? Yeah. So 65 % and then you're getting in the 65 % bucket, massive winners, which cumulatively is doubling the S &P 500 performance. Yes. And we have also been beating pretty much every major research firm and hedge fund on Wall Street. um too bad it's a paper portfolio right now um but really this um the stocks I would say have been concentrated in energy and defense and technology which maybe you could say that's obvious um but a lot of these names are small cap stocks or mid cap stocks unlike you know it's not like a mag 7 pick or something like that but they're pretty under the radar um we had one stock uh plug power which was uh at this point maybe six weeks ago and it's up like 80 wow um and that one i had actually not heard of until i did the interview and we went through the thesis and it sounded very um it was not an obvious one and uh the person who suggested it are they in the power industry or they're just more of like a general investor yeah but they're a generalist investor or okay got it so you're basically when you go to these people some of them may be sector focused.

20:47Some of them may be more generalist. Yeah. I mean, this is a pretty interesting, from a content perspective, right? I think that what you're basically doing is you're interviewing people and saying, hey, I don't know, like let the person that is being interviewed suggest what is their best idea. It's pretty cool, right? I mean, I'm very agnostic to the pick, right? So if they tell me a stock, it's not always that I agree with it or that I myself would bet the house on this name. However, as a basket, it's done extremely well. Now, you know what I told Phil one time is this is not new in the sense of Marshall Weiss is it's got a much more scale, right?

21:26But they basically they go around Wall Street and they take all of the research and the suggestions and analyst picks and price targets and all that stuff. They ingest all that data. They put weightings on different people and different ideas and concentrations and correlations, all this stuff. And they basically use it in their hedge fund to trade and they've done pretty well for themselves over time. So it's not necessarily like this has never been tried before, but I think the fact that you're taking it and sending it to people is pretty cool. How can they get Best Ideas Club? So got to subscribe to Opening Bell Daily's newsletter, right?

21:59And then the - This guy, the pro. Subscribe. What's the website? Openingbelldailynews.com. All right. Very easy to find. Link in the description. Yep. And the Sunday newsletter is Best Ideas Club. So this is our sort of paywall, their premium product. And the pitch, I think, is very simple. If you want to get the ideas that have been beating the market, just sign up to Best Ideas Club. And they're not your ideas. They're people that you're interviewing. So you're basically going and getting some of the people across Wall Street, different firms, et cetera. You're asking them for their best ideas, and then you're able to kind of democratize access to it.

22:35Yeah. So it's pretty much, it's kind of like, I guess what reporters would call access journalism, right? So you're becoming a member to get access to our network, right? Of investors. I like that. I never heard that before. Access journalism. There you go. All right. Phil Rosen, where can people go follow you online? I'm on X, I'm on LinkedIn, I'm on the newsletter. I'm pretty much everywhere. If you look up my name, look up Opening Bill Daily, I'm very easy to find. Amazing. All right. Well, thank you for doing this. We'll do it again in the future. Thank you for having me. All right. I hope that you enjoyed that conversation with Phil, I learned a lot and hopefully you did too.

23:07Please remember to subscribe on YouTube. We just crossed over 30 ,000 subscribers and our goal is to get to 1 million together with your help. I'll see you guys live tomorrow from the desk of Anthony Pompliano.