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Welcome to the Merrin Talks Money and News round Up, where we talk about the biggest moves in markets this week and what's driving them.

I'm Marren zumzet Webb, Senior editor at Bloomberg UK.

Wealth, and I'm Joined Stavik, senior reporter and not that of the I need distilled news later.

You missed out award winning.

Oh yeah, I'll opt read it next week.

That's all right, okay, Just I want to be absolutely sure you get all the credit I know you want every week.

I ceve it, I know.

Right.

Listen, there's a lot to talk about this week, most of which we're not going to talk about.

But let's talk about this interview with Annie Burnham, who may or may not one day be Prime Minister of the UK.

And he talked about all sorts of things in it.

But there are a couple of things that you and I to hmm.

Yeah.

So this is his big interview in The New Statesman, which for those listening outside the UK is a kind of slightly left lean in UK political magazine.

So the Andy Burnham when the cover Nandy Burnham's currently the mayor of Manchester, but he's hoping to be the leader of the Labor Party in there for the Prime Minister.

I'm not at all interested in his exact route to get in there, because it's the usual political stuff.

But one thing jumped out in this otherwise very softball interview, which is at one point he says we've got to get beyond this thing of being in Hawk to the bond markets.

That just leapt out at me, because the most obvious way to get out of Hawk to the bond markets, in other words, to not owe the bond markets money is to stop spending as much money and to live within our means.

But elsewhere in the article, all he talks about is how he's going to nationalize basically everything, and that would cost money.

So I'm just trying to put two and two together.

They make it sum side up, and what I'm really coming not worth is this would be even most for the public finances than the current situation.

But then, which at least has Rachel Reeves grappling with the notion that the bond market matters and that her fiscal discipline matters, even if I don't think she's going about that the great way.

Yeah, I mean, it's an interesting one, isn't it, because that very common.

We've got to get out of this, this idea that we are in hockdaw controlled by the bond market.

It's not an idea.

It's not an.

Idea, it's a reality.

You can't think yourself out of being controlled by the bond model.

If you you know, if your debt levels are too high, you are controlled by the bond market.

That's just the way it works.

And as you say, the only way.

Out of that is to get that debt down, or the very least get that deficit down so that the markets trust.

You know.

We're not going to go on about this at length, although we could or were really.

Good because we've got a podcast coming on this on Monday that I strongly recommend you or listen to it.

It's a little bit scary, so nice cup of tea before you start, but do listen on Monday.

It's it's a very.

Interesting perspective on where the UK might be going next financially.

At least it is great.

I mean it's gary but great.

And also politics.

There's a little bit of Andy and there Andy Byrnham, not Home in particular, but how we might get to the point where there might be an opportunity for him to show us more of his wares.

Can't wait, Oh goody, right right, So while we're on the matter of crisis, what I want to talk about today, All I want to tell you about a little bit is a note that's just come out from gav Cal Research, and it's a piece written by Charles Gavin.

It's called a Turkish portfolio for France.

And he hasn't put in brackets, but he could put in brackets and everywhere else.

So what we want to ask is what is a Turkish portfolio?

It sounds sounds like a ethhmism, and actually kind of is.

While Charles says, is it in any country when you invest, you effectively have a choice between four domestic asset classes.

You can invest in shares, you can invest in gold, you can invest in bonds, or you can invent in cash.

So we're going to put a bit quite lot and all that aside for one moment.

That's just stick with trad got those four things.

Now, if the local currency is worthless or heading in that direction, you expect very high inflation or huge political instability or whatever it is, then bonds and cash, they don't have any real value in that currency.

And if that is the case, if your government is following a policy that structurally debases the value of the national currency, I don't know who that could be, who might be doing that, but let's say your government is following that kind of policy, then you can't possibly diversify dimest domestically into bonds in cash.

All you can do.

Is hold a portfolio made up of fifty percent of shares and fifty percent of gold, which is what he calls a Turkish portfolio, because you could call it an Argentinian portfolio or something like that.

