Tom welcomes back Michael Kao, former hedge fund manager and commodities trader to discuss the policy dilemmas facing central bankers worldwide and the implications for gold. Central banking challenges, including the Federal Reserve's higher-fo…
Tom welcomes back Michael Kao, former hedge fund manager and commodities trader to discuss the policy dilemmas facing central bankers worldwide and the implications for gold. Central banking challenges, including the Federal Reserve's higher-for-longer policy and potential risks for reserve asset holders, particularly those of BRICS countries, are explored.
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Michael argues against the adoption of alternative reserve assets like gold or Bitcoin due to their supply inelasticity and potential for sharp price fluctuations. The conversation touches upon geopolitical implications of central banks' search for alternatives to the US dollar, the challenges posed by illiquid reserve assets, and the inflationary environment. Michael believes we might be experiencing a new inflation trajectory between low inflation and stagflation, with unemployment currently in the middle.
Michael also discusses the dynamics of treasuries versus gold in relation to currency devaluation and central bank interventions. The effectiveness of interventions like those by the Bank of Japan is questioned, suggesting potential selling of reserve assets, including gold, to fund these interventions.
He introduces the concept of the 'Goldilocks trade' and its opposite, the 'anti-Goldilocks trade.' The Goldilocks trade refers to an economy not too hot or cold, allowing the Fed to cut interest rates without causing inflation. In contrast, the anti-Goldilocks trade is characterized by stagflationary conditions. Michael expresses concern about the widening wealth divide and pockets of weakness in certain sectors while larger institutions remain unscathed.
Lastly Mr. Kao shares his investment strategies, emphasizing the importance of information asymmetry and understanding underlying..
