Gold’s importance has always extended beyond its price. For nations, it can represent monetary independence, geopolitical leverage, and protection from a financial system controlled by someone else.
Dominic Frisby argues that China understands this better than almost anyone. In fact, its quiet accumulation of gold may reveal ambitions the country has little incentive to announce.
If he’s right, the significance of China’s gold strategy may only become clear when Beijing decides the advantage of secrecy has run its course.
Read the transcript below.
Transcript
Dominic Frisby
China’s gold accumulation is without doubt the biggest story in world finance. It’s huge. The implications of it are enormous, and nobody’s reporting on it. So China’s got 10 times the amount of gold it says it does. 17,000 tons is twice as much as America says it has. If China turned around to the United States and says, oh, actually we’ve got more gold than you, you know, that’s pretty much a declaration of war. The first thing that gets weaponized in a war is money. You know, I think it goes to $7,000, $8,000, $9,000, $10,000 by the end of the decade. Like, gold is your hedge against government, the debasement money is inevitable and you’ve just got to own gold.
Monetary Metals
Welcome back to the Gold Exchange podcast. I am joined by the wonderful Dominic Frisby. He’s the author of The Secret History of Gold, which may be the best book ever written on gold, but I’ll have him tell you a bit more about that. Dominic, welcome back to the show.
Dominic Frisby
Thanks very much, Ben. Adam Fleming, who is Ian Fleming’s nephew and, uh, a great gold bug and the former chairman of Harmony Gold and various other gold mining companies, sent me an email saying, I have read every book on the precious and yours is the best. So it’s not me that’s saying it, it’s Ian Fleming’s nephew, no less.
Why gold has shaped world history
Monetary Metals
Hard to get higher praise than that. So let’s start on the history of gold. I mean, you’ve researched literally thousands of years of gold-related history. What surprised you the most as someone who’s been in the precious metal space but really did a deep dive for this book? What surprised you the most?
Dominic Frisby
The impact of the gold rushes in the 19th century and how they changed the history of the world. And the role of gold in the British Empire, which is correlated cuz the gold in the British Empire came from Australia and South Africa. But I mean, you guys all probably know about the California Gold Rush. You’re all taught about it at school, but without it, would California ever become what it is? Would people have, you know, Oregon was where the best farmland was. Nobody was going to California in 1850. We probably wouldn’t have Hollywood without it. We wouldn’t have Silicon Valley without it. And, you know, the gold rushes put California literally on the map. 1849, of course, the year. And we only got the gold rushes in Australia because of the gold rushes in California.
There was a guy who came over, you know, an amateur geologist who came over to California in 1850, having seen somebody landing at a harbor in Sydney going, look, look, look what I’ve got, gold, gold. And he went over and he was sharing a room with a sheep farmer who’d sold all his sheep to get a ticket to go over to California. And the two of them were talking on the ship on the way over the Pacific to California. And they were like, they were discussing geology and they were like, I wonder if there’s gold in the Blue Mountains. I bet there’s gold in the Blue Mountains. And they literally got to California, turned around and went back.
They worked in the mines for a bit, went back to Australia, and they went up to the Blue Mountains and sure enough, they found gold there. And in fact, gold had already been discovered there, but the English authorities had suppressed the story because they didn’t want all hell breaking loose. And so we wouldn’t have Australia as we now know it. And then of course, you look at South Africa now, obviously South Africa’s a bit of a mess now, but through most of the 20th century, it was an economic giant. It was huge. And you just need to look at the roads and the buildings and the infrastructure and things like that to see the magnitude or the previous magnitude of the place.
Just compare it with the rest of Africa. And why did so many people from all over the world go to South Africa? Why didn’t they go to, I don’t know, Ghana or Congo or somewhere? And the reason is the discovery of the Witwatersrand in Johannesburg, you know, major international city sprung up around it. And that Witwatersrand produced 40% of all the gold that’s ever been mined. And that gold mostly way, way, way back to Britain. So You know, South Africa, Australia, California, they just would not exist in the way that we now know them without the gold rushes. And so those gold rushes changed the course of history.
Monetary Metals
And about those gold rushes, it is so interesting because it feels like in a lot of ways gold is pretty evenly distributed across the planet. There’s gold in Africa, there’s gold in the Americas, there’s gold in China, obviously. So why do you think that is? Why do you think that gold has this kind of random distribution, almost these nodes across the planet and they’re found at different times? Do you think that’s just luck or kind of historical circumstance? And how important do you think that is going forward?
Dominic Frisby
Well, I think there’s one theory that the Vittsvattensrund was actually an asteroid that landed. It’s like a reef that’s 2 miles deep and 60 miles long. But, but I think that’s been discounted now. But I mean, it’s pretty random where gold occurs. A thought I always like is, you know, you ask how is gold made in the first place? And some would say divine creation. Isaac Newton thought you could make it, make it from lead and mercury. He was an alchemist. In fact, he devoted more of his time to alchemy than he did to physics or mathematics. The last of the magicians, Keynes called him.
