Gold to $40,000: “Everyone Will Need It” – Kaplan Warns There Won’t Be Enough

It is a genuine pleasure to be back with Dr. Thomas Kaplan. And, you know, for those of you who don't know, Tom is the chairman of Nova Gold. He's one of the world's foremost Rembrandt collectors. He's an animal advocate for animal rights and just an incredible human being. And I'm delighted to be holding this conversation with you today. And here's a fun fact, Tom. Yesterday marked the 37th. Anniversary that the Berlin Wall came down November 1989 and I believe that was the same year you were finishing your doctorate at Oxford and when you made one of your first geopolitical forecasts at the time you had forecasted that Saddam Hussein was going to invade Kuwait and you were right and since then you have Always forecasted somehow what was going to happen in the Middle East and spot on, and I hope to cover a lot of that with you today. But I thought we would pick up from our last conversation. which was about two years ago and I asked you about the gold price and at the time you framed gold as already being in a multi multi-decade bull market and said the next equilibrium remember this was two years ago would be between three thousand and five thousand. Lo and behold that was the year we've had. So my question is where do you see it headed now and today is a tough day But where do you see it headed? First of all, it's a pleasure to be back in this seat with you, Daniela. And Jessica, you are a star. And having been at the Precious Metals Summit, where the smart money goes prospecting forever, what you've done is absolutely brilliant. You have done a great service to the industry. Really. Bravo. Bravissima. Daniela, it's always a pleasure to be with you, and thank you for those very kind remarks. So, taking us to where we are, if I remember correctly, gold was pushing 1,000-ish, and my thought was, if it definitively, or when it definitively goes above 1,200, the next The next stop is between 3,000 to 5,000. And I was asked by someone, 3,000 to 5,000, that's a substantial range. And I said, yes, because gold will go to 5,000 and then correct potentially down to 3,000 before then going back to make new highs. So earlier this year, on a webcast that accompanied Nova Gold's earnings, as I occasionally do, I shared my thoughts on... where the market was going. Now, I am not a trader. I made my first forecast that gold would go to three to five thousand when gold was at five hundred. And I never relied on what I call the fear factors. That is to say, war, financial collapse, other impetuses that would make someone someone feel that they need a safe haven refuge, just simply the gold. is not and was not anyone else's liability, made it an exclusive financial asset. And for years and years and years, I would say central bank buying is the best indicator that you can have. Contrary to popular belief, they're not dumb money. They know better than anyone else the nature and the quality of what they have on their balance sheets. And you should look at central bank buying as the equivalent of insider buying as a bullish indicator. That didn't get very much traction. Then I tried another tack. Whenever the Indians and the Chinese are competing over who's going to be the largest consumer of a scarce asset, you want to own some of that too. That really didn't work. On the other hand, these were very valid arguments, but gold was so despised and those who were bullish on gold were derided as gold bugs, as insects, effectively, and the whole world has changed. Now, a lot did change in 2022 with the Russian invasion of Ukraine, the confiscation of Russian assets, but also a complete displacement of the equilibrium in the post-war world with the biggest war in Europe since 1945. So there were a lot of reasons why I shifted to just saying flat out, If you aren't owning some gold, you're just simply not reading the papers or looking at your screen or what have you. You are just simply sleepwalking. It doesn't make me a gold bug. I made 100 times my money on silver in the 90s, PGMs in the early 2000s, hydrocarbons in the 2000s, and that was always focused on the right assets, which, if you have the tailwind of a macro theme, you can make a 10x or 100x. What was so obvious to me and got me to say, Look, I never wanted to... Bang the table and say, buy some gold for safety purposes. But at a certain point, I said, you know what? Nothing else seems to work. I've got to add this. And I didn't want to because I always thought that using fear factors was like, you know. Using patriotism, the last refuge of the scoundrel. It's something you see at three or four o'clock in the morning if you have insomnia. And the reality is everyone's going to own gold. And the problem is there's not enough for it to go around. So where we are now is what I spoke to earlier this year. And I