And in future it may be that we call it a French portfolio or a even a British portfolio.

I don't know, but you know, the euphemisms might just keep rolling.

And one of the reasons that he writes about this is because he says, look at the social democratic model, or perhaps what we might call the kleptocratic model.

It is collapsing in France very fast.

It's beginning to collapse in the UK heading in the same direction in Germany, and in the US, of course, guns and butter, guns and butter blah blah.

One of our our collegue, John Authors has written in Great Guns and Butter opinion piece do you read that have led to a fiscal situation, which Charles says is quote making me very nervous.

Indeed, and he says rational investors should therefore adopt Turkish portfolios in France, in the UK, in Germany and in the US.

Wow.

So we yes, So he doesn't just single fine does Okay?

He goes right for us to write for us too.

I like that we spoil up the icy classies there, because that's how I spoil up aid classes.

I think if you're thinking about your act allocation, you say equities, borns, golden cash, and you know all the other bits are subsets of those things.

Yes, So I mean I agree with him on that, and it's also hard to disagree with I mean, really, he's just making a distinction between real assets and financial assets.

I know he kind of calls them kind of contractual as it's doesn't he something like that?

Yeah?

And it I mean obviously I think I wouldn't.

I wouldn't be comfortable saying have half your portfolio and golden half your portfolio and equities.

But I do take his point and I suppose the only thing, the one thing that I don't know, and I don't know about you, but my sort of contrarian tingle in my brain keeps on saying points have got to be a bye again at some point.

It's not saying that very strongly, but I can't help but feel that we will reach a crisis point rather than societal collapse.

I mean, I don't think that's what we'll get.

A think we'll get a toundon point, much like the end of the nineteen seventies, and at that point it will probably be a good team, you know, invest in points, but we could be quite away from.

That, I think.

I mean, you're you're not alone there in that, you know.

I've spoken to several people recently who are quite bullish on UK guilts, but I find that quite difficult.

Right now.

It feels to me like we've got a bit more of.

This cycle to go through before we hit a point where the current government or the government that replaces it genuinely understands that running the equivalent of a six seven eight percent deficit in the UK, which is where we're likely to end up this year if we don't put ourselves together again.

I refer you to Monday's podcast please listen.

Is not sustainable and that something has to change.

Whether you want it to or not, whether you feel it's kind or moral or not, something still has to change.

I feel we're a way of that.

So I'm still looking at and going Turkish portfolio.

Yeah, we could do that.

I mean I wish that's half my portfolio and gold rate.

Yeah yeah, half in the nasdak and half of the nasdak and half in gold for the last decade.

If anyone has done that and is therefore roaringly rich as a result, please do get in touch, let us know about it and tell you why why you decided to do that.

It would be fascinating.

But John, that brings us back to the gold price, right, yeah, I mean, at what point do you look at this and go this is overbought or do you just look at it and go, well, Actually, if everyone's going to get a Turkish portfolio or a French portfolio, whatever we're going to call it these days, there is a.

Long way to go.

But in the past, gold bill markets and quite often, honestly, I just started to think about these things about like what should have got telling you and then what was it wrong about last time?

Because the instinct sort of starts to kick in, and so there's a little bit in the nervousness there.

But in my mind that kind of historically means that's probably quite a long way to go.

Yeah, And also at a micro level, I mean, I think the thing that presumably would stop the gold bill market for good would be a return to some sort of fiscal discipline, and specifically in the US.

I am not one hundred percent rolling that out because a lot of people have got such bad Trump derangement syndrome that they can't see that anything that he does will ever turn out well.

And actually, in many ways he is actually raising money in unorthodox ways.

That said, I do think that he also would like to see you inflation running at three to four percent for a while.

He'd like it interest rates to being much lower.

So I don't think that, you know, fiscal discipline is going to return anytime soon.