Plato and Aristotle both thought you could make gold by mixing sunlight with water. Didn’t quite work, but they were right on a number of other things, those two. Science has generally sort of agreed now that gold and other heavy metals are made when stars collide in outer space. In the collisions that follow, and then the nuclear explosions, the heavy metals get created and then dispersed as dust into space. And they actually thought they saw gold being made in space about 8 or 9 years ago. Incredibly powerful telescopes looking out and, um, they were able to measure how much gold was made because of the reflection in the starlight.
But in any case, that’s how gold is made. And then the dust goes out into the solar system and then gradually over time you get gravitational pressure and accretion and all the rest of it, and collision, and that dust compresses. And so the planets get formed, and that’s how the solar system was formed, and that’s how the gold made its way into the Earth’s crust. And it’s thought, I think it’s 2 parts per billion, the Earth’s crust gold. I’m sure somebody can pick me up on that stat, but I’ve, I’ve got that figure in my head, 2 parts per billion gold.
And so if it’s just dust in a whole cloud of other dust, it’s pretty random where it ends up in the Earth’s crust and then all sorts of, you know, geological shifts and faults and things, movements taking tectonic plates and all the rest of it taking place, then shift the location of that gold. And that’s how you get your little outcrops and, uh, other occurrences. So it, it is pretty random, but at the same time, every continent seems to have its, uh, its fair share. And in fact, maybe it’s not such a good thing, you know, if you believe in the resource curse, maybe it’s not such a good thing to have lots of it.
China’s secret gold accumulation
Monetary Metals
Let’s talk about our friend China. You have a whole section about China and their gold accumulation in the book. How important do you think is the fact that China is not only one of the largest importers of gold, but also one of the largest producers of gold? We’ve obviously now mentioned the resource curse. So maybe explain to our audience what is that resource curse and why do you think it maybe will or will not affect China?
Dominic Frisby
Resource curse doesn’t really apply to China, or it hasn’t applied. You know, the problem with the resource curse is if you have a resource, it can concentrate an enormous amount of wealth. In the hands of a few people, you know, such as Saudi princes or something at the expense of everyone else. You know, the other problem with the resource curse is you’re going to end up like Venezuela. You somehow, you’ve got all this oil and you end up poorer. I think that’s what’s meant by the resource curse. And I don’t think you can really apply it to China, although you might be able to apply it to specific regions. I don’t know enough about it.
But China’s gold accumulation is without doubt the biggest story in world finance. It’s huge. The implications of it are enormous and nobody’s reporting on it except a few people like me and a couple of other diehard gold bugs.
How much gold does China really own?
Dominic Frisby
Well, firstly, well, let’s just talk about how much gold China actually has and then we’ll talk about what the significance of that is. So a ton of gold would be about a medium-sized suitcase. Okay. And there are 210,000 tons, 220,000 tons of gold in the world. That’s all the gold that’s ever been mined. So 220,000 medium-sized suitcases.
And it is generally said the American government has 8,000 tons, although as we all know, there hasn’t been a proper audit since the 1950s. And is that gold of good delivery quality and so on and so forth? And if, is it just melted down coin from the coins that got confiscated in the ’30s, which were only 90% pure and blah, blah, blah.
But let’s just assume that America has 8,100 tons. 8,122, I think, is the number. Whenever the number is bogus, they always have a ridiculously precise thing. But anyway, now at the turn of the 20th century, there were roughly 4,000 tons of gold in China, in jewelry, some of it by the government and so on. 4,000 tons. And we know from geological records that China’s mined about 8,000 tons. This century. So that takes the total up to 12,000. And it does not export any gold.
China, it’s not allowed to, it’s against the law. And, um, even as jewelry, it’s a net importer. Doesn’t export any bullion, I should say. And then it’s impossible to know how much gold China’s bought from around the world because transactions that go through Switzerland, London, Dubai are private. But you are able to measure how much gold has made its way to China through the Shanghai Gold Exchange. And I haven’t got the most recent numbers, but it’s something like 25,000 tons has been withdrawn from the Shanghai Gold Exchange since it was formed in 2005. Now, some of that gold would have been sold back and then taken out again, so some of it’s been double-counted.
There’s also the money laundering trade with Hong Kong, so you can take a little bit off, okay? And some of the gold that goes through the Shanghai Gold Exchange is gold that China has mined as well. So you can take a, but I said 25,000, 26,000 tons. But if, if for all of those things you just say, okay, let’s just take off 5,000 tons. So you’re at 20,000 tons plus the 12,000 that I already said. So you’re at 32,000 tons. And then for example, the People’s Bank of China only likes 400-ounce bars, which are the norm amongst central banks. But you can’t get sent 400-ounce bars through the Shanghai Gold Exchange. You can only get kilo bars.