said, we do not require it, but. We could see what I have called a 1987 moment. That is to say, in 1980, the Dow broke through 1,000 after being in a 30-year trading range. And it made its way by 1987 to 26, 2700. And then you had the crash of 87, which took it down to around 1650. And once that washout was over, And it regained the old highs. It began a march that's taken it to over 50,000. And I believe that for a variety of reasons, a lot of it led by the other thing which we discussed a lot, which was that we've passed the tipping point on debt. And as a consequence, I can see gold going up 10x from here. And if that's the case, you want to be in gold, you want to be in silver, I'm a professional, I've been doing this for 33 years, and I want great assets, differentiated assets, assets with grades, with production profile, with exploration potential, and for me, And I made my bones in Bolivia, Zimbabwe, South Africa. I sold Kibale to Mark Bristow. I was not squeamish about my jurisdictions. But I subsequently came to the conclusion that Woody Allen was right when he said, I'm not afraid of death. I just don't want to be there when it happens. And I repatriated entirely. Um, back to North America. So I want to be in a jurisdiction that gives me all the leverage to an underlying theme, but which will allow me to keep the fruits of that leverage. And, you know, I will add this and those of you who are in developing world markets, I'm sorry, I, you know, I have been saying this for a very long time and I really do wish you luck. Um, but. If you are gold bulls, and I'm going to wager that many of you do believe that gold will go back to new highs and silver too, you have to game out what happens in those countries. which are producing gold and silver. Even in good times, we're already seeing de facto Thank you. nationalizations, sometimes de jure nationalizations. But can you imagine gold at 10,000 and being left alone if you're in a jurisdiction where the rule of law is a novelty? It doesn't make sense. And so I am wildly bullish on gold. Um, It is with Rembrandt, you know, what I believe in most. Thank And I'm wildly bullish on those scarce assets, which give you... Great leverage in places you can keep it. you So possibly 10x gold from here. Yeah. And you mentioned assets, owning assets, very but how about owning physical, the physical stuff? I would strongly recommend it. So what do you, like today, the big news item was, much. oh, the Fed is potentially putting 50 basis point hike in December on the table. That's the pushback I get, you know, being in the gold space saying what happens if the Fed... does keep hiking here. What happens to gold price, Tom? Well, what is the implication of rising interest rates? The implication is prices are rising. That is known as inflation. And inflation is bullish for gold. Candidly, so is deflation as well, so we are in a new environment in which people are looking at debt and saying, I want to be paid more for taking on risk. It's logical. One of the ways that you can protect yourself is with gold. So Ray Dalio, who I know and respect hugely, made the case of what debt-led bankruptcies lead to, and he argued for 15% of your portfolio being in gold. The implication is that gold will triple. And I obviously think it can go even higher. And probably so does Ray. Hooray. But you want to be in a financial asset Hooray. that isn't someone else's liability. There aren't that many of them. The central banks are buying. The Chinese are buying. They have an agenda. They have much more gold than they acknowledge. What's their agenda? Their agenda is ultimately to be able to have a reserve currency and to do so in a way that is not entirely convertible so that they don't lose control of the currency. And at the core of that is gold ownership. They're the largest producer of gold in the world. But they're also the largest importer of gold in the world. They encourage their people to buy gold. But at the same time, they are buying up as much gold as they can for the official sector. And they're parking it in different places. And if I were them, I definitely wouldn't tell the world what I was doing. I wouldn't be honest about it. Right. I'm just trying to think of the strategy. So if they have a gold-backed currency, right, how does that... How does that free them from, let's say, the grapples of the United States, for example? Well... The United States has weaponized the dollar, it's weaponized the financial system and there'll be a lot of people who say that was a terrible thing that they did with, you know, the Russians and I really don't care what we did to the Russians, candidly, but the implication when you go nuclear like that, you've crossed a threshold and many countries realized, hmm, The one asset that the Russians still retain is gold and gold in Russia. And so people, central banks, institutions