Summers on President Trump vs. the Fed, Battle Over America’s Jobs Data, Australia Gold Rush 2.0

26:11Will leadership continue to prioritize the best, most impartial data, or will it fall into a familiar trap that other countries know too well, in which numbers aren't used to learn about the economy, but to tell an approved story about it? We really need people to get excited about the whole system, not just the firing of the BLS commissioner, but knowing that that's a keystone in a larger system that is in peril. We're going to go one way or the other at this point. I don't think there's a status quo option. I think it's either going to get very political or people are going to really strengthen the system.

26:54We've got to choose. as a nation, which way we're going to go. Up next, there's gold in them-thar Australian outback mines. And firms are reaping the benefits from higher gold prices. But what are they going to do with all that money?

27:15Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. They're back live across North America.

27:57Lawrence H. Summers:Guns N' Roses Tour 2026.

28:04Get tickets now at LiveNation.com.

28:13Don't miss Guns N' Roses.

28:22Every sale comes down to a single second. The one between buy now and maybe later. PayPal is built to help your business win that moment. With a checkout experience that feels certain, reliable, and familiar. With a global two-sided network and hundreds of millions of buyers who already know us. all to keep you in control however buying happens next new markets new ai powered selling services a whole new agentic era where you decide how your business will show up and stand up paypal is built to help your business come out ahead we're built for payments built for growth Built for Agentec. PayPal Open.

29:08Built for all business. Visit PayPalOpen.com to get started. That's PayPalOpen.com.

29:23This is a story about money burning a hole in your pocket. The price of gold has been on a rocket ride up. Our colleague Paul Allen tells us about what this means for gold mining in Australia and both the risks and the opportunities. In the Australian outback, scrub and red dust stretch as far as the eye can see. It's desolate out here and it's dry. But beneath the dust, there's a bounty that miners are willing to dig a long way for. How many ounces of gold would be in a typical truck? So there'd be around 500 grams of gold in a truck. So we've got a line of trucks slowly making their way out of the pit here.

30:04How long does it take you to get from the bottom to the top? Yeah, it's well over an hour. The Kalgoorlie Super Pit in Western Australia is a sight to behold. More than 600 metres deep, it would cover even Manhattan's tallest skyscrapers. It's so vast it'd swallow Central Park. This project's going to be an important one for our business and our shareholders. Stuart Tonkin is CEO of Northern Star, Australia's biggest gold miner. Probably around$300 million to$400 million per annum being spent moving material from the southern part of this pit, gaining access to over 6 million ounces of gold in the bottom of the southern part of this pit.

30:40The price of gold has been on a tear. It's up nearly tenfold since 2000, and more than doubling over the last five years. Tonkin's company and many others around Kalgoorlie are cashing in. But the gold industry has been here before. There's probably more failure stories than success stories where people can point to in the gold sector and so repairing a lot of that trust with investors as we go into another cycle has been really important for our company and I think for many Australian companies to get that investor trust. But before we get to that, let's set the scene. It was 1893 when a group of prospectors on horseback quite literally struck gold in kalgoorlie a rush ensued and the precious metal has dominated the western australian town of 30 000 ever since ashok parak is the local accountant and chairman of mid-tier gold producer horizon minerals i've been involved in the mining industry for over 40 years in kalgoorlie and i happened to own the pub as well when i came here

31:47Lawrence H. Summers:gold was probably$150 an ounce. Today it's over$5 ,000 an ounce. It has been great for everybody in Australia and Kalgoorlie. We're the biggest gold mining town I think in Australia and Kalgoorlie is different. You can come to Kalgoorlie, you can walk into a pub, you've got no job, nowhere to live and no money. And by the time you walk out you've had a meal, you've got a place to stay and you've got a job. And there's plenty more people finding jobs and places to mine with the price of gold booming. We're currently mining. It's all a great gold price environment. What these high gold prices do for us is we can actually produce gold now, pay a little more through processing through third-party infrastructure, so use other people's infrastructure.

32:33But what it does is actually closes that funding gap we'll need to refurbish our own plants. You know I call them pop-up shops around the gold fields here, just the amount of flurry and activity of things that weren't economic six months ago that suddenly become economic. Australia produces about 300 tonnes of gold each year. That's about 8 % of global production. It's a costly exercise. The process involves breaking down vast amounts of ore extracted from the mine. Each truck can carry about 250 tons of material, but just typically 500 grams of that is gold. That material is then broken down and processed by crushes before being melted.

33:14So the melting point of gold is 1024 degrees, so we then heat the furnace up to roughly 1200 degrees. As we go through the pour process, the first material comes out is all of that slag off the top of the crucible. Then when the gold comes out the colour change actually goes from a yellow almost to a greeny colour and that's the gold coming out of the process. Probably one of the good things about this site is that we have a relatively nice ore body coming into it. We don't have a great deal of impurities coming through so these are some of the nicest bars that I've seen in my time in industry.