So we know that all the gold that the People’s Bank of China has bought has not gone through the Shanghai Gold Exchange. And we know that the People’s Bank of China, it said it’s bought 2,000 tons. It may have bought more. So you, you just can’t quantify how much gold has been gone to China privately. But yeah, 5,000 tons. I don’t know, 10,000, 2,000. Well, we’re gonna say 5,000. So that takes us to 37,000 tons, okay, of gold in China. But there are somewhere between 30,000 and 40,000 tons of gold in China. Okay. Now what percentage of that gold is state-owned? 50%? Alasdair MacLeod and others say 55%, 60%. Some other gold analysts, Kus Janssen and others say it’s more like a quarter.
Monetary Metals
25%.
Dominic Frisby
If you look at how much of annual gold supply central banks buy, then it would be 30%. But whether it’s, is it 25% of 35,000 tons? Is it 30% of 35,000 tons? Is it 50% of 35,000 tons that is state-owned? Remember, the People’s Bank of China is not the only state department. The army owns gold, the pension funds. There’s all sorts of other government bodies that own gold. That don’t have to disclose. But if it’s 50% of 35,000 tons, I’m just saying that ’cause it’s a round number.
That means the Chinese government owns 17,500 tons of gold and it says it owns 2,000 tons. 17, 2,000. It’s quite a big difference in numbers. Also, 17,000 tons is twice as much as America says it has. You know, the, the number, the, when you start extrapolating this number, I think at the low end you’re looking at 5,000 to 6,000 tons, and at the high end you’re looking at 20,000 tons. We just don’t know. But we know that a lot of China gold has been going to China and it’s been accelerated since Putin’s dollar assets were confiscated and blah, blah, blah. So let’s just say it’s 10,000 tons in the middle.
Well, that means China’s got more gold than America, but the Chinese motto is we must not shine too brightly. And China isn’t Billy Big Bollocks. It’s not going around going, “Look at us, look at us.” It just wants to buy and sell as much as it can and ideally make as much money as it can and accumulate. But if China turned around to the United States and says, “Oh, actually we’ve got more gold than you,” that’s pretty much a declaration of war. And I don’t think China’s quite ready to do that yet.
Could China challenge the U.S. dollar?
Dominic Frisby
If China and America ever get into some kind of escalated conflict, which a lot of people say will happen, I’m not sure, but if they ever do, then China has that card to play because the first thing that gets weaponized in a war is money. And China goes, “Well, actually we’ve got more gold than you. These are what our gold holdings actually are and you don’t have the gold that you say you do because you didn’t, hasn’t been audited.” And so they work US dollars worthless.
What are you talking about? And they attack the dollar if they want to. But then China’s also got $3 trillion US dollars. It probably doesn’t want to attack the dollar while it’s got all those dollars itself. So it’s just declaring the bare amount that it needs to be credible. So China’s got 10 times the amount of gold it says it does. What does anyone do about it? What do you do with that knowledge? You’re not going to like go and attack China for its gold.
Do you know what I mean? What do you do with that knowledge? So that’s why nobody’s kicking up a fuss about it. But you just know it’s coming at some point. That declaration is coming maybe 5 years from now, 10 years, who knows? But that declaration is coming. Maybe when China decides it wants reserve currency status, it’s got that gold card because there’s never been an international reserve currency that didn’t start out interchangeable deal with gold.
So I know why China’s doing what it’s doing, because it, it’s ambitious, and gold is money, and he who has the gold makes the rules, and all of those things. And if you’re ambitious and for your country, you want your country to own lots of gold. It’s just kind of normal. And if you’re retarded, you sell the gold, a bit like Gordon Brown did in 1999. And who was on the other side of that trade, by the way? China. So China’s gold holdings are dramatically understated.
And it is accumulating gold because it is an ambitious country and because gold is money and it is money that is nobody else’s liability. And so when you’ve got the gold, you don’t have to worry about America confiscating your gold assets or being shut out of SWIFT or anything like that, cuz you’ve got the gold and it’s in your vaults. So that’s why China’s accumulating it and that’s how much gold China has.
Monetary Metals
If you’re enjoying this conversation, you’ll probably wanna check out our 2026 Gold Outlook Report. It’s our latest edition and it covers everything from fundamental prices of gold and silver, basis and co-basis data, as well as our macro outlook for the rest of the year and our price calls for gold and silver in 2026. It’s absolutely free to download.
Is the global gold market moving east?
Monetary Metals
And Dominic, I want to talk about the idea of a central gold hub. So in the past, London has been the kind of gold hub. It was the center of the monetary universe. Then the US with Nixon, they were kind of the gold hub with Bretton Woods, and then of course the closing of the gold window. And now maybe Dubai or China and the Shanghai Gold Exchange are this new gold hub. How important do you think where the gold trade moves through as its central hub is going to be?
Dominic Frisby
Well, I still think the center of the gold universe is London. You talk to the gold traders in London and most of the gold, you know, the major gold flows still go through London and technically gold is Britain’s biggest export, believe it or not, except we don’t produce a single ounce. We don’t have a single operating metal mine in Britain at the moment. I mean, I find that incredible. But anyway, so technically London’s still the center.
