Speaker 1:
Welcome to ETF Central recorded here at the New York Stock Exchange, the home of ETFs. We're diving deep with the people shaping the space, the technologies driving innovation and the stories behind the tickers. Whether you're an investor, issuer, or industry insider, welcome home.
Bilal Little:
Welcome to another episode of ETF Central. I'm your host, Bilal Little. I got to tell you, today's episode is going to be one that you will not want to miss. We have Sal Gilbertie. He's the founder, CEO of Teucrium Investments. They're one of the most unique investment managers on the street. Historically, they've brought together really unique, hard to reach asset classes like commodities on the agricultural side. And today, I'm super excited because we're going to lean into one of the most innovative conversations around digital assets. So excited to have him. Sal, thank you so much. Welcome to the show.
Sal Gilbertie:
Happy to be here. Thank you for having me.
Bilal Little:
This is a long time coming. I've been trying to get you for a while.
Sal Gilbertie:
It's been a while, yeah.
Bilal Little:
Your foot is healing.
Sal Gilbertie:
My foot is healing. Drop the cinder block on it. This is my first day with shoes since June 6th, I think.
Bilal Little:
Are you serious?
Sal Gilbertie:
Yeah, real leather shoes.
Bilal Little:
Oh my goodness. Well, I'm glad you're back.
Sal Gilbertie:
Thank you.
Bilal Little:
It's exciting. Sal, I think it's important to level set for us, we always want to make sure that our guests get an opportunity to explain who they are and a little bit about the firm or company that they manage. You got a phenomenal background, so I'm really excited to have you.
Sal Gilbertie:
Okay. Well, thanks. I started in commodities a very long time ago, trading oil for Cargill, and that was good fun. I think I learned more there than anything else except probably reading the Wall Street Journal on my way to work every day. I learned more doing that than at school really. But I had a long commodities career and was trading for Soc Gen, a renewable fuels desk because I had brought the ethanol markets to fruition. They're swap markets, derivatives. I basically am a derivatives guy. And so someone called me and said, "I have a client here. They were a broker downstairs.
I don't understand what they're talking about. It turned out it was the guy's launching USO and so they had packaged oil in an ETF and I thought that was amazing. I'd never heard of an ETF. I didn't know what it was.
Bilal Little:
What year are we talking?
Sal Gilbertie:
I don't know if somebody can look up whenever that was. Early 2000s
Bilal Little:
Okay.
Sal Gilbertie:
I didn't know what an ETF was, but I could never trade for my own book. If I thought oil were going up or down, I was trading oil and oil futures for somebody else and it was a conflict of interest. So this guy is putting oil futures into something that trades on the New York Stock Exchange. I just thought it was the greatest thing I ever heard. But I realized it could be done, I thought better. They launched a tremendously successful product and it is a wonderful product still to this day for short-term traders. And people understand now the effects of contango and backwardation.
Bilal Little:
Absolutely.
Sal Gilbertie:
The Industry has matured. But in those days we came out, Teucrium came out with what we called SEC next generation funds. And so we structured our funds to not just hold spot to try to mitigate the rolling and co-tangling backwardation issues.
Bilal Little:
Absolutely.
Sal Gilbertie:
And it was fun. We came out with oil ETFs. There was an oil ETF and a gas ETF. I think there were third and fourth to market respectively. And they were better structured. They did outperform. They were the best in their category for two and a half years. And we didn't get a single create in any one of them. If you are not first in ETFs, you lose. And that's been my experience.
What we were first at and our first ETF in fact was corn. And I remember very clearly coming down here to this beautiful building, New York Stock Exchange and looking for tickers. The concept of the company was proven, we've gotten funding, and we were in the ETF process. I said to Tom champion, actually, I said, "I wish you had..." That was when the ticker was only three letters.
Bilal Little:
Yeah, three letters.
Sal Gilbertie:
I said, "I wish you had four." He said, "Well, you do." I said, "Wow. Do you have corn, C-O-R-N? And I remember he got up from his desk and walked down the hall. He came back and said, "I have corn."
Bilal Little:
Oh, wow.
Sal Gilbertie:
I said, "Great, I'll take it." And we went down the line with soybeans. Sugar was taken because I think of Sugar Land, Texas. There were a lot of those things.
Bilal Little:
So you went into the agriculture space?
Sal Gilbertie:
We went to the agriculture space simultaneously with energies. The first fund to launch was our corn fund in June of 2010 here on the New York Stock Exchange. And that was good fun. Of course, I think we won an award that year for best ticker. I think the industry gave us an award for corn, corn fund.