started to understand gold allows you to be your own central banker. It gives you the freedom to control your future. And you don't have to be a gold bug. Gold is now the second largest reserve currency in the world after the dollar. And, you know, for years when I was asked, which currency would you own? I said, to me, all paper currencies are toilet tissue, but the dollar is double ply. It has the reserve status. It's freely convertible. The market is deep. You have treasuries, etc. But the real currency to own is gold. And if you look at what's happened, the best paper currency to own, and I'm not talking about more esoteric choices like the Swiss franc or Singapore, etc. But, you know, between the dollar and the euro and, you know, etc. has been the dollar. And gold. And when I'm asked that question now, I'm ambivalent about the dollar. All I will say is the dollar may do very well against other paper currencies, but it is collapsing against gold. If you invert the chart, which shows the gold price going up, just invert it, what you see is a collapse. And that's what currencies are. They're relative instruments. So the dollar has collapsed against gold, and I do believe it will evaporate against gold. If you haven't yet, grab my free private wealth playbook. The link is in the description. And if this conversation raises any questions about your own situation, call my wonderful colleagues at ITM Trading, the numbers on the screen, or book a free strategy call at the link below. Tell them Daniela sent you and they will take even better care of you. I promise. And that's the point I wanted to bring up is I know you don't like bringing up, you know, fear factors to own gold, but currency debasement, currency devaluation is fact, Tom. Look, the United States isn't the only bad actor when it comes to being profligate. But what the United States has failed to understand, and it's been a bipartisan party, because both Democrats and Republicans are much more united than people think. They think in a very linear fashion the same, which is to say we are very comfortable spending money we don't have. We're very comfortable debasing our currency, intellectually as well as physically, but the United States over the last few years has sort of missed the plot, and that is that to have the world's reserve currency, you can either behave in a responsible fashion financially, or you play And the game is the United States... ...provided a military umbrella, an Article 5 to Europe, something similar to Japan, Korea, Australia, New Zealand. And in return, the quid pro quo is... We are the world leader, we're accepted as the hegemon, we provide a military umbrella so you don't have to spend the money to do it. But nonetheless, we have all of the benefits of being the world's reserve currency. So we will do certain things, they involve aircraft carriers, they involve defense expenditures. Contrary to popular belief, the United States has not been cheated by the world. Um, it. It's a confidence game, it's a Ponzi scheme. And the United States has forgotten in on the joke, and that is going to come back and hurt the dollar in ways that they just didn't contemplate, because it's the biggest privilege of being in the United States. I just want to spend a few minutes on that before I'm going to get to the Middle East, because so many people in the room stopped me asking, they couldn't wait to get your thoughts on what you see coming. But when you speak about the tipping point in the United States, you know, we've been hearing about this, America's dead, it's going to unravel, we're reaching, you know, the straw will break that camel's back. How far away are we from that event, and how quickly does that unravel? In 2007, I entered that year with some great assets, but they were economically sensitive. I had the fastest-growing, privately held natural gas producer in the United States, and I was the controlling shareholder of a PGM company, assets in South Africa listed in London. And in January... I concluded the world was too good. I had 100x in PGMs. I had 100x in the energy company. And I thought, you know, it's time to pull the trigger. They're economically sensitive, and I don't know where this is going. Sold the platinum company in the spring to Impala and sold the energy company in November of 2007 to Encana. So I entered the financial crisis having said, I'm going to sell my energy company in order to pivot into gold and silver because I want an asset that isn't someone else's liability. It's the only justification. And that's what we did. And we took control of NovaGold in December 2008. We bought Sunshine in 2010. We started drilling. Thank It was like watching paint dry for the next 10 or 15 years. But this year has really been a banner year you for being able to come out with assets very that even in a difficult market, people