The Bull Market in Electricity

24:26I thought, how could you not be? We're in the innovation super cycle. That's it. And what I think is that the market value, what I said coming into this earnings season is, okay, everyone's nervous the MAG7 is 35 % of the S &P or whatever it is. Get your mind to get around 60%. I mean, it could. If you look at some of the charts that we have, right? These large cap companies, they're not hiring any more workers and their revenue is going up. Their profit, these are going to be insane profit generators. What's going to stop it? It's just unbelievable. It's not regulation. No. And like this is just Microsoft.

25:05I borrowed the slide from Co2, so credit to them. But I looked at Amazon headcounts, been flat over the last several years as well. They're just not hiring. I talked to an MBA professor. Amazon's not hiring any college graduate programmers this year. I mean, I'm assuming that's true. Hiring for kids coming out of college is one of the things we've harped on on this show repeatedly. It's now noticeable in the data. Look at this. Unemployment rate for college. So this is no high school diploma, no college, a bachelor's degree, and college grads. And none of them look like this. Yeah. College grads, it's not good.

25:44Right. So white-collar workers. They're white-collar workers. It's the first thing you automate. And the large caps, my point into the market cycle is it's the mega caps and the large caps that benefit. If you're VanEck, we don't have that many employees. We've got four people maybe doing the same job. You've got thousands of banks, right? So they're just going to, like, it's just crazy. The efficiencies that these large companies with the installed customer base are going to realize. Another thing that is often lost and probably a bit lazy when you're describing Google and Microsoft, you have to unpack them and talk about the other companies underneath.

26:21I mean, YouTube would be a top 20 company, right? Yes. They've got so much innovation that they're working on in so many different dimensions. How many Fortune 500 companies does Meta sit on top of or Microsoft? Yeah. Meta has 11 different services or perhaps something of Alphabet has 11 different services that on their own, like have a billion users. Like this is, it's unprecedented. We've never had companies like this. AI is another scale technology, right? If you have a little vertical focusing, just like say, like we invested in this finance AI company that was going to kill Bloomberg's, right?

27:02But their models will never be as smart as open AI or perplexity because they're not going to have the traffic. So someone who has 100 times the traffic is going to have the smarter models, the better answers, and they're going to suck up all the market share. It's another winner-take-all world. Exactly, just like social media, right? Are you worried about what this does to electricity? because I was listening to a podcast that Patrick O'Shaughnessy had the CEO of a company called Bason, and they were talking about how quickly the cost of electricity has gone up. And I think this is a very underreported story.

27:37I knew nothing about it until I listened to it. We have a chart from you showing the cost of electricity versus CPI. Yeah. And all of this AI stuff, is this going to push us up even further? I think there are a couple of implications. This is wild. Yeah, this is a great chart from my colleague Matt Siegel. Shout out. But so number one, you know, we talk about, well, there's the macro implications, right? I don't know if you guys think that inflation is going to 2%. I just don't think that's likely to happen, right? And here's another example of something that's running way ahead of this. And if electrification is another decade-long trend, there's no way electricity prices are staying flat.

28:12Because if you look at these trends, like we're, that's why we're rushing to build nuclear reactors and all that kind of stuff. The other thing about this, though, is it really has psychological impact on people. right? Even though inflation wasn't crazy at the end of Biden's administration, a lot of people felt that inflation was super high. Electricity prices are like 2 % of the income of wealthy people. For low-income people, it's like 10 % to 20%. Really? Electricity. Of what? Of the money they spend? If you're in Baltimore or New York, it's 10 % or 20 % of your income. Is your electricity cost?

28:47Is your electricity cost? Wow. So it's so that, you know, whatever it is, 300 to 400, Like in New York state, uh, electricity is going up like 11 % this year, 11 % last year. We shut down our nuclear reactor. Thank you very much. Our electricity is more expensive in New York, but, um, yeah, it's, so this is just an interesting story. I think, you know, it's, it's very, um, regressive, right. From, uh, and so I think it'll have, I don't know if it'll have political implications, but it's, it's, it's economically regressive in that it more, it, it's got a heavier impact on the lower income people.

29:25Correct. I was looking at utility stocks. I've been looking at utility stocks all year. This is like a once in a hundred years re-rating for these names. They're trading at some of the highest multiples we've ever seen. And it's not just the unregulated utilities, like the more fun ones. The regulated utilities are going to their state and they're pitching these rate cases and they're winning them. And the reason they're winning them is because they're saying, guys we can't with our current capex we can't meet the demand and if there are data centers in their territory forget about it it's like off the charts so i think some of the biggest winners in the market over the last couple of years have been utilities and some of these transmission companies that are the go-between and uh do you think there's an end to that in sight or if if three to four trillion is right from nvidia yeah then these have to keep working yeah i mean we We need more electricity in the US.