Bilal Little:
Kept it simple.
Sal Gilbertie:
Yeah, it was really good. It was good.
Bilal Little:
Okay. So just continue with that. So you went into the agriculture space. You went with corn. You said soybean, sugarcane.
Sal Gilbertie:
Corn, soybean, sugar, wheat.
Bilal Little:
What does wheat look like?
Sal Gilbertie:
Yeah, so right now we have corn, soybean, sugar and wheat in individual funds. Those are our legacy funds. They trade very actively and efficiently on New York Stock Exchange. And then we started another fund because a lot of advisors would say, "I don't know which one to buy and they're all related." So we started one called TAGS. So the ticker is T-A-G-S and that's Teucrium Agricultural Fund. Teucrium ags. And it's just a fund of funds. So it is 25% each of the prior four are legacy funds, the corn fund, the wheat fund, W-E-A-T, the soybean fund, S-O-I-B and then the sugar fund, which is Cane, C-A-N-E.
And then we came out, we wanted NOK1. So a few years ago we came out with TILL like tilling a field, T-I-L-L. And it's the same thing. It doesn't hold our other funds. It just buys 25% each exposure using derivatives of corn, soybeans, wheat, sugar. For people who want to allocate to the ags, which is a great allocation product. And people trade them as well when they're in the news obviously.
Bilal Little:
So I just want to make sure we get a clear picture of Teucrium because I feel like you guys do a few different things, provide a clearer picture of who Teucrium is because it's more than just these institutional products that are now obviously tradable to retail as well..
Sal Gilbertie:
Sure. Teucrium is an ETF sponsor primarily that is a derivatives-based sponsor. So we're experts in derivatives. We know what to do. So we are not limited just to agriculture as you know. And we've filed for Bitcoin funds, which were successfully approved and launched. We obviously have an XRP leverage fund here on the exchange, which is very successful. We also have a white label business where we are giving out advice. People would call and say, "I've got this ETF idea."
And then they'd call back and say, "Can you help me with it?" And we always said no and then it turns out that there's a big demand for that now. So now Teucrium has a white label shop internally and in essence uses up our excess capacity. We have a lot of really good people, really good expertise. Teucrium is a family. We have good team at Teucrium and they know their stuff. And so now anybody who wants to launch a white label an ETF can use one of many white label firms. We're one of them and that's growing very quickly.
Bilal Little:
So just I want to make sure I understand something. So the specialty obviously is commodities. I mean, you guys have done that or derivative products really, really well. You've transitioned into digital now. When someone comes to leverage your white label, are you also doing traditional equities as well?
Sal Gilbertie:
We will, yes. There's pretty much nothing off limits for us.
Bilal Little:
I like that. Innovation is in the blood, huh?
Sal Gilbertie:
Yeah, yeah.
Bilal Little:
Okay. I like it.
Sal Gilbertie:
It's what's fun.
Bilal Little:
It is, it is. Okay. So you built products historically for yourself, which was an institutional investor. Obviously, over time you actually have adoption of the advisors, you have adoption of now self-directed investors who want to invest in these various asset classes. In your opinion, how has your particular business changed to now start to market these products and or speak to a wider range of potential investors?
Sal Gilbertie:
Well, that's a great question. When we first started in this business in 2010, the primary way of marketing was you had a sales team and you had a force. The old call up a firm, "Can we come and talk to you? Well, are you on the approved list of people who can come talk to us?" And if you are, which in that in itself is a very difficult-
Bilal Little:
Difficult, yeah.
Sal Gilbertie:
... long process. It's very arduous. It's call the office that you want to visit and they'll set it up for you. And you'd call the office and it's, "All right, you can come four and a half months from next Tuesday and bring lunch for 50. And four and a half months from that Tuesday you show up with lunch for 50." And 50 people show up. 55 or 60 people show up for the free food and half a dozen will stay out of courtesy and one will stay who is really interested.
So it's a really inefficient model for an upstart for existing firms who've got groups of a dozen or 50 or a hundred salespeople who have existing relationships and they're making those rounds and they've got products, a very full product suite, a very wide product suite. Because part of the trick is not just the relationship. I think when a salesman walks into an advisor's office, they're carrying still that briefcase and there's 800 sheets of paper in there for whatever fund is in the news that day because that's what matters.
Bilal Little:
So you know I was a wholesaler for a long time.
Sal Gilbertie:
No. I don't know.