33:53And with a surge in prices Australia's gold miners are cashing in and setting themselves up for long-term success. Laurie Conway is CEO of Evolution Mining. So back in June 23, we made the decision to invest$250 million building this plant expansion and$75 million to open up a new mining centre into the north here to feed the plant, taking it from 2 million tonnes to 4.2 million tonnes. And in 23, it was pretty difficult. The market was hot. It was hard to get people, hard to get equipment. I think we were very fortunate when we did that. But, you know, gold price was only$2 ,400,$2 ,500 an ounce when the board approved this.

34:35And it had very good economics. I mean, bringing it in right now at$5 ,000,$5 ,200 an ounce is a perfect time to be commissioning it. I think that the difference this time is what's going on around central banks and that shift of we need to have gold in our reserves a lot more. Whereas back in the last cycle, it was really around the whole mining boom and therefore what was going on in low inflation, low interest rates that pushed the price of gold up. And so that was more being driven by an economic standpoint. This time it's really been driven by geopolitical tensions and the shift in the way that governments are handling their reserves.

35:12And so that's why you sort of see that structural shift that the governments are driving this price, whereas the economy was driving the other one. and that's why in the long term, yes, the gold price will come down a bit, but it's structurally shifted higher because of what central banks are doing versus the last boom. In 2019, Evolution reported adjusted gross profit of about$270 million US dollars or about$410 million Australian dollars. That's now jumped to about$1 billion. It's expected to grow even further to almost$2 billion next year. And how are we about on the costs front? What's that like at the moment?

35:50Power will go up because we're obviously doubling the processing and the processing uses power. 50 % of our costs are labour. And investors are keeping a keen eye on costs this time around. When gold prices last jumped, Australia's gold miners underperformed, falling 16 % in the three years from 2010, while the price of the metal itself rose 52%. Kate McCutcheon covers Australia's gold miners for Citi. So last cycle we definitely saw a lot of transformative M &A which was very value destructive. So that last cycle from 2000 to 2012, the 10 biggest gold stocks in our coverage universe cumulatively burnt$10 billion in free cash.

36:33As an industry we made those missteps because when the price did come off and that cycle changed, shareholders went well where's the cash and all the industry said is well we reinvested it into projects or we went and bought assets and therefore we've reinvested that money for you and the shareholders were like well we would have liked some of that and we didn't see that. It hasn't changed too much I mean other than that we're putting more cash in the bank which is what our shareholders want to see. So it's interesting you say you've got more cash in the bank. Has this changed your approach to reserve management and long-term planning as well?

37:06You know you've got to see it as a sustained price at these levels before because you can't just change your mine plans overnight. So what it does mean, we look at our reserve pricing, we look at what the costs have changed, because you do see costs generally follow the gold price. And then we look at what projects become more economic in a higher price environment, and then we apply the normal discipline of when do you bring those on. Look, I think it's important that you look at a lot of these things in hindsight, some things like hedging, you know, hedge book legacy at prices that people had never thought that they would see exposure to.

37:41You know, when people had a high equity price, they probably tried to use that currency by raising lots of money on the back of an elevated equity price and then potentially dropping money out of their balance sheet, return capital to shareholders that then wasn't retained for its own sustainability inside the business. So there are very many different disciplines of what people do at different times. And do you feel lessons have been learned? Do you feel like the approach is different this time? I feel that the heat has come out of some of that. But I've found a foundation discipline of true capital management across a variety of things.

38:14So, you know, dividend paying gold companies was never really heard of. There's a lot of good track record of gold companies paying dividends, doing share buybacks, compressing registers that they had raised equity on the back of. Those are the type of capital management measures that aren't typical to a gold company. This time, investors want to see more tuck-in acquisitions or bolt-on acquisitions close to infrastructure. It's very, very hard in a bull gold market to do a deal that's accretive. And I think the gold companies are realizing that. Secondly, what's not different this time is delivery on operational guidance.

38:52So the three biggest stocks in our coverage universe, Evolution, Northern Star and Newmont, actually up until this FY hadn't delivered on guidance for between four to seven years. The third thing that's different this cycle is also hedge books. So now we're seeing gold miners opt for no hedging policy, so that exposure to spot prices and putting in place some put options to protect the downside. And this cycle as well, most of the gold miners in our coverage are in a net cash position or running at peak net debt of 15%. So balance sheets are very different this time. And investors appear to be liking what they're seeing.