30:23That's not a secret, right? We've been talking about the winners from this sort of second phase of investing in AI. And what we've pointed to is nuclear and natural gas. Because nuclear, because we just need it. And people want environmentally clean electricity. And then not gas, because you can't build a nuclear plant in two months. Why is the energy sector trailing so poorly if this is the story at the utilities? Is it just because oil and electricity have very little to do with each other? Because in that gas component, I would have thought that the demand side would have picked up, pricing would have been stronger, and those stocks would work.

31:01But they're the worst stocks in the market. But the worst. I mean, EQT had a pretty good run for a while. No, there's a few good ones. But as a sector, XLE. Because there's no supply limitations. The United States is never going to run out of natural gas. Okay. So that's part of the pricing problem. So it's as simple as that. Yeah. Okay. All right. Got it. But still, like the machine makers, the combine, like, you know, there's a lot of services, construction that still needs to go into building these plans. Do you guys have a utility fund? We don't. Okay. On the drawing board? So in our nuclear fund, not to, you know, sound too promotional.

31:37No, no, no. It's okay. It's a mix of miners. It used to be everyone would just play, you know, uranium miners. And we said that's like too, that's too narrow. So we include utilities, you know, utilities oriented towards nuclear, obviously. And then it was like the equipment suppliers. But now those are the new SMR companies, right? The OCLOS or whatever that went five, ten times last year. It's kind of richly valued. I mean, I wouldn't sell it. OCLO? No, I mean, just the whole sector. Okay. Is that the biggest market cap in this sector now, OCLO? I don't know. Do you know what that is? I know that's one of the momentum stocks that the kids like.

32:15That's the Sam Altman invested in this mini nuclear reactor thing. Yeah. So. SMR, I think. Is that the other one? I don't know. I should pay more. I should pay closer attention. Is that fund raising money? Yeah, it's our highest fund. Oh, really? Yeah. Oh, wow. What's the ticker? NLR. NLR. It's up 45 % this year. I just think it's like a lot of things in the market. It's just sort of tired now. It's just got to, like, the real activity has got to catch up with it. I mean, the bearish case coming into the year was it takes five years to build these things. And, you know, like alternative energy and everything, people are, like, they were already expensive in December, and you're going to get wiped out.

32:58And I said, I don't know. I just think it's a global thing. It's bipartisan. And there's enough news flow happening this year, which is what happened, that the stocks will be supported. But, you know, again, I wouldn't put all my money in now. Trump is pro-nuclear. Oh, my God. Yeah. No, I don't know. Is he? He's incredibly. I mean, Biden started like full credit to Biden. And then Newsom, like Democratic governors, Newsom, Whitmer in Michigan, and then Delaware governor all supported nuclear projects in their states, like extensions or whatever it was. So it's definitely bipartisan. Right. But Trump did this executive order.

33:35And now he's like challenging companies. He wants three of these newer reactors up and running by next July 4th. So I don't know anything about this stuff. What is the opposition? Like, I know nothing about it. Is it people are afraid that there's going to be like a blow up or something? Yes, Fukushima, Three Mile Island, Chernobyl. Nobody wants that anywhere near them. But aren't there ways to not do that? So NIMBY, right? No one wants it in their neighborhood. Right? Well, would you buy a house? You know what they're doing? Would you buy a house 10 miles away from a nuclear reactor? I wouldn't.

34:03Why can't you stick it in the middle of nowhere? It's the middle of nowhere. Because then you have to like move the energy? No, that's what's happening. So they're doing it on federal land. There's one company that's got - Bro, you take flights. There is middle of nowhere. There are literally hundreds of miles. But that doesn't help you. You have to move the electricity it generates. To have it fast. Dude, AI, blockchain, something. AI. Come on. Go ahead. To have it fast, you need either a friendly local regime, like Louisiana, right? Great people. You need federal land where Trump with an executive order can do it.

34:34So that's what they're doing. Then there's one company that's doing private financing. They're doing it underground. They're building a nuclear reactor underground. And they're literally building one on the moon. Oh, on the moon? Great idea. No, but they're… I am all for nuclear on the moon. I have always said this. That's the best place you could put it. That's why I had to mention it. Because it's a little ridiculous. But that's why you have to get around NIMBY. You have to get around it. But it's… Literally moon. The problem with it is, you see Fukushima. That was not a nuclear meltdown. it was a tidal wave or a tsunami that created the conditions for a nuclear meltdown they didn't do anything wrong at the plant that's not a Chernobyl it's the Japanese they don't f*** up like that the technology is so old it's like the iPhone 3 you know what doesn't have tsunamis?