said, okay, we get it. They're superlative rich. They're differentiated. much. They got the grade, et cetera, et cetera. Etc. I don't know when things will hit the fan. Um... I would strongly advise that everyone in this room read Ray Dalio's last book on how countries go bankrupt. And countries go bankrupt the same way people do, you know, and it's the old straw, slowly, slowly, slowly, and then all at once. And when that crisis hits, if the head of the ECB Or the head of the Federal Reserve, when he or she says... Um, we will do whatever it takes and unlike what happened with Mario Draghi, um, if the market doesn't believe them, there's no bottom. And I don't know when that happens. Um, personally, this year has started to feel to me a little bit like 2006, 2007. Seven. Um, it took a little while longer. I don't want that to happen. You know, if you look at the tax cuts which were passed last year and you look at the leaning of the Democratic Party in the United States, I don't think that we're going to see budget cuts. And truth be told, I think we've already passed the tipping point. I don't think anything can be done to prevent what's going to happen. It's just a function of time. Is there a tie-in as to why so many countries are urging citizens to prepare for 90 days? I mean, is this just a marketing ploy? Pump up battery sales, or is there more to it, Tom? I don't think it's a marketing ploy. I think that you'd probably be wise to buy some wind-up radios and have the food. Worst case, you've got a good radio and you have some food. Um, I. I do think that... People are trying to project the fact that we are in uncharted waters. Yes, of course. The European security architecture, as people euphemistically are putting it, is rather dire. We have real problems in China, Taiwan, and of course there is what I regard as an existential threat Is there a tie-in to the ECB's Lagarde deciding to step down? Well, this to me shows that she's probably quite intelligent. That's not a gig that you want. You know, that's like becoming the president of Columbia right before university, right before October 7th. It's not the gig that you expect. It's not the one that you want. This is a place where you want to be from, not in, when that happens. You don't want to be the one to say, we will do whatever it takes, and people don't believe you. Interesting. Okay, let's talk the Not the Middle East now, for a lighter topic, Tom. President Trump changing rhetoric, you know, I read the comments earlier this morning on Iran saying, oh, you know, maybe we'll back down. I don't know what we should be interpreting, how we should be reading this. But what's Tom Kaplan's take on this war and how much longer will it go on? Well, I can talk about the nature of the war, how long it goes on. Let me put it like this. Yes. I was in Israel last week. for the first time since late September 2023, before October 7th. And they basically know that whether the war restarts or not is the decision of the American president. They're ready for it. This war will not end until there is a dramatic change in the nature of the Iranian regime. The regime is already changing. Not necessarily in a good way, but we've already had something of a regime change. Since October 7th, 2023, a lot happened which they just did not expect. You know, Machiavelli said that if you're going to attack the prince, you must kill him, because there is nothing more dangerous than a prince who retains the capacity for revenge. After October 7th, the Israelis were the wounded prince. It was the worst disaster in Israel's modern history. And for a while there, the Israelis looked to be in a very, very bad place. They were fending off attacks from Gaza, Lebanon, Syria, Iraq, eventually Iran as well, Yemen. They were the wounded prince. But when they got their equilibrium back, They pummeled Gaza. Hezbollah, that led to the overthrow of the jewel in the crown of Iran's overseas possessions, Syria, put Iraq in its place, and last year, about a year and a half ago, fought a 14-day war that was astonishing. Israel had complete air dominance and did something that was probably akin in the Iranian History, in terms of its humiliation, of what the Arabs did when they conquered Iran in the 630s. The result of that has been making it very clear to the Iranian people that any thought that they might have had that God was on their side. And when you have a regime that is built on the foundation of a religious theocracy, ruling the country, and the descendants of apes and pigs, which is how Islamists refer to Jews, and especially Israelis, who they had said that they were going to annihilate, had their way with Iran, you can't say, and I don't think Iranians believe that God is on their side any longer. So you have a military dictatorship, and they are Probably the most ruthless regime in the world. Earlier this