Stock Prices Becoming ‘Detached From Reality’: CCLA’s Bevan

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James bevin we’re seeing this we’re seeing an extrapolation forward of these successful blue chip platforms is that a dangerous game or is it common sense it’s massively dangerous tom i absolutely can care with perspective these businesses can make shareholders a lot of money over the long term what i’m questioning is whether the share prices are simply running too far ahead and the wall of money that has come from both the federal reserve and more recently the us government is clearly propelling stock prices to levels that i begin to anticipate becoming very detached from reality everybody worldwide i want you to understand that james bevin has the best remote audio of anyone we’ve talked to since the beginning of the pandemic whatever you’re doing james at your studio there it is mint james bevin when we look at the equity markets are they de-linked from what we see in gold and the dollar dynamics now i would say that these are all connected movements if we unwrap what has happened to the gold price it’s heavily correlated with the movement of the u.s treasury inflation protected securities as you identified slightly earlier in the program we’re now looking at record low negative real yields from us tips now that seems almost oxymoronic but there we are they have been driven there by extraordinary buying by the federal reserve to put a floor under markets and gold has been a beneficiary i equally anticipate that there are some quite interesting technical factors behind the recent strength of the gold price and normally as you will all be aware gold is traded in the futures market people trade out the futures and take cash delivery now i would observe that there are surprisingly large number of people taking physical gold delivery at the end of the futures contract and there are far more futures contracts in circulation than the availability of physical gold so people who have to deliver on the futures contract have to go into the market by physical goal i think that there is therefore a short position in physical goal value to perhaps 40 billion dollars and that’s going to keep the gold price going for some time uh james would you be buying at these levels absolutely i don’t buy gold i don’t buy cryptocurrencies because i want there to be a fundamental underpinning in the form of free cash flow i like to be able to value something based on calculating the future value of the cash flows that i’ll receive as an investor very much if i was owning a private company now with a little block of gold sitting on my desk how do you put a price on it for the long term and i would say that that the gold price will come down as and when real confidence in the global economy returns and as and when therefore bond yields begin to rise once again

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