35:21the moon I agree I've always said this what do you want to say about US credit and the deficit? so Jan let me ask you this I know you're a deficit warrior Steve Eisman was in here a couple months ago saying ah it's just virtue signaling from the rich guys. What say you? Did you hear that? Yes, I did. So look, I think if you look at history, right, the budget deficit in the U.S. has never been as large as it was a year or two ago. I mean, it was just ridiculous, especially given that we had low unemployment. Any country in the world could not get away with the budget deficit that we've had. So all I'm saying is it's a risk out there, right, that you really have to watch.

36:03And I know people are sick about talking about it. And, you know, I know that Japan has a lot of debt. And throughout my career, everyone was, you know, the JGB trade blew people up, right? It was, you know, one of the widow makers out there. I get all that. Timing and markets is impossible. Let's just grant that. All I'm saying is, let's just focus on it. Now, if you're building a portfolio, you wanted to own the hedges, right? So, you know, we've been talking about Bitcoin and gold for a couple of years. Guess what? Gold is working. Again this year, those hedges against that risk have really worked out super well.

36:35And gold looks like it's about to explode even higher. You think gold is working because of the deficit? I do. You do? Yeah. Okay. What do you think? I have a slightly longer view. If you look out 10 years, I think that India is going to be the fourth largest consumer market in the world. So it's going to pass Europe. They love gold for jewelry. The world wants a hedge against the dollar, right? And so they are just, what's the second best currency in the world? It's gold. It's not the Reb and Me, right? It's not the yen. I just list these and you're like, in your mind, no way, right? The euro?

37:12No. So that's why it's been gold. And that, I think, is a multi-year trend. That's not complicated. The dollar is weakening. This is the basement trade. People are buying Bitcoin and gold for this reason. It's very straightforward. I thought when you said India, you were going to say Diwali season. Because when I was a broker, I used to pitch gold stocks. And we would pitch them around Diwali season. and I didn't even know what it was. I was just reading it off a script. Yeah. But it's this like Indian gift giving festival and gold is like prominently featured. No, I mean India just, if you think about what the world looks like, it's going to be more fragmented.

37:44Yeah. And that's not a bad thing. It's good that like other countries are getting wealthy. All I mean is that the Chinese economy has nothing to do with the dollar, right? The renminbi and the Indian rupee, they don't want to dollarize economy in any way, right? So all I'm saying is they have their own ecosystem systems, what's the common, you know, kind of number two currency is going to be gold. What's so funny about that is it's like, it's like a complete 360 back to the way it used to be. Gold was the common currency. 100%. So now they have this belt and road thing, but it was the Silk Road.

38:20And it's like everybody could agree what gold was worth. Yeah. So like you had this barter system, but like gold was the medium that everyone just looked at and said, okay, I understand the value of that. And you're suggesting like we're sort of headed back there. Look, I'm just saying, you know, you can make fun of the deficit watchers like your guest was doing. And I always just my first counterpoint is that the hedges have worked great in my portfolio. I don't know about his. Right. So that's number one. And then number two, I guess, what we look at. We look at the 10-year and we look at the 30-year.

38:52And what I like to say is we know the government's going to default on its debt in the next 10 years. People look at me. Wait, what? The U.S. is going to default on its debt in the next 10 years. No. We are not going to meet our Social Security obligations in 2033. That's less than 10 years from now. Yes, we will. We are going to cut payments down by 20%. That's a selective default on your obligations. Are you adjusting that for NVIDIA? How are we? All right. No, no, no. The trustees say this. Everyone knows that. That's political suicide. Who's going to do that? Well, so I said you have two chances to fix these problems.

39:31Sorry, you fix a problem like this the year after a presidential election. We only have two presidential elections between now and 2033, right? We just had one, 2025, and then we've got 2029. In his third term, you don't think Trump will take a look at this? So it has to be bipartisan. Like, I wish he would have dinner with Hakeem Jeffries and say, we just got to solve this problem, right? We can't cut the benefits to people who are relying on Social Security. But there's no way one party is going to do it on its own, right? So we're going to default. Do they convince you? No. You're rolling your eyes.

40:04I think one of the great things about investing is, to your point, it doesn't really matter because the price is the price. And if you don't understand that gold is being accumulated just based on its price action, then you don't understand the first thing about investing. That thing is being bought. Yeah, it's working. Not just the ETF, but gold in general is being bought. I remember three years ago, Costco was putting gold coins into the stores and they couldn't keep them on the shelf. Dude, this is a face blower. Look at this. Oh, is it? Yeah, what are we looking at? This is it. Foreign central banks.