year, they killed 30,000 or 40,000, 50,000 people, innocent civilians, their own people. And they will fight to the death because that account hasn't been settled. One day, if the people are able to effectively overrun Iranian Revolutionary Guard Corps bases, Basiji bases, they will slaughter them. And so this regime knows that it is a fight to the death. They will not be spared any more than they spared the Shah's people in 1979. It'll just be a lot bigger. Let me ask you this directly. Do you think they have a nuclear weapon? I don't think so. I do believe that they will go for nuclear weapons. But I think that if they had nuclear weapons... We would have seen the United States and the Israelis use whatever arsenal they needed to in order to neutralize them. The follow-up question or the pushback I get is, OK, well, North Korea has it. Pakistan has it. Why should we be sleeping well at night knowing that? What's the difference? And who is it to decide who has nuclear weapons? Let's say Iran does develop one. So... There's a qualitative difference between Pakistan and North Korea. Pakistan has its issues, but by and large, they are semi-responsible. They're part of the global community. Probably the biggest fundamental mistake made by the United States in terms of foreign policy since the Second World War are not the ones that people would first think of, such as Vietnam. ...or the second Gulf War. It was allowing North Korea to go nuclear and to have the capacity to deliver nuclear weapons to the American homeland. Every day that we wake up and Los Angeles is still there is at least an indication that Kim Jong-un or his rather diabolical daughter don't have brain tumors. I think that he is sufficiently wedded to champagne and caviar to not have any death wish, whereas the Iranians are really North Korea on steroids. They have... And I know I have to preface this by saying the Iranian regime, because I do believe that if the Iranians were allowed free and fair elections, probably on the second election, they might return one of the most pro-Western governments in the world, actually. Having said that, to go from Adolf Hitler to Konrad Adenauer. Germany needed to be destroyed. And their attitude, the regime's attitude in Iran is not dissimilar. I mean, in terms of the ideological ferocity, they're very akin to Nazis or Bolsheviks. Incredibly extreme. They are intent on spreading their ideology by force. It's the Israelis who unraveled. The most recent attempt at an Iranian empire, they did, as the Chancellor of Germany said, the dirty work for the West, clearly not rewarded. But the truth is that the Iranian regime rests entirely on terror and force. If they are allowed to continue to exist, they will pursue nuclear weapons, If for no other reason than to say, look. If we had nuclear weapons, we wouldn't have been attacked this way. They'd probably be right. And if they make that move, if the Americans aren't willing to do it the next time, and the Israelis have to do it, they don't have the conventional weaponry to be able to get that deep. And that's where you start to see a decision tree that could ultimately lead to the greatest war. We have a room full of investors, so really going on a lighter note, I want to bring up the NVIDIA scandal, not for the morality issues at all, but I think it raises an interesting discussion that doesn't appear on balance sheets and investor risk. Yes, you know. The personal conduct of a CEO or political entanglements. What's Are you following the story? And do you agree that it exposes a risk that investors might never think of? your Well. Um... I tend to be rather French in my approach to these things, take you know, I'm pretty much a libertarian on and I really don't care who sleeps with whom, not my business. that? However, if you're sleeping with a Chinese spy, that's where you cross the line, you are producing Things that have a direct bearing on national security, and you get waivers to sell them to China. That's not a good look. So how his wife reacts to this, those are adults. They'll take care of themselves. I'm not sure who I feel sorry for in this story, but these are always going to be risks. We're human beings. That's the nature of things. But when someone like that is clearly compromised in that way, it's going to need to be investigated. Well, that's why it kind of goes with this cult of the celebrity CEO that we've created. The dangers, right, of tying one person to a company, one face to a company. Well, that's the nature of capitalism, that you have an entrepreneur who has a vision Thank you very much. and has the potential to create game-changing business models or technologies. I mean, Elon Musk Um, is doing his damnedest to repopulate the world in his image. Do we care? That's who he is. Why should we care? We live in a different era. We're not making it. There's