Gold's Role in a Changing World Order: My New Interview with Frank Giustra
Also: Frank’s Devastating Hyperinflation Experience, Building Gold Majors With Ian Telfer and The Famous Treasure Chest He Restored.
China is “like a black hole where the gold goes in and never comes out,” says Frank Giustra, a major player in the mining industry and founder of Lionsgate Entertainment.
As the largest producer and importer, Giustra believes China is under-reporting their gold reserves. “My guess is they are preparing themselves, as Russia is, to exit the US dollar system… to one where gold plays a role.”
In an exclusive series of interviews with CEO.CA taped over a couple of days, Giustra says war in Europe is accelerating a bifurcation of the monetary system. Countries representing ~80% of the world’s population refused to condemn Russia for its Ukraine invasion despite pressure from the West. Meanwhile, global central banks have been selling dollars to stockpile gold.
“Currency is being debased and inflation is out of control,” he says. Giustra believes CPI is manipulated to prevent a confidence crisis, and actual inflation may be double what is reported.
Global debt has gotten to “insane” levels according to Giustra. He cites $300 trillion or 250% of GDP in most developed countries. “Raise rates in that environment.. you'll implode the whole system. They know this. So [the Fed] can talk a lot about raising rates and they can make a lot of threats about unwinding the balance sheet. None of it is going to happen.”
In the interview, Giustra shares for the first time how his family lost everything to hyperinflation in Argentina in the 1970s. They landed broke in a small trailer on Canada’s Texada Island where Giustra’s father laboured in an iron ore mine.
Gold would have “absolutely” protected the family from inflation, Giustra believes. He fears a similar unravelling of the Western economy is happening now and is warning investors to prepare themselves.
“People don't believe that [hyperinflation is] possible in America or Europe… It can happen, and it's always caused by the same thing, the printing of too much money.”
“Gold is the only constant [through history] that no one can print,” he says, while also advocating for diversification in certain stocks, real-estate, and even cash. “This is not the time for speculation,” Giustra says.
In 2001, he famously forecast a coming gold bull market and, with Ian Telfer and Neil Woodyer, built Wheaton River Minerals —which would become Goldcorp— from a $25 million shell into a $50 billion producer in 10 years. Goldcorp combined with Newmont in 2019 and today is the world’s largest gold company. Telfer joined Giustra for part of the interview to share experiences of building businesses together.
Since Goldcorp, Giustra and Woodyer co-founded Endeavour Mining, now worth $7 billion, and Leagold, a gold miner acquired for ~$600 million by Equinox in 2019. Giustra, Telfer and Woodyer are partners in a new venture, Aris Gold (TSX:ARIS), which they plan to transform from its current ~$200 million valuation into another major producer.
Success has enabled Giustra to connect with history as a major collector. He showed CEO.CA the personal trunk of Spanish conquistador Francisco Pizarro he acquired and had restored. With less than 150 men in 1532, Pizarro conquered the Incas in what is now Peru. They plundered a room full of gold in the fabled city of Eldorado —today Cuzco— which contributed to the rise of the Spanish empire. It’s an incredible museum-worthy relic which reminds Giustra of gold’s role in history and the ugly, greedy aspect of human nature.
The interview with Frank Giustra is full of insights on the economy, wealth preservation and building companies. Watch his perspectives on YouTube now.
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Author owns gold bullion and shares of Aris Gold (TSX:ARIS).
Nothing in this communication is intended to be investment or personal advice of any kind.