Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Merton Talks Money weekly round up, debrief and the biggest stories in Marcus and economics this week. I'm join Stepicks, senior reporter and author of the Money Distilled newsletter Meurn's out this week, so I'm again in the driver's seat and back by popular demand, we have none other than Bloomberg opinions. Marcus Ashworth. Hih hi Marcus. So today we're gonna get
any exactly exactly macro. That's a famously easy to predict and forecast thing that no Hedge one managers ever come a cropper from attempting to do. But I thought we could start with gold because gold has been the obvious big story this week. I think with so it's a new record in dollars, also an ay speG growing number in pounds, twenty one hundred squadter owns. And I suppose I'd just like to get your views or in why this is happening.
Just know, well, I like commodities generally. I think clearly gold is you know, just a technical analysis overview is clearly going to carry on pushing up to new highs. If you were just take the fundamentals away, so it's trading in a certainly an abolished format. The fundamental reasons behind gold going up, I've got no idea. I don't think anyone does quite clearly what gold is being driven by in recent months and what have you. Is, in essence, is something bad is going on the one It doesn't
matter where in the world it's going back. For instance, let's we can see that a lot of money still coming out of China as in individual investors trying to sort of perhaps put something away where it can be literally for any day. So driving I think it's just simple. It's it's it's constant demand.
You know.
It could be what's going on in the Middle East. People want to want to get some money off shore. It could be indeed, still the ongoing main driver, I think is something from both China and in the state, but equally much more in individuals.
And so because gold you can see as one with stuff from a capital fleet from China, cant is that fair to see it? Because Chinese people can move it to gold exactly that and even although it's stell end China, it's kind of not. It's what goes on.
Well, I'm not sure holding it in China, But that's sort of not the point, really, isn't it. But yeah, look, I think it's it doesn't matter where in the world if something's going really bad and people need to get money off. Sure, you know, we know what happens with bitcoin from time to time, and gold is in essence exactly that. Now you can extrapolate a lot of other
fundamental drive of what's going on in the world. We can see bon yeos going up a lot, everyone's worrying about fiscal plans for whoever the next US president might be. I don't think that is necessarily the primary diur of gold, but I don't think it's holding gold back. Sometimes you would think gold would be going the other way because of that, But actual fact clear at the moment as that it's a momentum trade and people are prepared to
be quite happily long it. And because if something bad goes on on November fifth, sixth seventh, you know, at least you know you've got something which is doing it's an instancy's silver starting to move as well, because that's the sort of the higher beta gold, and that my view is that gold is you can't really call it an asset in a normal sense of the word, but it's it's a barometer of other sort of fear and
greed in excellence. Both both benefits you, both in greed terms and in fir terms at the moment.
So that was getting well, just a couple of things because at the very start there you said can elate commodities at the moment, because that's essentially because commodities generally, so gold has been growing up, but and places may also have been going up bit coppered and the world or the rest of them. And oil, I say, it's the obvious wine as well, haven't haven't actually been going the other week.
So I meant more soft than I should be more Yeah, but I mean, you know, the point here is oil is that it is you know, if you want to look at one thing to tell you what the world's economy is doing, not stop markets. You know, obviously you can look at the value of the dollar, you can look at the ten year US treasury yield, and you would look at oil. And every time oil goes to be fair below seventy in the moment, it's getting bought.
So it shows you that it's got quite a quite a firm flaw at the moment, which is pretty low in some senses. Quite clearly, you would expect a test of fifty rather than a test of one hundred of the moment, if you were looking at how the market's been training. Every time it tries to rally on Middle East fears and what have you, it comes straight back down again
fairly quickly. And it quite clear to my mind that the jibilisical concerns and how oil relates to them as is nowhere near as big as it perhaps once was. You know, the question is that most people in oil, all they focus on is is supply as opposed to demand. What's interesting at the moment is that, you know, demand is very strong actually, but supplies even stronger.
I see this. This is key, isn't it? Because you would look at the oil place by itself and your assumption would be oil goin do and means the global economy is slowing. But that doesn't it seems to be more to supply.
Yeah, which I know it should normally. Would you look oil, you go okay, that's the economy is telling something that the global economy that oil prices coming down. The other story, which is harder to get into, and I wouldn't say I'm an expert on this, but from what I can understand is that the shift in China's demand is probably permanently down because they're shifting to gasification. They're moving to other types of ecologically more more more sound forms of
energy wind, solar, et cetera. And I think that is quite a fundamental shift that they are going to be requiring less and less oil deliberately. Yeah, that's a much longer term thing, but you know, you want to have to understand that, you know, China can move the old
market and has consistently. We will see what goes on with India it still being requiring an awful lot of hydro carbons, and other big economies in Asia particular like Japan as well, But for the moment, you know, China has always been the mover of this and that that may well be no longer the case going going forward.