39:29Since the start of 2022, the gold price is up 85%. Australia's gold miners are up 98%, with both Northern Star and Evolution balancing share buyback programs with new investments in recent months. Do you feel like investors now buy the idea that the gold industry is more disciplined than it has been in the past? Yeah, I think if we can continue that over the next 12, 18 months through increasing dividends, making sure that some companies do buybacks, that they do see that, as well as reinvesting in the business. because the shareholders still want us to reinvest in the business. They want us to make it sustainable over the long term, but they do want to share in that as we're going through this cycle.

40:10Just spent a couple of weeks in the US meeting with investors because there's a lot more interest in the US in Australian gold stocks at the moment. And so it was good to go and talk to them and explain what we're doing here at Evolution, but also what the gold industry in Australia is doing. And there's certainly going to be more interest. The big question is, where to next? Gold has plateaued in recent months, but in an increasingly uncertain macro environment, there's room to go higher. It's a really exciting time for gold and it's been elevated for some time, but there doesn't seem any signs that this is going to fall back.

40:46We think it's possibly the new norm and if anything, the start of another continuing bull run for gold. Yeah, certainly. Gold started back in the 1850s, so it's been around and been a part of Australia for a very long time and I think you know as we go through the boom and bust of economies gold has had a significant role to play. It now has a more important role to play because we are a top 10 producer, we're a low-cost producer, we're a great jurisdiction in which to operate and therefore it makes it important to the Australian economy but it also means it makes it attractive for people to invest in the sector.

41:21Whether it does make it attractive for people to invest in is going to depend on some big decisions being made by companies like evolution and Northern Star? Is it time to double down on the gold mining bet? Or is it time to take some money off the table and give it back to investors?

41:42Coming up, millions of Indians put billions of dollars into equity derivatives and lost most of it. We take a look at Indian capital markets and their role in driving growth and innovation. That's next on Wall Street Week.

42:26We'll be right back. market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. They're back live across North America.

42:45Guns and Roses Tour 2026.

42:51Get tickets now at LiveNation.com.

43:01Don't miss Guns N' Roses.

43:09Every sale comes down to a single second. The one between buy now and maybe later. PayPal is built to help your business win that moment. With a checkout experience that feels certain, reliable, and familiar. With a global two-sided network and hundreds of millions of buyers, who already know us. All to keep you in control however buying happens next. New markets. New AI-powered selling services. A whole new Agentic era where you decide how your business will show up and stand up. PayPal is built to help your business come out ahead. We're built for payments. Built for growth. Built for Agentic.

43:53PayPal Open. Built for all business. Visit paypalopen.com to get started. That's paypalopen.com.

44:07This is a story about walking a tightrope. India Prime Minister Modi is committed to making India an economic power, and capital markets are what provide businesses with the money they need to start and to grow. But to do that, they need to encourage investors to take risks, enough risk, but not too much, a fine balance we recently saw lost in India's equity derivatives market. As a market maker with a unique model, Jane Street's business makes bets on inefficiencies in markets. Bloomberg reporter Catherine Doherty has been reporting on its business in India. Jane Street has kept its trading secrets close to their chest, but it was really the millennium lawsuit.

44:51Jane Street saw an opportunity in India's equity markets, engaging in a strategy called index arbitrage. So the firm was essentially placing these large bets that were then impacting the other side, and they were profiting from the way that these markets were moving. So the regulators in India have identified this as a manipulative trade, and the firm has said it was in arbitrage trade and not market manipulation. India's market regulator, the Securities and Exchange Board of India, or SEBI, banned Jane Street from the country's securities markets. Jane Street has filed an appeal alleging that SEBI denied it access to documents it needs to defend against market manipulation accusations.

45:37Ironically, the problem with India's capital markets historically has not been encouraging too much risk, but too little. Nilesh Shah has watched the evolution of the country's capital markets as the managing director of Kotak Mahindra Asset Management. The Indian savings allocation is more tilted towards physical assets. We are one of the largest buyers of gold in the world, putting anywhere between 50 to 70 billion dollars annually. We also have love for real estate. Capital market or financial savings itself has taken off in recent times. But thanks to mutual funds, insurance industry and pension funds, slowly and steadily, allocation to capital markets, both debt and equity, is increasing rapidly.

46:25India's transition to retail investing is still in its early stages, but it is moving fast. One in five households today hold shares, up from one in 14 just five years ago. We launched an investor awareness program called mutual funds sahih hai. Mutual funds are right thing to do and that has helped us in mobilizing more and more retail savings into mutual fund. Our industry is growing at a fanatic pace and I believe the nudges from the regulator, the work done by the regulator is laying the foundation. Now it is up to us as an industry to carry forward the work. One measure of the expansion of Indian capital markets is the success of its IPO market, which is among the biggest in the world.