40:35What did they buy in? They're buying gold. And they own more gold than treasuries. So for the first time since 1996, foreign central banks hold more gold than U.S. treasuries. This is a wildly big deal, I think. Yeah. So what the central banks did is sort of like in different phases. First of all, the developed market central banks said, oh, gold is so old. Like, we're going to start selling it. So, L.A. Europe started selling their gold. And then what's been happening recently is basically the new rich countries, the emerging market countries, are buying. So, India, China, slowly, even Eastern Europe.

41:08So, that's basically what you're seeing here. They just want to hedge against the dollar, which makes a lot of sense. What's the y-axis? 35, 30 % of their reserves. Percent of their total reserves. So central banks have about, it looks like 30 % of their reserves in gold and a declining 25 % in US treasuries. And for reference, that number peaked around 2015, 2016 at 30 % for treasuries. Can I give you the other side of the argument? Yeah. So the bullish side of the argument is that we are reducing our budget deficit. And so in the last fiscal year, it was 6.5 % of GDP, which I said was crazy.

41:48from a historical or any other perspective. Besson just yesterday is talking about getting that to five or five and a half percent. So since Trump has been in office, it's been at five and a half percent tariff revenue. And that's why they keep talking about tariff revenue. So we'll see. They love the tariff revenue. So if you get down to five or five and a half percent within a year, then you can grow your way out of it. And then it just doesn't matter, right? And so I think - Is that your base case of what ends up happening? I think we don't know. I'm just saying it's a big force in the markets that we got to watch.

42:22And obviously, government debt matters in people's portfolios. And I just think we think you need to have a hedge. But I don't think I know for sure that there's going to be that. I was making fun of social security. I was kind of using that to make a point. But there's both sides of the argument. So I a little bit agree with your guess that you can't overly and only obsess about the budget deficit. I would say that the deficit has been a worry since the beginning of time. It's only gone up and to the right. So I am not super concerned about it. However, it does seem like the type of thing that even if there's a 0.1 % chance of something going wrong, it's like the ultimate something going wrong.

43:00Right? So like, I get it. Well, it's always been the risk has come out of the banking system. It's coming out of Wall Street. Basically, if you look at our financial history, this would be the first time that the risk since pre-Alexander Hamilton came out of Washington, D.C. Right. Right? It's interesting. Yeah, nobody worries about bank balance sheets anymore. It's like no one worried about housing debt until housing debt blew up, right? Because it never happened before. Do you think we'll see a central bank start to accumulate Bitcoin? Our central bank? Any central bank. There's probably a few that already are.

43:32Well, yeah. I mean, the Mideast countries are mining it. And so they're accumulating it. They're not selling it. But yeah, I think eventually. Yeah, if you're worried about volatility, definitely the answer is to start accumulating bitcoin i love it i love it um let's talk private equity it's been brought to my attention by one of your employees give this guy a raise how do i say his name bo bo you call him bo yeah okay so um i did this i did this thing on uh private equity investing and um i had a little bit of help from sean and chart kid matt we were just basically trying to figure out like, is it better historically to have invested in private equity funds or just buy the stocks, the publicly traded companies that are the biggest private equity players?

44:21And I mean, it's night and day. Like if you bought the stocks of Blackstone, KKR, et cetera, the top 10, whether it's by market cap weight or equal weighted, you turned$100 into$264 owning the stocks. Whereas if you bought, I mean, this is one index, but the Bloomberg PE index benchmark, which aims to capture the returns of all their funds, you turned$100 into$113. Now, that's in a three-year period. So it's a little unfair. But just conceptually, I asked the question, why be an LP or an investor in the fund when you could be a GP or a sponsor of the fund by owning shares of the sponsor. So your guy reached out and tried to sell your ETF.

45:11Yes. No, but that's, listen, man, I want, I want my people this, this aggressive. He said, hi, Josh, hope all is well. I am Bo by way of introduction. I've been an avid fan for a while. I listened to your session on the Prof G Markets podcast and was struck by the analysis you highlighted between the performance of the stocks of alternative asset managers versus the performance of their fund. I recently joined VanEck to lead coverage of our asset manager channel, and I've been highlighting this trend as captured by our GPZ ETF. I didn't know this existed. I went through all this trouble to build my own model using the individual stocks.