The fact that it’s the center dates back to the South African gold going through London, a lot of the Californian gold, the Australian gold, you know, London, the city being the, the center of the financial universe, London being the capital of the most powerful nation and so on. So a lot of it is, goes back to that. And London lost a lot of its status in 1970 when they closed the gold markets briefly when the London Gold Pool collapsed.
And we lost a lot of its, we had like a monopoly on South African gold until that point. And then after that, a lot of the South African gold started going through Zurich. So London’s still the center, but it wouldn’t take a great deal for it to be pushed to one side. It’s not like we’ve got any, anything that can defend it. But yeah, at the moment, you know, there’s a lot of gold goes through COMEX, New York, Dubai, Zurich, Shanghai, Hong Kong.
These are all important places. I guess if you have designs to be the most powerful nation on earth, then you want, want a part of that is you want all the gold or as much gold as possible going through your cities and your exchanges. So, I mean, you know, the Shanghai Gold Exchange didn’t exist 22 years ago and now it’s huge. And I think, I don’t know the exact numbers, but I bet the Shanghai numbers, certainly a retail level, eclipse everywhere else.
Monetary Metals
And let’s talk about what’s going on in the UK. Obviously, maybe they missed out a bit on the crypto story that was, you know, started offshore and went to the US. Then they maybe missed the AI story. They’re missing the gold story. How is the UK planning on competing on the global stage, or are they just basically saying, hey, it’s time to bow out and hand it over to the US and China to fight it out?
Dominic Frisby
The idea of the UK government thinking in terms of competing on the global stage, that’s a long way from what’s, you know, we’re just not ambitious in that respect at the government level. They’re too busy getting bogged down in meaningless domestic arguments and so on. And we are too heavily taxed to be able to compete commercially and we’re too incompetent to be able to compete militarily. I think our Navy, which was once the envy of the world, I think we’ve got 15 ships now and most of them are in being repaired. Uh, it’s such a joke. If it wasn’t so funny, it’d make me cry. You know, so yeah, we missed AI. We can’t compete with AI.
Because our energy costs are too high, because we, we don’t produce our own energy, even though we’ve got abundant oil and gas supplies, we don’t produce it. So we can’t hope to compete in AI or anything to do with computers. Our tax structures and our regulatory structures are too onerous. So we can’t really compete with tech, other forms of tech. And even though we’ve got lots of expertise, most of our talent leaves the UK to go to places where taxes are lower. S
o we can’t compete with tech. We can’t compete with military. We can’t compete with energy. We can compete with incompetence. In idiocy. We’re right up with the— up there with the best in terms of those. It talks about leading the way, as you know, there’s talk about the— us leading the globe in terms of clean energy. Well, we have the most expensive electricity prices in the world, so if that’s competing, I’d rather not compete. And you know, the other major theme in all of this is, you know, the City of London, the London Stock Exchange, it’s the oldest stock exchange in the world.
There was something like 900 and something companies, 950-odd companies listed on the London Stock Exchange at the turn of the century or just before the turn of the century. And now there are like 500 and something. So it’s down by 40%. And like every, it’s not even every week, it’s like twice a week now, some undervalued London company’s being bought by an overseas competitor. And so we got fewer and fewer companies on the FTSE, you know, under Thatcher, at least we, and all the deregulation that followed that, at least we competed in the finance markets, but we’re losing those as well. It’s idiocy and incompetence where we are up there with the best of them. Idiocracy. Do you remember that film, Idiocracy? I think that, that might have been set here.
Why the UK is falling behind
Monetary Metals
I remember speaking with our friend Charlie Morris about that. The fact that there were so many British companies that are basically being sold off. How important do you think it is that Britain is, you know, waning as a power on the world stage? Do you think it’s important that, you know, this kind of major Western power doesn’t have a strong enough foothold to stand up and say, hey, this is how we’d like to see the world, or do you think the US has kind of taken over that mantle?
Dominic Frisby
Well, the US has completely taken it over and the UK’s just meaningless. Who cares about the UK anymore? You know, we’ve got very rich history, but we’re busy destroying that and we’ve got lots of lovely old buildings. They’re still there and you can come and admire them. But in terms of being a global player at the moment, we’re just nothing.
Monetary Metals
I want to talk about the kind of AI trade because that was something where you know, a lot of industries initially said, hey, we’re worried about AI, but it seems like Silicon Valley in the US said, hey, we’re embracing it, as well as almost an industrial policy towards AI. How wise do you think that is? How important do you think AI will be as a technology, not only to the economy, but to the world stage of which companies and which countries grow or wane?
Dominic Frisby
It’s huge. And, uh, I mean, I use it in my own little world and my little business all the time. And it gives me better outcomes and quicker outcomes. And you probably see this, I bet you, you know, when you’re quickly negotiating with somebody for something, you just get AI to write your email and they get AI to write their email back to you and they, you reply to them.