Bilal Little:
I was a wholesaler for over 15 years. So I carried the bag. I know exactly what you're talking about. And to your point, depending upon what you have and what's the sizzle, you're right, only a handful of products will come out of the bag.
Sal Gilbertie:
Headlines matter. And so we stepped back and said, "All right. We tried hiring a couple of salespeople." And the key in the sales world is that real salesmen are really good at selling and they're really good at selling themselves. But if they're looking for a job that's a problem. You have to find a unique situation where a firm downsized for a reason and they had to let good people go. Otherwise, good salespeople make a lot of money. They're very successful. They have a good thing go and they don't leave.
Bilal Little:
Very true.
Sal Gilbertie:
They just don't. So it's hard to hire them. But anyway, social media is the future as you know. That's why we're sitting here.
Bilal Little:
Absolutely.
Sal Gilbertie:
That's the audience now. It's easier. I think the internet... Well more than that. Social media era of the internet has changed everything. And that's the last 10 years really. Teucrium is 16 years old last week I think from when we incorporated and our 15-year anniversary just went by with corn. And so we've been around a while. We know our stuff and you've got to change. You have to innovate. That's the only way. It's why we come out with different products. And the marketing is now, social media, internet-based. You can cover a lot more ground and go to where the action is, go to what the buzz is right away. Right away. The pivot is easy.
Bilal Little:
The search feature of social media is what's really continued to evolve and disrupt a lot of businesses. So I want to unpack that in a moment. Let's just talk about just exposure to commodities. I think this is an important conversation. Historically, to your point, it's been an institutional play for most people. But now just given what inflation looks like, investors almost should really consider allocating or at least thinking about what commodities could do for their portfolio. How are you having that conversation with investors?
Sal Gilbertie:
Well, we're trying to get the word out that stocks... People don't realize stocks don't always go up. The new generation investors-
Bilal Little:
They don't?
Sal Gilbertie:
... they just think every pullback is a buy and it won't hurt you. And at some point that will change. And even if it doesn't, I think people hit a certain time in their life when they want less volatility in their portfolio. And that's not necessarily when you have to go to more cash. You don't have to worry about putting money in things for the long term. But agriculture... Well first off, commodities should be in everybody's portfolio. It's why I got into the business. I'm a simple guy. Stocks are really hard for me. There's a lot of complexities.
So commodities, there's either enough or there's not. Okay? So in some commodities there's a supply surplus. They go down. In some commodities, there's supply deficit, they go up. Demand by and large is rising all the time for commodities because the global population is going up. More importantly, the global middle class is increasing. And as people get more money, they buy more commodities and use more commodities per capita.
And the interesting part is that commodities particularly ags trade at their cost of production in a natural state when there's enough. Because producers will just stop producing when they're losing money.
Bilal Little:
Absolutely.
Sal Gilbertie:
And so you do tend to have a floor on most commodities. Granted, oil went negative famously, and that always comes up. But you can't just shut an oil well off. It is often more productive and more profitable for an oil producer to pay someone to take their oil away for a short while than to risk adjusting that well and losing it, which is possible. And most people don't understand that about oil.
But in agriculture, for instance, a farmer will just plant a different crop. Farmers are also subsidized in every country of the world because every country needs food. And every country wants its people to be happy and well-fed. My personal opinion, why I got into commodities is that the last thing any of us want to do is let ourselves, our families, our friends, our animals go cold or hungry.
So if you're not in energy and food, I think you're missing out. It's just foolish not to be. And especially when crude oil goes under $40 a barrel, it's astounding the tens of billions of dollars that flow into ETF products that are related to oil. When corn goes under $4 a bushel, that doesn't happen. And it really is analogous. So I think the more people that understand that, the more opportunity there is for them to diversify their portfolio and have surprises to the upside.
Historically, since 2007, the Renewable Fuels Act, which reset... Well, agriculture prices, okay? Corn has doubled from the 3.50 to $4 area three times in 17 years. So if somebody says to you, "I have an asset that goes to the same number and sits there for a while and then doubles, and then goes back to that same number, and then sits there for a while and then doubles." I've done that three times in the last 17 years. You're going to say, "You what?"
Bilal Little:
We should look at that.
Sal Gilbertie:
"Next time it gets there, let me know."
Bilal Little:
We should look at that.
Sal Gilbertie:
Well, that's corn. That's corn.
Bilal Little:
Why do you think people spend so much time looking at oil and gold or pure commodity exposure and not ag?