45:52but the VanEck Alt Asset Manager ETF. What a great idea. Isn't it amazing that it didn't exist? I mean, it's like four or five months old. When did you start it? Like four or five months ago. I am super bullish on this theme. You are. I want to buy this ETF. I own Blackstone. I, this is. Okay. So here's the issue with that time period, Josh. These companies, alternative asset managers, right? Because their performance fees aren't necessarily that predictable. Used to trade at quite a significant discount to traditional asset managers. I mean, the argument in the old days, right, when the hedge funds were all over Wall Street, is there's no terminal value to these hedge fund businesses, right?

46:32What's his face? Famous hedge fund guy retires? There's no business left. Now there is. Right? So, right. So now they realize, wow, these are, you know, very, you know, they're diversified. They're constantly achieving these returns. You could also argue the alternative credit managers have a competitive moat. Because if you want a billion-dollar check for a data center, you're going to Blue Owl or Apollo or Ares. You can't go to some small$3 billion alternative credit. There's not 1 ,000 players there. Right. And so I think, you know, so that's about 45 % of the portfolio. So I kind of like that story.

47:06What's the other 55? You like the credit, the private credit part of the story better. Since the financial crisis, the government basically said, you know, banks get out of the risky lending business. So now there's risky lending. Are there any moats in private equity? because I feel like my inbox is filled with thousands of offers from companies I've never heard of. Yeah, you get the bad ones. I only get the bad ones. Well, I get the good ones too. So can I ask you guys a question? So if you look at these unicorns, right, all these private companies, there's about$3 trillion, you know, rounding up, right, and market cap of these private companies.

47:37And you go to an RA and you say, you're missing these out of your portfolio because the Stripes and SpaceX are just not going public. They open AI. So let's say they never go public. but you should have some exposure in your market cap weighted portfolio. How do you not open AI at$400 billion? Small caps, by the way, are like$7 trillion, right? So it's a little wedge in your portfolio. So does that appeal to you? I think to a lot of investors. Depends on if the NASDAQ just went up over the last six months. Yeah. Wait, are you saying you can get me into open AI at$25 billion? I'm in. So what's the answer to that?

48:11I'm asking you. Like, honestly, we think about it. So we actually have some private funds. And for that business, I think its mentality is totally different than the rest of our business. ETFs are an economies of scale business. All I care about for my hedge fund and my early stage venture fund is total return to LPs. But what you're talking about is very different. You're talking about early stage investing versus growth investing. These are very different things. The markets are going to mature, right? NASDAQ, Marketplace, and CARD, and all these companies are coming in a big way. BlackRock is going to be in there.

48:42So this, I think we are still very, very early on the transformation of private and public. I think we're still very early. So these names are going to work. To buy. Yeah, I think it's a buy. I think the ETF will work. I haven't even looked at the holdings, but just I think the tailwind is probably a five to 10 year tailwind. I don't think this is a, I don't think it's a fad. I think as more advisors start to utilize these tools in their portfolios, some will work, some won't, but they won't just stop for some reason. It's different than when they threw all these hedge funds in our faces 15 years ago.

49:19Because that, I think, suffered from the problem you described. Like, everybody wanted to be in John Paulson. Everybody wanted to be in Steve Cohen. Everybody wanted to be in, like, the hot manager. That's not evidence-based. You can't, like, a financial advisor. It's a cocktail party, like, investing, right? Like, a financial advisor who talks to their clients about Vanguard funds is never going to be the same person that's like, I'll do anything to get into 0.72. It's two different people. But this stuff, if there's a way to show people a systematic approach to making loans at a private credit fund, you will have that advisor's attention and that advisor will not feel like a clown re-explaining that to their end customers.

50:03So I think the runway here is like five to 10 years. But the open AI, the name that you mentioned, that's venture stuff, right? That's not private equity. Private equity traditionally is you buy a small cap, a micro cap, you lever it up, and it works, right? It's equity and leverage. It works. Advisors are never going to have early access to these names for their customers. If you want to get into Andrel today, you could do it at a valuation that is not what early investors got in. And it's fine. That's the way the market works. So late-stage access is okay to growth companies. Well, the reality of there being enough great startups in order to satiate the demand of like trillions of dollars, like it's just – it's an impossible thing.

50:49And I was debating this with somebody who was like, it's not fair. Yeah, I know. Like not everything gets democratized because life's not fair. I don't know a better way to answer that really. It's unfortunate. I wish everybody could have open AI. You can't. and if you could, you probably don't want it. If OpenAI decides we're going to raise money at a trillion dollars, yes, there's plenty for everyone to go around. Wait, that's nonsense. It's not fair. That's a ridiculous argument. It's not fair. It's not fair. Okay. The closer you are to these founders, the more likelihood you are to have access to invest early.