And this is like, I went around Namibia earlier this year and it was quite logistically quite complicated, my trip. And it was a couple of times when I was losing my temper with the travel agent, but I just wrote the emails with AI and kept my ego out of it. And then I realized after quickly that she was using AI to reply. And so it was both of our AIs talking to each other. And it was, it was quite funny cuz I know you are using AI and you know I’m using AI, but nobody’s saying it.
But the, the result was we didn’t have a single problem and every difficulty got resolved. And you know, if you are negotiating a deal with somebody, you just get AI to, you know, write your emails for you and it, it looks after you. It, it makes sure that you don’t ask too much. It makes, keeps you honest, but it also makes sure you don’t get ripped off and So I just think better deals get done, so better outcomes.
And so I think this is one of the benefits of it is it really does help small businesses. But if everyone at grassroots level is getting a better outcome here and a better outcome here, and you’re getting quicker outcomes and better outcomes, then that has to be beneficial to both the economy and to humankind. And so, you know, it’s taking a lot of decision-making out of things and we need to make decisions, but Do you know what?
Before we had handwriting, my memory was a lot better. And now I use handwriting and I write stuff down. I don’t need to remember it. So my memory’s got worse. And I used to run through the forests barefoot, or my ancestors did, and now I have to wear trainers. And so my feet are weaker than they were. But do you know what? It, I don’t know, it is what it is. You know, Andy Burnham and Donald Trump, if they’re messaging each other, you’d rather they spoke properly than wrote AI messages to each other. But you know that at every level, senior people are doing just what you are doing with AI.
Everyone’s doing it, but the result is the outcomes will be better. If AI was negotiating between Donald Trump and Iran on the Straits of Hormuz, I’m sure we’d have a much quicker and better outcome than what’s currently going on. And nobody really knows what’s going on. I think it’s really good and I think it’s gonna make us more productive and it’s gonna generally improve outcomes. But if you start instructing AI if you are, you know, a high-power president and you are like, this country’s really pissed me off, I want to obliterate the hell out of them.
And AI’s under strict instructions to do as you say, and it’ll tell you how to obliterate the hell out of them. Then you’re gonna get very bad outcomes. If terrorists start learning how to make bombs, as I believe they can from AI, or, you know, I want to take out London, how do I poison the water supply? Or how do I take out crucial infrastructure or whatever? Then you put it into AI and you can probably learn how to do it. So, it’s not all rosy, but it’s, it’s not the end of the world either.
Monetary Metals
So I want to ask you two questions based off that answer. One is, you know, this seems like we’re heading towards a world that’s a lot more variable. The really awesome outcomes are potentially more likely, but also really catastrophic outcomes are more likely. A, does that mean that gold as an asset where people say, listen, I don’t want the counterparty risk, I don’t understand how AI works or large language models. I just want to know that I have something that’s been valuable for 5,000 years. Do you think that becomes a more likely scenario? And on the other side of that, do you think that people are going to say, well, maybe we don’t really need gold anymore. We have AI, we have technology. What’s the point of this shiny metal?
Dominic Frisby
Well, I would say 50,000 rather than 5,000. But anyway, that’s in the book. That’s where the first fragments of gold use date back to Paleolithic Spain. I just don’t see how you don’t own gold in this environment that we’re in at the moment. The debasement of fiat currency is built into the system. It’s a debt-based system. The more debt that gets issued, the more fiat money gets debased, and then governments get involved and print and government bonds and all the rest of it. And you know, money’s a political tool, and if you want apolitical money, then you have to go to either gold or Bitcoin. You know, you can’t debase it. It’s nobody else’s liability.
Now there’s times when you want to own gold, such as the 1970s, such as the noughties, and there’s times when you don’t want to own gold, such as the ’80s and the ’90s and the tweenies. But this is one of those decades where you do want to own gold. It won’t be the case forever, but I think over the next 5 years, I mean, gold’s at $4,200 as we speak, having been consolidating for 9 months or something. It’s probably made its low at $3,900, $3,950, wherever the low was. Might need to go and retest it again. It needed a year of consolidation after the run it had last year.
But you know, I, I just, I think it goes to $7,000, $8,000, $9,000, $10,000 over by the end of the decade, something like that. And I, I just think everyone wants to own it in their portfolio. It’s just like essential. Why would you not want to own gold at the moment? I, maybe if interest rates go to such a level that, you know, they, they compel you to own these kind of yield-bearing instruments, but I think they’ve gotta go a lot higher before that happens. And like gold is your hedge against government. And you know, I’ve said how bullish I am about AI and how it improves outcomes, but you know, we’re still in these incredibly divided times domestically.