Sal Gilbertie:
So that's a great question. I think you know that you're turning your thermostat up or down or you're filling your car up with gas or now electricity.
Bilal Little:
Good point.
Sal Gilbertie:
I think gold is a visceral thing. It's throughout history. But guess what? So is wheat. Wheat is mentioned 53 times or something in the Bible?
Bilal Little:
Absolutely. Absolutely
Sal Gilbertie:
People should be thinking about it. And when Russia invaded Ukraine, our wheat fund here on the New York Stock Exchange went from 80 to 800 million in weeks time, multiple weeks time.
Bilal Little:
Wow.
Sal Gilbertie:
Headline, right? Back to the-
Bilal Little:
Headline. Great point.
Sal Gilbertie:
... what's going to sell? The headline. Everybody wanted wheat. And what did it do? It went right back down. It took two years to go back down and we went back. It bounces around with drought. That's 99 times out of a hundred of bull market in ags because it doesn't rain somewhere. Okay?
Bilal Little:
Wow.
Sal Gilbertie:
None of us are going to not eat our New York bagel-
Bilal Little:
I agree you.
Sal Gilbertie:
... if it doesn't rain in Kansas. Now that's a lot of negatives, but you're going to keep eating your bagel even if Kansas gets no rain. And that's the key. So what's going to happen? The price of wheat is going to go up.
Bilal Little:
Supply demand dynamics,.
Sal Gilbertie:
Supply demand is easy. Commodities are easy to me because of that. It's a very simple equation.
Bilal Little:
I love this. So now let's pivot the conversation. This is probably the most innovative aspect of, I would say, society when it comes to digital assets right now. And there is no topic hotter. You guys have been innovators throughout your history, right? I want to talk about where you decided to get into the digital asset space.
Sal Gilbertie:
Sure. We saw Bitcoin futures come out and we'd been following Bitcoin.
Bilal Little:
When? Hold on. Origin story right now.
Sal Gilbertie:
All right.
Bilal Little:
When did you first hear and learn about Bitcoin?
Sal Gilbertie:
Bad story. I was told by a computer guy at the bank to buy Bitcoin. And I asked him what it was and I thought it was a great idea.
Bilal Little:
What year? What year? What year?
Sal Gilbertie:
He was working my computer. I don't know, but Bitcoin was 25 cents. And he said, "If you give me a hundred dollars, I'll buy you 400 Bitcoin." And I said, "Tell me about this again." And he did. I said, "So you're telling me I'm going to have this thumb drive." In those days, that's what you put it on and you're going to give me this 26-digit code that I'm going to forget and I'm just going to waste my hundred bucks with you. So no, I'm not going to do it. I'm either going to lose the thumb drive or lose the code." Probably true. I probably would've lost it anyway.
Bilal Little:
Absolutely.
Sal Gilbertie:
But I don't have it.
Bilal Little:
Absolutely.
Sal Gilbertie:
I don't have it.
Bilal Little:
Okay. So that's the origin story. Okay. So when did you decide to launch a product?
Sal Gilbertie:
When futures were announced. Because we're a derivative shop, we understand futures. As soon as Bitcoin futures came out, we, along with many others, filed for Bitcoin futures related ETF. I'm not sure we were the first. We may have been, but there were a slew of filings. And the SEC almost immediately asked everyone to withdraw, which we did. Their basis for the ask was that futures weren't liquid enough. That's what they said. Now, there was still the ongoing debate of who's going to regulate? How they're going to regulate?
Bilal Little:
For sure.
Sal Gilbertie:
What's the visibility? We knew that if we just watch futures closely enough, everyone else... When the SEC ask you... When the government ask you to do something, you pretty much do it.
Bilal Little:
Yeah, for sure.
Sal Gilbertie:
And then you get a little gun shy. So we knew everybody else would be slow to watching, but we just look at... We're really good at watching futures and derivatives. So the moment we thought that futures contract met the criteria for liquidity that the SEC would also see was acceptable. We refiled. Now, in those days you did it with a '33 Act wrapper because that's what you fit them in.
That kicks off a 270-day process. And we did that in either late April or very early May of whatever year it was. And in August, Gary Gensler gave a speech that said, "Why doesn't everybody... I think it's okay for everybody to file under a 40 act to hold." And that sets off a 75-day call. And so we were not prepared for that. We missed out on being the first Bitcoin futures fund. It's still around. It's a very successful fund. God bless them. But that was a burn that we didn't appreciate.