Can we get in the geopolitical conspiracy theories for famous?
Yeah?
See, because I mean obviously reading a few things and obviously wine is it big sort of stories that always checks about and there has been kicking a bit for twenty UYGLS is this idea of China eventually having the ui and or the n men.
Ben't you that MST named what a winning sort of the bricks currency of choice?
Well, no, I I was thinking just just the yourn rather than the bricks, because I think the bricks is a sort of fever dream by you know, golden bitcoin, kind of bugs with whom I have a certain amoent
the sympathy. But I think that one's just daft. But what you're saying there is basically so if China is building out electric vehicles to reduce its reliance on oil, and presumably most of that electricity can be generated at home, and it's simultaneously trying to build up its gold reserves so that it can effectively cut itself off from the US dollar system if it needs to or wants to, and can provide a sort of alternative payments global payments system.
I guess for the like say Russia and all the other people who don't want to be not.
How it's further wey than ever was. And that's one of the reasons. What's going back to what we're saying about gold. The reason why gold's up is because exactly that not even Chinese want with it. So no, I don't, I think, And that's the problem. You know, as I mentioned, it's going to ago. The bricks countries are together as we speak and want to basically have at some point,
you know, an alternative to the US dollar. But it's not so much the US dollar, it's the US dollar payment system, of which, of fact, the of as far off assets control. Basically, the US Treasury can reach out across the world and make light very difficult, not just by grabbing sovereign reserves like they did for Russia, but you know they can block and do all sorts of things,
rightly or wrongly. But the point here is that the alternative to the dollar would have to be the un and it isn't ever going to be because of cup of controls in the way that the rule of law is not applied to be saying in the normal sense of the word in China means that any bricks country or any bricks alternatives that the units was you know they're thinking about, will essentially be the Chinese ran. It's
not gonna be Russian rouble. And any correlation into India repeat that, that's never gonna happen because you know, India and China for whatever reason, may I have some or a prosh one moment, but they are not friends and never will be. And you know, likewise, you know, in this context Brazil and South Africa are not are not directly relevant. So in that sense, if they want to get together, that means they're essentially going to give control
to Beijing. Is that better than giving control to Washington? Obviously not So in that context, I don't think. I think it's a non start, and it will continue to be. They will obviously be trying to push for into trade and denominations, and that's just smart and I perfectly understand that, and that's fair enough, but I don't think it's going
to evolve into anything. What they are most keen on, though, is is the payment systems, because you know, separating away from using the dollar, you know, it's it's it's the
how that payment is monitored. And you know, as we know swift, the society of worldwide, you know, national financial transfers is essentially the payment system of the globe amongst the banking systems, and they want to find an alternative to that, and that's something which I think they will also struggle very hard to do, but I clearly see
why that's their prime concern. So when you look at a bricks currency, it's not really about the currency, it's about alternative payment systems which can move money between China and any other part of the bricks sort of universe, but not getting involved in the essentially a US controlled banking payment system.
And has that been a lot of the interest in the CBDC say the things that can digital cut and see say the things.
It's slightly more subtle, But I went to the europe Central Bank in June and one of the things that really surprised me is the real desire to get a digital Europe without really i think, the concept of understanding what they're going to create and what monster they are going to be left with. Because you know, only seven of the area countries have their own individual banking payment systems.
It's quite extraordinary.
So you know, we have Chaps or you're going to call it in the UK, and it's not applicated across the whole wide euro area. So they're ali essentially on Visa, master Card and what have you, and they really are unhappy about that. So their logic would be credit digital euro and a lot of central banks are thinking on the line zone in the UK obviously looking at it, that's more of a keeping up with the Jones this
type thing. Yes, sure that they're at least not completely left behind, but you know, the concept of allowing the government to completely control every payment you make and to my mind is horrific. The alternation surely would be to create your own privately owned or non government controlled payment system, but that doesn't seem to have quite dawned on anyone.
There, so we could call it bet bet queen.
You'll never catch on say blockchain a few times, so to say blockchain refeatably long of the answer everything.
You should basically get your by a point of a longer chat about that topic, because that's actually really interesting. But yes, I think we'll wrap it up there for just now. But so thanks very much again. Marcus Marx's most recent column ECB should shock and all with half point cut spoiler alert, they didn't.
We are talking about doing it in the someone else I think I'm cracking. I'll win on that one.
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