It’s huge culture war going on between left and right. And you know, it’s worse in the UK, but it’s bad in America as well. You still, you saw that very far left guy got elected in, where was it, Michigan or somewhere the other day, Minnesota or somewhere, one of those M-E places. You know, there’s still an appetite for far-left socialist policies even in America. And some states, you know, leaning hard left and, and other states are leaning hard right, Texas, Florida. And so while there’s this standoff and, you know, you’ve got a big spending president in Donald Trump and I don’t know yet who succeeds him, if it’s gonna be the Democrats or the Republicans, but America is divided and Europe’s even worse. The debasement of money is inevitable and you just gotta own gold.
AI, productivity and the future economy
Monetary Metals
And let’s talk about mining as well, because a lot of people think, well, this AI boom can really only be sustained with an increased boom in the mining sector for different materials, different metals. Do you think that that, you know, boom to the mining sector is a real trend that’s going to happen or is happening? And how do you think that affects the underlying metals?
Dominic Frisby
Well, I, I think there’s demand for all metals at the moment. It’s, You know, copper, we are gonna need a lot of copper and all those data centers and infrastructure rebuild. And then there’s the reshoring of critical metals to the United States, which means a lot of investment in copper mining and other essential metals. You can make a case for pretty much every metal. And the mining companies had their bid run and now they’re consolidating. And, you know, mining could be a horrible industry, but if you buy the argument that metals prices are going higher, then you wanna own the miners. They’re not without risk, but, you know, there’s just no huge copper miners come on stream for goodness knows how long, and there’s a huge need for them.
You know, it won’t be the case forever, but for now, yeah, you want to own miners. And funnily enough, you want to own miners because they supply the essential component parts to the AI boom or the component materials. But actually AI’s getting used a lot in mining now. You know, so much of mining is data. And you know, if you’ve ever been to a mine in Khorshak and you just see boxes and boxes and boxes of this drill core about, you know, 3 or 4 inches thick, the width of your fist.
And, you know, all the contents of each bit of drill core, how much metal, what type of metal, what type of this, what type of that, all has to go into data rooms. And a lot of the time, a development mining company or exploration mining company, it’s really almost like an intellectual property company that’s just got the knowledge of this particular plot of land and what’s in it. And sometimes the value of that is zero. Um, you, you know, if you look in the ’20s when all the mining companies collapsed, that you, there was just no value ascribed to it.
And then sometimes the value ascribed to it is enormous, but AI can now process all that data and it can guide geologists as to where they should be drilling. And it can go, well, actually this deposit here is almost identical to this deposit in Outer Mongolia. That you didn’t know about, but I know about it because I’m AI. And so you should start drilling at this point and this point, and that’s where you’re likely to find the motherlode and so on. So AI is going to make mining more efficient.
The role of silver in a modern world
Monetary Metals
I want to get into a rapid fire round with you. I’m going to ask you questions from all over the map. You can answer as short or as long as you want. And I want to start with our friend, the metal silver, which obviously we haven’t talked about today. Maybe there’s a Secret History of Silver coming. But for now, I want to ask you about silver. Obviously, some people see silver as a monetary metal. It’s basically, you know, the smaller version of gold. And then other people see silver as more of an industrial metal, like copper, with some monetary properties. Where do you fit on that spectrum for silver?
Dominic Frisby
Well, silver was money for as long as gold was money. And the function of silver was to be medium of exchange. And the function of gold was to be store of wealth and display of wealth. And silver, obviously, display of wealth as well. But silver’s role of money was killed by the gold rushes of the 19th century. Everyone said the increased supply of gold would lead to the falling gold price, but in fact what it led to was the abandonment of silver. And so in 1850, every country in the world apart from Britain and Portugal were on bimetallic standards, silver and gold.
By 1900, every country in the world except China was on a pure gold standard. So the gold rushes did for silver, and that was silver’s role as money dead. Basically, it still has a role as money cuz instinctively we think of it as money, but really the gold rush has killed it. Now the important thing is that is we don’t use physical money anymore. We don’t pay for things with gold and silver coins. Everything’s digital. And so I don’t see gold and silver coming back as money in the sense that we’re going to start using gold and silver coins again. I do see gold having a role as a reserve asset.
It already has a role as a reserve asset, even albeit unofficially, but it’s sort of officially unofficial because central banks are buying it. But central banks aren’t buying silver. And I think silver’s an important strategic asset. I think it’s an important industrial asset, but I don’t see it having a role as money because of the fact that we no longer— its role was always medium of exchange and that’s it’s not gonna be a medium of exchange again ’cause everything’s gone digital except in extremes. And by the way, this is a silver dollar that I have here. I carry it around with me every day as a lucky charm. So, you know, I understand silver, I know what I’m talking about.
And silver bugs get really cross when I say it’s not money, but I’m just afraid it, its role as money was killed in the 18, in the second half of the 19th century. And, and I don’t see it coming back. I do see it important strategically. And I do see it important industrially. And I, I do think the, um, price is still ludicrously cheap. I don’t see it ever going back to the 15 to 1 average except, you know, in extremists at some extreme point. But I can quite easily see silver going to $200 or something like that. And it, it’s, it’s used in everything. The, the, its use in solar panels and increased solar panel demand is what’s pushed the market over the edge in this bull market.