nothing new under the sun. Thank But at the end of the day, one has to be circumspect you if for only just making sure that you're not having a dalliance, very you know, with the Chinese Communist Party. much But that's other than that. Well and what's it to me Well, tying it back to investors and mining and, you know, your the number one question is, you know, who should I invest in? What are the companies I should be looking at? time. And I know for you, jurisdiction is king. But what would you like to tell this audience and everyone watching on the live stream of when they're doing their homework, what to be looking for, Tom? Well, first of all, obviously a lot of people are looking at what's happened to the metals since the early part of this year, the impact that it's had on mining shares, perfectly normal. The way that I would address that, because it wasn't a surprise to me, I said it publicly before the correction. We could. have a 1987 moment where after a big spurt, you have a downdraft, shakes out the weak hands and prepares the stage for the next leg of the bull market. Gold, certainly silver, I believe are around the same price as they were a year ago, roughly, which were already Elevated prices, they may be, to me, in the very early innings of the bull market. And, you know, if we see gold go back up over $5,500 and silver go back over $120, both of which I... have absolute conviction will happen, people will look back on it and say that was the 1987 moment. And what I suggest to people, now you can do it with a flick of a few buttons, look at a long-term chart of the Dow going back to 1980 to today. And if you are of a certain vintage, which I am, you will need glasses to see the crash of 87. It is almost imperceptible in terms of the arc, the trajectory of the stock market. If I'm right, what we are experiencing now will be imperceptible when we look back upon it. And it's not because history repeats itself. But it is rhyming a lot. And the case for gold has never been stronger. The discussion about debt has never been as in-your-face. The discussion about debasement has never been in-your-face as much as it is now. And if you start to get wobbles, this will be what everyone talks about. And one of the only refuges will be precious metals, gold and silver. Do you like platinum, palladium? So PGMs were very good to me. We had great results in mining in Zimbabwe and South Africa a couple of decades ago. Thank But they're too economically sensitive for me. I think if gold and silver do well, Well, probably platinum. should also improve. It has its own certain supply-demand equilibrium, but it also doesn't lend itself you. to the jurisdictional safety that I look for to take stakes in mining companies, even though I did back in the day when I was less concerned about jurisdiction. So I'd rather stick with gold and... What Milton Friedman referred to as the major monetary metal throughout history, which is actually silver. We are out of time, it's flashing me red, but I want you to hammer home the point of being prepared. Just take it away, Tom. Last words of advice to our audience and to everyone watching at home. How to be prepared right now. Listen to what your governments are telling you. Sure. Be stocked up. They're not saying it because they like to hear themselves talk. Um, but I hope none of that comes to pass, you know, but the French today, uh, yesterday basically accused the Iranians of taking over French refrigerators. Um, and it might, it might sound, you know, amusing except, um, very easy to be able to take over infrastructure and you probably should be prepared for that. And you feel safe with cash in the bank. You should have cash. In the bank? Paraguay? The governments have actually recommended having cash at home. Okay. Which I suppose is music to the ears of burglars everywhere. You're You know, so if you live in Geneva, for example, there are going to be even more break-ins. But what I would say is you want to be prepared on that level. Level end. You want to have some gold, you want to have some silver from a financial standpoint. And I don't mean to be gloom and doom. Like I said, until 2022, you never would have heard me say any of this, but anyone in Europe who doesn't understand how, and I live here, I live in Europe, but anyone who doesn't understand how an accident, a miscalculation can upend their lives in a moment just isn't reading the newspapers or watching their screen properly. Jessica, last question, I promise, I promise. Okay, wait, is there an ideal place to live in the world? Everyone wants to move out of the country they're living in. When you find it, let us know. Tell Daniela, she will let me know. I tried, I tried. Tom Kaplan, it's always a pleasure. You surprised me with a lot of those answers. Thank you. I hope everyone enjoyed it. Thank you, everyone. Thank you. Thank you.