Now that said, we had invested the time and money in the '33 Act filing. We left it in and we got it approved. And what that did was open the door for Grayscale's lawsuit against the SEC, which they won on the basis of that, our approval, our '33 Act Bitcoin approval. That fund did launch. We eventually sold it because it would've been, I don't know, 12th or 14th, the market and harken back to, you have to be first.
Bilal Little:
Be early.
Sal Gilbertie:
We sold it. So we kept watching. I'm not an Ethereum guy, didn't know much about Solana. Still not an expert, I would say. But I do have many friends that are XRP, members of the XRP ARMY, they call in.
Bilal Little:
Yeah, absolutely.
Sal Gilbertie:
And I joined them and I think XRP.
Bilal Little:
You joined. You enlisted, huh?
Sal Gilbertie:
I believed it. I believe in XRP. I believe in the use case for the [inaudible 00:19:08] ledger. Let me put it that way. And obviously XRP is an integral part of that.
Bilal Little:
Look, I feel like XRP was an acquired taste.
Sal Gilbertie:
Agreed.
Bilal Little:
When did you realize that it was an important technology?
Sal Gilbertie:
Probably not long before we filed, whenever the filing was. Because once I realized it... Well, actually that's not true because we had to wait for futures to be announced. So I did realize it, but I couldn't figure out how to-
Bilal Little:
Access it the right way.
Sal Gilbertie:
How to access it, exactly. Thank you. And so once futures were announced, and I think both CME and Coinbase announced futures. And we filed. We filed the meeting because you have to be first. You just have to be first.
Bilal Little:
Even with the lawsuit, even with all the headline risks.
Sal Gilbertie:
Didn't care because that had nothing to do with a derivatives product being listed in an ETF wrapper. Just doesn't have anything to do with it. You could still do it. And so then we're saying, "Well, how are we going to be first?" Because many people filed for XRP ETFs. And that's where my derivatives and swap background came in. So we structured a swap around an XRP fund trading in Switzerland, and we got a bank to give us that swap. We package it inside and we met all the rules, checked all the boxes.
Bilal Little:
For sure.
Sal Gilbertie:
And I want to be clear, the SEC is here to help. Okay. And the new SEC is actually really [inaudible 00:20:37] here to help digital.
Bilal Little:
Yeah, absolutely.
Sal Gilbertie:
The difference is the SEC is always there to help. They're always there to check the boxes. We have the safest markets in the world for a reason. But the SEC, because of the leadership at the time was adversarial to most crypto. And that's gone. And that's a really good thing. It's a big relief. And of course now we see the tide turning in Washington.
Bilal Little:
So XXRP, explain exactly what it is, and...
Sal Gilbertie:
Sure, it's a 2X levered fund and we knew that that would be great demand and less competition to go levered versus unlevered. Also, there were futures capacity constraints. We knew there would be great demand for the funds. And if we filed for both and listed both at the same times, we would hit futures limits more quickly and which... What do you do? And so we decided to go with the levered fund on a strategic decision, which was in hindsight, very good.
Bilal Little:
Yeah, for sure.
Sal Gilbertie:
And it's a great ticker. I mean, XXRP exposure, XXRP-
Bilal Little:
Is simple as it gets. Right?
Sal Gilbertie:
So being first with the right ticker, we learned that with our corn fund. It's a big deal.
Bilal Little:
Absolutely.
Sal Gilbertie:
And so we made it with the swap. And then once futures came out, in fact, we started using Coinbase futures first. Coinbase, while new at the game, they've been tremendous. I should give them a shout-out. I mean, Coinbase as a futures exchange has done what they said they were going to do. It has been really marvelous working with them. And we're obviously big, big supporters of Coinbase. They've done a wonderful job on their futures, and we support the CME as well.
Bilal Little:
They've been a big advocate for the industry?
Sal Gilbertie:
Advocate for the futures industry in general. Futures are really important. It's been my whole life on futures. And the CME came out with a bigger contract, and they're of course the big dog in the room when it comes to commodities derivatives. We're obviously enormous users and supporters of the CME on their agricultural products, and we're supporting them on their derivatives products for crypto.And so the fund trades really well. It's got a lot of liquidity. There's depth.
Bilal Little:
You got a lot of early success.
Sal Gilbertie:
Very early success. Has options on it. I mean, it checks all the boxes. But what the fund is to your question. Is it's a 2X-levered fund, which investors need to understand a lever fund is to reset every single day. So the investment objective of the fund is for each day, each single day time period, to match as closely as possible, 200% performance of the underlying instrument, which is XRP futures basically.