And that will come back cuz a lot of solar panels will be recycled. So recycled silver will increase. So I still see, see silver going a lot higher, but funnily enough, it’s gold bugs who buy silver because it’s a leverage play on gold. And I get that and it will always have that. It’s gold on steroids thing. So it’s like a, a levered bet on gold, but I, I just don’t see it. It’s not really a store of wealth and it’s not gonna be a medium of exchange and therefore It’s not really gonna be money.
Monetary Metals
All right, next question, still on silver for you. You’ve argued that silver bull markets don’t last forever, and when they end, they really end. So let’s talk about the silver bull market. Do you think we’re in the end of this silver bull market? We had a great run-up and then a big crash down, or do you think that we’re still in some sort of a silver bull market phase?
Dominic Frisby
We’re in a consolidation phase in an ongoing bull market. You know, silver’s actually behaving really well. Broke out of that $50 resistance line. You know, 1980 was the high, then 2011, then it retested it again the last year and it broke out. It was a perfect cup and handle and it went to the moon coming out of that cup and handle. And it’s come right back to the breakout point, $55, and that $55 has held. So it’s technically, it’s behaving really well. You want to see $50 hold really. 50, 55. You don’t wanna see a 40 handle on silver because then I’ll change my view then. But as long as you see a 50 handle on silver, I think it’s consolidating and, and it will go a lot higher.
The value and frailty of Bitcoin
Monetary Metals
Now I wanna ask you about one of the new assets on the scene, which is Bitcoin. You were an early Bitcoin enthusiast, but a lot of arguments now are, well, there’s these quantum, you know, potential hacking abilities. There’s of course been hacks to these wallets that store Bitcoin. And AI has taken a lot of the wind out of the sails of the crypto universe. What do you think about Bitcoin going forward? Is the argument, well, gold is digital, we’re just sending digital payments back and forth, why not go with Bitcoin? Or do you think that Bitcoin needs to evolve its story, evolve its argument to stay relevant?
Dominic Frisby
You know, the potential of Bitcoin is so enormous. For me, the risk is not owning it. Why would you not want to own a little bit? It’s got such enormous potential. And there’s this huge divide between gold bugs and Bitcoin bugs. I’m just like, I’m an I own them both. They’re both great. They’re different. One’s physical, one’s digital. You can appreciate that once you appreciate the difference between digital gold is not gold. Once did gold is digital, it’s somebody else’s liability cuz you’re relying on vaults and things. So, you know, digital gold’s not gold. So I like gold and I like Bitcoin.
What you need to realize about Bitcoin, I, I do think by the way with AI, there’s gonna be a lot of attacks on both the Bitcoin network and also on hacking and so on. A couple of guys I know in the Bitcoin space just think over the next year, hacking is gonna go nuts. There’s gonna be a lot of it. So you gotta store it somewhere safe. Bitcoin had a bit, its big run up to $125,000, whatever it was, and then it collapsed. But this time the correction was only 50%. Previously it was 70%. Time before that was 90%. So the volatility’s gradually coming out of it. And what was the low? $58,000, $60,000. So it’s about a 50% correction.
Every bear market needs its disaster story. So we had, you know, FTX in a previous bear market and, um, Mt. Gox in one. And we’ve just had our disaster story now with the Coldcard hacking. So, you know, that little box has been ticked and Bitcoin’s still $64,000, $65,000. You know, people go, uh, AI’s gonna take it out. Quantum computing’s gonna take it out. Do you not think the people, the Bitcoin devs have thought of this? That, that’s what you have to realize when you go to a Bitcoin conference.
Everyone’s got massive foreheads. It’s full of mildly autistic geniuses. The combined IQ at a Bitcoin conference dwarfs the combined IQ at any other conference you go to. And you’ve got some of the cleverest people of the world working on the most powerful computer network ever built. And so all the things that everyone talks about, quantum computer, AI, they’ve thought of it already and it’s all been dealt with. And if anything’s gonna hold up against it, it’s, it’s Bitcoin. If you’re an evil genius, Dr. Evil, and you want to, you’ve got enough computer power to take out Bitcoin. Well, do you know what? You’d probably take out Goldman Sachs and JP Morgan and the banking system. Because you may as well do that because you’ll create much more disruption than you would take out Bitcoin.
Owning an ETF is not the same as owning the asset
Monetary Metals
All right. Next question for you is about ETFs. So when gold did not have an ETF, the introduction of ETFs, of course, helped the price of gold. And obviously Bitcoin also got their own ETF as well. How important do you think the institutionalization of these assets has been? And do you think we’ve kind of gotten to peak sensibilities for both Bitcoin and gold? Everyone who wants to know about gold knows about gold. Everyone who wants to know about Bitcoin knows about Bitcoin. We’ve basically gotten to the point where if you want to own it, you own it.