47:16Last year, IPOs in India accounted for more than$20 billion, U.S. dollars. It was the number two IPO market in the entire world. Josh Fellman is the principal at JH Consulting and advised the Indian government on economic and financial matters during his time as the director of the IMF's India office. To date, regulators have encouraged retail participation in IPOs, helping contribute to overall retail participation in markets. One thing that they've been fantastically successful in, as opposed to, say, China, is they've managed to get household participation in the capital markets. It's not all roses.

48:02Under the surface of India's blossoming capital markets, is a risk that threatens its stability, derivatives. About 40 % of derivative transactions are conducted by households in India, which is an incredibly large number. So if you take the derivatives market in particular, the regulator, SEBI, did a study. They found that last year, about 90 % of the participants in the market lost money. And they found that, again, about 40 % of them were under 30. Three quarters of them earned less than$6 ,000 per year. The growth in derivatives has caused a liquidity problem. It is a fact that there are a large number of unsophisticated investors.

48:50It is a fact that they have very poor cash buffers. but what to do about it. You don't want to push these people completely out of the market. At the same time, you don't want to unduly restrict the professional participants in the market because they're the ones who iron out the market inefficiencies. So far, it has not had any adverse impact on the ability to raise money through the equity market. Even if the illiquidity in markets hasn't affected raising capital to date, it has introduced a different kind of risk. So in India, the options market is quite liquid, the most liquid active market really across the globe.

49:44In the U.S., you also have a very liquid options market, but the cash market, the equity market, is also liquid. It's also trading at high volumes and it's moving very efficiently. And the regulators really have a sense of the big players. And if there's any manipulation or if there's any large moves, they're able to identify it very quickly. India's financial regulator, SEBI, has made an example out of Jane Street and drawn a boundary in how far it's willing to go to liberalize its markets. But keeping the door open to foreign investors will be crucial for the country. India is one of the most open economy in terms of foreign direct investment.

50:25India's largest FMCG company, automobile company, telecom company, mutual fund, private sector bank, insurance company, all are majority owned by foreigners. There is hardly any other country in the world where foreigners will be allowed to own such kind of industry. However, can we improve further upon this? My favorite example on foreign direct investment is Maruti Suzuki. In the 80s, Suzuki came to set up an automobile company in India. They have gone through the ups and downs of India. Today, Maruti Suzuki, a 53 % owned subsidiary of Suzuki, sells more automobiles in India than what Suzuki sells worldwide.

51:11And Maruti has delivered better return than Suzuki, Honda, Toyota combined in the equity market since its listing in 2003. It isn't just equity markets that provide capital to companies, and the debt side of the capital market equation may be about to get a shot in the arm when Indian government bonds are included in several FTSE Russell bond indexes this month. Essentially, we have seen that whenever a country becomes part of benchmark indices, both passive as well as active flow starts flowing in. So inclusion in FTSE government bond indices will undoubtedly increase allocation towards India.

51:56More importantly, when you get an alternate source of funding, for example, all domestic investors are generally on one side of liquidity. Either it's high or it is low. But global investors can bring balancing part. Indian markets have come a long way in encouraging risk-taking among retail investors and offering channels of investment to foreign investors. But Shah says that hasn't been enough to support the risks inherent in generating the kind of innovation that comes from the success and failures of startups. Unfortunately, here, Indian capital market has not done a good job. The majority of our startups both innovation as well as otherwise have been funded by global private equity and venture capital funds.

52:46It has been to some extent funded by family offices and high net worth individuals. Like the public market, private market has not received encouraging participation from Indian capital. The second thing is related to instruments. The private equity market, unlisted market is not as much regulated as the public market is. So, the domestic flows, domestic retail flows have not moved into unlisted segment as much as it should have done. The third and probably which is changing rapidly is creation of angel networks. The whole purpose of venture capital industry is to some extent go from monkey to King Kong scenario.

53:37You invest in lots of monkeys some of them will grow to become gorilla and one of them will eventually become King Kong. There was a lot of financing through venture capital through private equity for Indian startups. People wanted to bring the sort of IT ecosystem that exists in the United States into India. So, for example, food delivery firms, which has proved to be an enormously big and very successful market in India. Ride-hailing apps, all these things have been started in India and have proved very successful. A lot of them have, firms have grown and exited through, the PE firms have exited through IPOs.

54:28But of course, more recently, as elsewhere, when interest rates moved off the zero level, a lot of that financing has dried up. Whether it's reforming taxes on securities transactions or limiting speculation in cash equities and derivative markets, or making sure both debt and equities are supporting innovative new companies, India is moving, trying to walk that tightrope of risk and stability to support its economic growth. and its very motion means that it can't come to a rest. That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.

55:20Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same.

55:56The thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. There are exciting things happening at your local CVS. shop new extra big deals with extra care every two weeks no coupon needed plus get access to exclusive sale prices personalized deals and more as a member extra care is the way to save at cvs join for free online or in store and start saving visit your local cvs store or cvs.com extra big deals for this week's deals