51:23So that's ridiculous? No, this is ridiculous. This is the way the world works. First of all, power is obviously concentrated. Yes. The people that have these relationships get access, but also a lot of the venture investors that are putting money on the line. For every open AI, there's a million that go to zero. You want those too? Right. Most people don't. Exactly. So they're taking the risk and they get the reward and sometimes they eat shit and that's the way it works. Matter of fact, being a venture investor, it's not been fun for the last three years at all. Yeah, if you were an open AI and some of the big winners, you'd be great.

51:49Yeah. But it's been a desert out there. Yeah. My advice to people who are like on the outside looking in and they're like, why don't I have access to this? The easiest way to have access to the shares of an exciting pre-IPO startup is to go work there. I mean, seriously, go get a job there. You will be in the stock option pool if it's not important to you. Second easiest way, be the college roommate of the founder. I mean, you have podcasts, give speeches. It's an amazing thing. That's a really easy way to get access to. But yeah, you've done a lot of early stage investing. I'm sure like me, you have a lot of zeros in there.

52:28That's just the way it works. Yeah, I haven't done a lot. Yeah, but Howard, I like to invest with Howard. And, you know, we hired the team out of Circle, and they've come off a really good start. But, you know, it's a$40 million fund. Right. You know, and you got to cap these strategies. I mean, we have a hedge fund that's done fantastic. It's like 47 % annualized. But you have a half a billion or a billion dollars in capacity in that. Everybody can't get in. It's a different business. These early stage companies, they don't need all the money in the world. That's not how it works. Right. Let's do some crypto stuff.

52:59So you were pretty early to crypto amongst the traditional asset managers. You've been very open-minded about it. You've been bullish about it for a really long time. What do you make of this state of crypto this year? And why is Bitcoin falling? Well, Bitcoin and crypto are totally different things. I mean, Bitcoin's hit all-time highs several times this year. I know. Why isn't it? It's corrected recently. But Josh, come on. Take the month of August off. I'm teasing you. All right. So that's Bitcoin. So crypto, I think, look, is blockchains are a great technology. Who cares? Nobody cares about that.

53:35I know, I know. What coin are you bullish on? I'll be brief. I'll be brief. Look, it was only in 2023 that blockchains became at all a non-toy. What I mean by that is the costs for a database have to be low and reliable, right? Before 2023, ETH gas, excuse me, the transaction fees were all over the place. Bitcoin, all over the place. No one's going to build on that. Any CTO is going to not even talk to you. It's too unreliable. They're not even letting you in the conference room. That changed in 2023. Okay, so now you have Solana, a lot of cheap, reliable blockchains. Now you have stablecoins being legalized.

54:15right every financial institution is going to want to have stable take stable coins right in from their clients you're going to have a checking account savings account you know credit card and your bank app and they're going to want to be able to take stable coins that's now starting maybe it takes a year and that'll be built out right and so i i said that's i was explaining the other day eth is like the wall street token because that's what people are going to build on it's ethereum or something. Their methodology is ETH Virtual Machine, right? EVM. So there's some EVM compatible change. So that's what Wall Street, I think, is going to build on.

54:50They're going to standardize on ETH as the way they tokenize all the securities. EVM, right? So that's why ETH is like rather like crazy over the last, it's more than doubled since the battle in April. We thought it was Tom Lee. It's more than just Tom Lee. That was a great interview, but it's more than Tom Lee. Look at this. This is back to the price. Nobody cares about these blockchains. So Hogan tweeted this. He loves when you hold this laptop right in front of the legs. I suck slacking at him. Hogan tweeted this. The one-year, two-year, three-year, five-year, and ten-year CAGR of Bitcoin versus the S &P 500.

55:21And for people that don't own Bitcoin, this hurts. And they're mad. And I'd be mad too. This feels unfair. The coin's outperformed, yes. But the level of outperformance on every time frame imaginable off of what people still think is just imaginary funny money nonsense. It's so common sense. It's digital gold, right? Their supply is limited. People have a demand for that kind of stuff. And it has hit escape velocity like in the mid-teens. So by 2017, like there was a little chance that anything was going to catch up to this, right? Millions of people had already adopted it. And then if you just say, okay, it becomes half the market value of gold, boom, that's$400 ,000 in Bitcoin.

