You’ll be talking about Gold at this year’s Mines and Money event in Toronto – what’s the one key takeaway you hope that they get from your presentation?

I’d like attendees to leave with the view that the medium to long-term outlook for gold is quite positive. This view isn’t based on peak gold theories. It is based on my belief that the US dollar is overvalued and will decline, that higher debt levels in the global economy will need to be addressed (which will incorporate higher inflation) and that central banks will not be able to tighten monetary policy significantly as a result.

What will trigger the next global recession and when will it happen?

I don’t know when the next global recession will happen. However, I do think that the current expansion is a post-depression expansion, not your typical growth cycle expansion. Therefore, normal benchmarks don’t apply. I am surprised at how low inflation still is, which suggest that the next global recession is a long way off. My caveat is that a Trade War impacting China badly would inevitably hurt the global economy.

What role do you expect to see China playing in this commodity cycle?

China has played a key role since joining the WTO in 2001. When China joined we saw an immediate, significant, positive price impact on commodities.

We are now seeing a slower growth pattern for China as it shifts from foreign to domestic consumption. We’ve done some analysis (based on US data) of the impact on commodity consumption when a country moves to a consumer economy and found there to be little impact in due course. However, observers will find China’s economic performance disappointing compared to that of, say, 15 years ago.

What is the most common mistake that investors make when investing in gold?

Thinking that as of tomorrow the world is going to hell in handcart and the price of gold will surge. One should invest in gold as part of a very long-term strategy. Investors in gold must be prepared to think in terms of at least the next 5 years.

What do you think of the interest in cryptocurrencies?  Do you invest?

I steer well clear of cryptocurrencies. The volatility is extreme, going up or down by 50% over very short time frames. If you are someone who likes volatility and who likes to gamble, then cryptocurrencies are for you. But they are not for me.

I also think that if/when cryptocurrencies start to compete seriously with currencies issued by governments (governments profit tremendously from their monopoly of printing money) then we will see a clampdown on cryptocurrencies (which has already started to happen in some countries). I don’t see a future in private cryptocurrencies.

What about gold backed cryptocurrencies?

I think this is somewhat tautological. We had gold-backed currencies to limit how much central banks could expand the supply of money – to limit how much currency the central bank could print.

However, cryptocurrencies have their own internal limits (such as 21,000,000 bitcoins). So, the idea of gold-back cryptocurrencies doesn’t make sense to me. But maybe this feature has some appeal to specific investors.

What is the books that have greatly influenced your life?

I am a keen student of economic history, and I have been influenced greatly early in life by “International Monetary Relations: Theory, History and Policy” by Leland B. Yeager, (2^nd edition published in 1976); it is an excellent book.

A more recent book along similar lines (though not as broad in scope) is “Lords of Finance: The Bankers Who Broke the World” by Liaquat Ahamed. It is about gold, money, the Great Depression and the impact on international relations. What’s fascinating is that many decisions made back in the early 20^th century still reverberate today.

What advice would you give to a smart, driven college student about to enter the “real world”? What advice should they ignore?

Start at the bottom. Learn about the real world. Don’t mistake having a degree with being smart. I had a PhD when I started out and thought I knew everything. Boy, was I wrong. I had to overcome this handicap and work my way up.

What are bad recommendations you hear in your profession or area of expertise?

I sometimes get frustrated with the rabid gold-bugs and their recommendations: gold is always going up, the world is going to hell, and gold will be all that is left in the ensuing economic wasteland. I can understand why a “promoter” might propagate this view, but really, he/she should know better.

Could you see governments intervening to buy gold if gold was to suddenly shoot higher?

Possibly! Some governments will, I suspect, want to get their hands on gold at some future point. China has been encouraging individuals to hold gold, and I believe there is a chance that in the future the authorities will choose to nationalise (i.e. confiscate) this privately-held gold.

My theory is that the confiscation of gold is likely to be in conjunction with a government policy to rebase its currency on gold (as in 1933 in the US).  However, in my opinion if gold was to suddenly shoot up to say US$3,000 per ounce, I don’t know if for that reason alone a government would want to buy gold. If the Bank of Canada (or the Fed) were to arbitrarily set the price of gold at $3000 for some other reason, I suspect many people might want to sell their gold to the government.