And while that's the case, and also while other countries want to get out from under the US dollar system, it's hard to see why gold would you know, turn around and quit.

Really Okay, So John's gold bull, Everyone's gold bull.

Yeah, well that's the problem.

It does feel like that too.

You are a resident contrarian.

How does that fit anyway?

He used to be?

For the last decade, we've been able to sit there.

You and I am one of the effectively in a gold gold market and the contrariant inside a bull market, which is very unusual position to be in.

Right, Yeah, but that that fail is beginning to change now everyone's all over.

God.

I was listening to radio yesterday morning.

I think I said to you the other day, and there it was long chat a bad gold at prime time?

That was times low, wasn't it.

That wasn't Radio four, No, it wasn't.

I see.

Look, honestly, at this point, I'm sort of looking for either an economist cover, which would be I think a first ever.

I don't think the economist has ever had golden it's covered not in my kind of time of being an adult, or maybe something like you know, a program on the Today program talking about or something like that.

I mean also because I mean it, I was looking at the gold mine and ETF and it has doubled in the year today, and okay, it was undervalued relative to gold for death, and it's playing catch up.

But at the same time, like anytime an asset doubles in a year and it's not a cryptocurrency, you've got to sit down and start thing and they will.

How much more exhibierance can get into this.

And yeah, at the same time, I don't feel that it's it's not a kind of you know, twenty eleven levels yet and that we did get kind of cover stories and ATMs ditional gold and things like that at that point.

So I guess that's where I am.

But you're right, all of the models that people who are actually quite good at analyzing gold have built over the last you know, twenty our years all suggest that it's actually really very overvalued.

It's not as overvalued as it has been at some points in the past, but it's certainly not cheap.

But then I think you could also say, and we'll finish with this, we could also say that those models do not take account of possible fiscal breakdown no which there is a non zero, non zero possibility of full fiscal breakdown across much of the West.

Very hard to get that into a model, very very hard.

When you're looking at a model for the price of gold, you're comparing it to the market cap of stock market, So you're comparing it to history.

You're comparing it to where it moved in this crisis or that this crisis.

But it's very hard to input into your model what happens when the majority of the West has a debt to GDP level of one hundred or one hundred plus.

How did you get that into a model.

It's proper tail risk stuff.

And obviously the actual history of gold does not go back that far.

It's only been three flooring since the nineteen seventies, so I'm not you know, it's very hard to see, like, well, what would the gold place have actually been during World War Two, which was the last time everyone had dated GDPD issue was at like over one hundred percent.

Yeah, but that didn't count.

That didn't count because everyone also had plans to bring that level down by you know, not being a war anymore, right, Hello, peace dividend.

We have nothing like that anymore.

There is no plan to bring down the vast cost of the welfare state by not having a welfare state anymore.

I mean, that doesn't exist.

So we cannot even begin to compare the level of debt we have now with the level of debt that we have post war.

Don't get me started.

I mean, I do remember that the.

Wonderful phrase that Russell Napier always used to use, that you know, we built up the debt in wartime, that it was built up by killing people, and if you stop killing people, suddenly you don't ever spend so much money.

And now we built up our debt by keeping people alive, and was certainly not going to stop doing that.

So where do you go from here?

I'd quivered, we're keeping people alive, But that's a that's a different that's a definite issue.

I think we had better end up bedge on anything else we need to add.

I don't think so.

I mean, I think if you're wanted to be called the one thing I would see is just think about what your ass allocation was where it's no sail it down to your ass allocations.

But I'll be honest, I'm not rebalancing.

Just know, I'm just saying, if you're nervous, you know, sailed down the sleeping point, as the old Wall Street gays used to see.

Okay, thank you, John, and we're also pleased to know that you're not selling down.

I'm not going to ask you about a bitcoin account.

Thanks for listening to this week's Maron Talks Money Debrief.

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This episode was hosted by me Maren Thumbsup web As, produced by Summersidi and Moses and