Dominic Frisby
Yeah, I mean, they’ve made it much easier to own, not in the UK, but elsewhere. And you’ve got to jump through so many bureaucratic hoops in the UK. Even now, most people don’t bother.
Monetary Metals
Stefan Gleason.
Dominic Frisby
But yes. So what’s interesting about the gold ETF when it came out is that the gold price actually fell. There was a lot of excitement about it in the lead up to the launch of the product, and then it actually fell. And something similar happened with Bitcoin. So, you know, we’re past that phase now, and gold ETFs have increased gold ownership around the world, and they’ve made it easy to buy and sell, and institutional investors and, um, uh, leverage products and all the rest of it. And the same will happen slowly with Bitcoin.
So I suppose that’s a good thing. I do worry about the fact that owning a gold ETF is not the same as owning gold and owning a Bitcoin ETF is not the same as owning Bitcoin. But maybe those are just purist arguments and I need to stop worrying about it. And yeah, I think, um, I really like Charlie Morris’s BOLD, which is gold and Bitcoin. I own some of that and I recommend everyone to own a little bit of that. You know, ETFs looked a bit shaky when 2008 came along. So in the event of another financial crisis, it won’t be the same as actually having Bitcoin or gold on your person. But you know, those financial crises are often only once in a lifetime thing. So maybe I don’t need to worry about that.
Monetary Metals
All right. I want to ask you, you have a daughter who’s around my age. What are you advising people who are maybe part of the younger generation? They want to know, all right, with this whole AI boom, with, you know, all this monetary insecurity, What is some advice that you can give to people who are maybe younger starting out their financial journey? What’s some advice you can give those people?
Dominic Frisby
Well, I have 4 kids, uh, 25, 23, 21, 20. 3 of them anyway are pretty good savers. You know, they hear me talking about gold and Bitcoin, so they know that they should own gold and Bitcoin. And you know, they know about compounding and I think they understand that instinctively. Funnily enough, my youngest son is He’s very good with money, but he’s very quiet about it, so nobody quite knows what he’s up to. If you’re thinking about your career, you just got to go where the money is and where the activity is. And so in the case of the UK, I tell them to leave.
Monetary Metals
Well, if they want to come check out—
Dominic Frisby
There’s a lot more opportunity there.
Monetary Metals
Yeah. If they want to check out careers at Monetary Metals, they know where to check that out. Last question for you on The Secret History of Gold. What’s something that you wanted to include in the book but weren’t able to?
Dominic Frisby
Oh my God. There’s loads of stuff because the publishers limited it to 70,000 words and I wrote over 100,000. I had to cut out loads of stuff. There are loads and loads of stories about Nazi gold. You know, there’s this sort of fascination with Nazi gold that I had to cut loads of them and people trying to hide their gold from the Nazis. And then what happened to the Nazi gold after Germany fell apart?
There’s loads of that. I suppose the biggest argument we had is I wrote a long passage about the, uh, aliens, the Anunnaki from the planet Nibiru, which is an alternative history of mankind, which is that human aliens came to the planet Earth to mine gold. And the hominids that inhabited the Earth, planet Earth, were too thick to be trained to mine gold. And so the aliens mated with the hominids, cross-pollinated with them to create Homo sapiens and got him to mine the gold for them and also bred into them an instinct for gold. And that is how, uh, Homo sapiens came to be. The Anunnaki from the planet Nibiru. But I was told in no uncertain terms by the publisher that you have to keep aliens out of the book.
Monetary Metals
Well, maybe there’ll be an alien history of gold coming next.
Dominic Frisby
Well, maybe, maybe they were right. Maybe that was a good decision from the editor, but yeah.
Monetary Metals
Maybe the first ever editor decision that you agree with. All right, Dominic, I want to ask you a question I ask all my guests before we end. What’s a question I should be asking all future guests of the Gold Exchange podcast?
Dominic Frisby
Do you seriously think China will go to a gold standard with the limitations a gold standard would impose on the government?
Monetary Metals
Dominic, you make my job easy. I want to turn the question around on you. Do you think that the Chinese will actually go to some form of a gold standard, even though there’s all these limitations that a gold standard imposes on government?
Dominic Frisby
No, but that doesn’t mean its importance as a reserve asset won’t increase.
Monetary Metals
All right, Dominic, it’s been fascinating getting to interview you as always. Where can people get The Secret History of Gold and more Dominic Frisby?
Dominic Frisby
Well, you can buy The Secret History of Gold at any bookshop. You might have to order it. If it’s a backward bookshop or at Amazon or any of those places, the audiobook has received particular acclaim. So maybe if you like audiobooks and you like the sound of my dulcet tones, the audiobook is the place to go for it. And then my newsletter in which I write about gold and Bitcoin and lots of other investment opportunities, which I urge you all to sign up to, is called The Flying Frisbee, theflyingfrisby.com. That is my Substack. And it is one of the best financial Substacks you will ever read.
Monetary Metals
A hearty agreement from me, Dominic. Thank you as always.
Dominic Frisby
Thanks, Ben.