56:06So it's not like a crazy, like it's just kind of a thing. I think just the concept of a new financial system was just really hard for people to even wrap their heads around. And the loudest voices, not the best people in many cases. And, you know, the FTX and the rugs, like you can understand what the average person doesn't believe. now for people that spend time around this i think like it's more makes more sense it's extremely generational right a lot of young people um and yeah i can't really explain it i say don't if you don't if you don't want to ever believe it don't spend time on it and if you're a financial advisor don't spend time talking to clients about it so i have a joke where somebody starts talking about but what is the use case and i always say this picture this you're in venezuela and that And you lose people that way.

56:52But Michael and I were doing a show on Tuesday night, and we looked at a chart of Western Union. Western Union effectively has vanished. Its share price is$8. And I said, I think this is the first U.S. company to be literally put out of business by a blockchain technology. I bought some Western Union today. Well done. All right, let me give you my history point here. Yeah. This is why I think the stablecoin bill was so important. It's the third most important piece of bank legislation in U.S. history. you got alexander hamilton sets up the credit of the u.s you got fdr that puts in deposit insurance and saves the banking system and then trump and then you've got stable coins which enables tech companies to get into the payments business without being a bank no everything else in your financial life you have to touch the bank you have to go to your checking account and do everything from there not anymore right you can remember they made fun of zuck when he wanted to do Libra that stable.

57:49This was bipartisan. It's not getting reversed. It's pretty radical. You think it's going to have that big of an effect? I do. In taking fees out of the system, speeding up the movement of money. The payment stack is totally going to change. Alright. There'll be more Western unions. But what's wrong with Venmo, I keep asking, for us? Or Zelle? That's fine. You're not Venezuela-ing! You don't understand. Alright, wait. Slight pivot. When Robinhood announced they were going to build this thing. ETH is going to be the underlying base, but it's like tokenizing securities. Corporations who themselves issue stocks did not like it.

58:32So I was surprised at the negative reaction. I think companies were saying like, make no mistake, whatever Robinhood is cooking up, these are not security. These are not securities that we have issued. There was a little bit of like a mini backlash, and then Robin Hood quickly stopped talking about it. Yeah. So what was your take on that? Those were private companies, and there is that dynamic going on. Okay. Right? Where if you get into this world of SPV special purpose vehicles, right? So SpaceX does rounds of investing, and suddenly there's 10 venture capital funds, and they're all sponsoring SPVs to invest in different rounds of SpaceX.

59:14These companies don't like it. Elon's like, I don't like this nonsense. I don't even know who owns it. And frankly, if you own SPV, you have no idea. If that VC firm disappears or the Carta blows up or whatever, you have no idea. You have no transparency. So he tries to clean that up, right? And that's what these companies, they want to control their own cap table, which means they are private. They want to control who's the shareholder, right? Like Rittles, like your company, VanEck, we want to control who our shareholders are, right? We may not mind having some minority shareholders, but we don't want just anybody.

59:44Do you think that's going to happen, though? Do you think that'll happen in a more accepted way? Not the private startup companies, but maybe public companies. It's similar in ADR to me, where somebody comes along and says, we're going to create something that is represented by a share in this company. We'll be the ADR sponsor here in this country. The issuer is in a foreign country. But if you want to trade the security here, use this. That worked. The ADR market is fairly substantial. Is this like the next evolution where people say, how would you like to trade a security but not be in the dollar-based world, be in the stablecoin world slash move in and out of these tokenized securities?

1:00:28It's just a tug of war, and I don't know how it's going to play out, right? Vlad, the CEO of Robinhood, on our behalf, we all want to be able to trade SpaceX, right? Or OpenAI. there's huge demand in the wealth channel for this right and then there's the founders and they may like it they may not like it in that case they didn't like it but you know maybe they get comfortable and and the weaker the founder meaning if the company's super hot sure they can suck up all the shares right but if they're kind of meh then you know too bad their shares are going to trade but you know what's weird if this becomes like a liquid market what about like investor protection and disclosures.

1:01:05LOL, stop. It's 2025. What are we talking about here? Nobody cares about that. Wait till the next market crash, and then we'll talk about that. Are there any other charts? Do we want to do this? No, we did it already. We're not going to do the treasury stuff, are we? We did it already. Okay, suffice to say, Jan is super bullish on the digital asset treasuries. How do you really feel, though, honestly? You think they're good for investors because they're creative and they're giving people a new way to bet? or? I mean, look, these companies, let's say they just are public companies or corporations that buy some kind of crypto asset to describe what a dad is, right?

1:01:45And so Michael Saylor has the most famous one. I think it gives some people the ability to buy access to that crypto with an ETF doesn't exist, or they just want to own it in that form. So that's a limited use case. So what? How about if you manage a convertible bond fund? This has been a whole month for you. Yeah. Seriously. Why? Like buy the bond and then convert? Buy the micro-strategy convertible bonds? Oh, no, we will in strategy and a whole bunch of our ETFs. We're like, what the hell? What's going on? So that's a, yeah, that's a separate thing. But, and then the positive spin is for some of these foundations.

1:02:20So a foundation is basically the original founding group of a token, right? And let's say they issue a token to do stock trading or whatever it is, derivatives trading. And suddenly a lot of people use that platform. Then that token becomes valuable. And there's this weird offshore thing now called a foundation. Most people don't know about these foundations. If the foundations say, okay, you know what? The United States is hospitable to tokens and to crypto. I'm going to come onshore and I'm going to be like a normal software company. And I'm just going to be like a version of Unix, like an open source software company that specializes in something.

1:03:00That's sort of what Ripple was trying to do. And then they got accused, some would say rightfully, of issuing securities away from the securities laws. And they fought it for, I don't know, 12, 10 years, however long. So these companies will look increasingly more normal. Some will, right? Right. And the test is right to avoid being a security. All these will all be securities is are you centralized or decentralized? Right. The good thing about Bitcoin is completely decentralized. There's no one person in charge. Other companies, it'll be a range of solutions. OK. What do you want to do with the next 70 years at VanEck?

1:03:43Where do you think? Where's the firm going? What are you excited about? Private market investing. Are you kidding me? OK. All right. Good. So how are you going to do that? we're looking at an etf wrapper or no no like interval fun maybe or something interval fun okay uh i hear those are hot so hot right now so hot right now all right do you have fun on the show today it was great to hear all right dude it's so great to see you and you of course will be at future proof um have you been to all of them did we ever miss one how many how many were there a million it feels i don't know i'm so tired i'm already tired thinking about it right I'm already tired thinking about it, but I also can't wait.

1:04:19This is my third. Okay. Third straight. There we go. All right. So I'm like, yeah, whatever. Dude, I'm psyched to see you in California. I'm so glad you're going to be there. Yeah. I want to thank you so much for coming on the show. We really appreciate it. And aside from your podcast, your secret podcast that we just learned about today, you're active on, I think your Twitter, LinkedIn? Yeah. Okay. All right. Awesome. Guys, make sure to follow Jan Van Eck. Wherever he's saying things, you're probably going to learn something. We always end the show asking people what they're most looking forward to.

1:04:48We'd love to hear if you have something for us. Okay, so college football, USC fan. USC? USC, University of Southern California. Oh, okay, all right, good. My wife went there with her. New York Islanders, hockey fan. Okay. They're playing each other. My one shout out, if I could, there's something called, and I'm not really big into healthcare or anything, called a calcium CT test. if you haven't taken it take it it's the weirdest thing it's a 200 test no one prescribes it ahead of time it's basically a way to see if calcium is building up in your veins and it's like there's op-eds about it brad gerstner talks about it and i'm not a health care guy but why don't people take these tests it's insane so it's where do you get it you just asked your gp and i did it someone told me to do it and my gp is like why do you need it i'm like because i want to take I've been missing out one.

1:05:39Because I read about it on Twitter. Just give it. What does it have to do with the Islanders or USC? Nothing, but I'm looking forward to his next calcium test. No, but I'm looking forward to other people. Shit, what's my best friend in my neighborhood? Like, he didn't take it, and suddenly he took it two weeks ago. It's off the charts bad. What do you do if you're off the charts bad on a calcium test? You change your diet, and you take a statin. Okay. So wait, literally, USC, Islanders, I don't get the connection. There's no connection. I'm looking forward to the hockey season it's like Knicks you're looking for we're excited the same way for the Knicks you know what I'm excited about Jan speaking of USC I'm going to see Oasis at the Rose Bowl oh I sick right that's awesome why do you have to do this I was supposed to go and my wife and I told him get me a ticket and my wife's like 20 minutes later he goes uh oh send my money back no it's the next day I think was it the next day or a week later it was very soon after so you took a friend dude I call Michael I'm like I'm so sorry I'm not allowed to go to his I'm like can you because you bought it on StubHub or something I'm like can you like resell it he's like don't worry about it I got it he didn't make me feel like a loser about it there's a good reason why I can't go I didn't ask permission no there's a good reason why I can't go I was so upset that I couldn't go alright we're going to get out of here guys thank you so much for watching thank you for listening we really appreciate it great job this week Duncan, John, whole crew.

1:07:07Happy birthday, Duncan. Happy birthday, dude. What are you looking forward to? Future proof. All right. What did you do for your birthday? Peter Luger? No, please not. All right, guys. Thank you. We'll be back next week. See you soon. Bye.

1:07:34Thank you.