And the futures go with XRP. So Understand less fees, expenses, and whatever, market static there is to get the execution done and pricing and things like that. You should get each day approximately 200% up or down on your money. But at the end of the day, because of the change and because of the way the math works, we have to reset for the next day. So this is not a buy and hold product. I have to be clear. It is an aggressive trading product. People may choose to do with it what they wish, it is designed for single day-time horizon. Aggressive trade.
Bilal Little:
I'm glad you said that. So right now this is the volatility... Not volatility, but the traction that you see is obviously within the trader market, which is exactly where it's supposed to be.
Sal Gilbertie:
Correct.
Bilal Little:
Correct.
Sal Gilbertie:
That's right.
Bilal Little:
Okay. Do you see the advisor community and/or the wealth management space embracing or adopting the product?
Sal Gilbertie:
Yes, we do. And I actually don't want to comment any further than that just because it is designed to be a trading product. But we are hearing from investors of all kinds who have tremendous interest in this product. Now it's their choice to use it however they wish.
Bilal Little:
Okay.
Sal Gilbertie:
But it's designed for one day time horizon, short-term trade.
Bilal Little:
What's the feedback you've been hearing on the product so far?
Sal Gilbertie:
Amazingly positive. I mean, we run into people all the time. We say, "I trade that product. I love it."
Bilal Little:
Wow.
Sal Gilbertie:
So we're really, really happy with it, truly.
Bilal Little:
Okay, okay. I like that. Let ask you a question. This is a bit of a pivot, but there seems to be an unwavering level of belief and understanding of the company, Ripple. I just want to get your sense on this, and because you have a derivatives background, this is important. And let me try to level set this. Historically in traditional equities, if I want a competitive edge in a specific area or asset class or sector, I'm talking to the management of these companies. And I'm going to sit across from you as a potential investor and say, "Look, I met with the portfolio management team. This is what they're doing. Here's what they're investing."
With derivatives, you're technically not getting that access. Or do you have that access to the Ripple team to understand what they're doing long-term for you to somewhat communicate that value and your thought process on the continued success of this product. Does that make sense?
Sal Gilbertie:
It does. I don't think we have any more or less ability to connect with the Ripple team. We can, but I think a lot of other people can too. They're communicative people. I get your point. But look, the products that we are issuing, are so people can track and participate in the price movement of a particular item. This happens to be XRP. XRP happens to be the token, that's Ripple's token, but they have RLUSD. I don't want to speak for Ripple.
Bilal Little:
Yeah, for sure.
Sal Gilbertie:
But they have a mission which essentially moving money around. And they're going to be able to do other things as the ledger builds out. And they are doing other things, the ledger builds out. When you go to a conference, the number of people that are there who aren't just token owners, but they're actually programmers, they're people. They're using the ledger and developing the ledger.
That's not unique to Ripple, I don't think. That's the whole blockchain environment and ecosystem. And so I think that people who have those questions should contact Ripple and ask them. They're there and they're answering questions. I think as far as anybody can understand what's actually going in a ledger who's not a computer geek, that's where the problem comes in, right? It's hard for any of us to get it.
What I get is price movement, derivatives, how they behave. I'm a big believer in the XRP token is going to have a massive use case. But where that goes and where that will take the price, I don't have a clue.
Bilal Little:
Look, what's going on in cryptography is important in the sense of the internet was built without security rails in many cases. And every single day, if you look on the newsfeed, there's some sort of hack, there's some sort of security issue going on, and we're talking about better accounting, stronger security. And I'd say better clearance, if you will. If that's the technological upgrade that we get with the information of data that's moving and anything, I think that's a good thing.
Sal Gilbertie:
I think you're right.
Bilal Little:
Right?
Sal Gilbertie:
You're right. Absolutely.
Bilal Little:
I think that's a good thing. So for me, the reason why I sort of got on the crypto trade was I read a white paper from the World Bank Group a number of years ago from 2015, and it was called Sandboxes, where basically the largest banks got together, may outline geographical areas where people can actually go out and test their technologies. And the technological test was security, identification, KYC, AML, transfer of payments, all of these things to bring a stronger financial ecosystem together.
So for me, that's where it was, and that's where it made a ton of sense. And I feel like when you read what's going on with the XRP community, they're sharing a lot of that particular information, not just obviously focused on chasing price.
Sal Gilbertie:
I think there's no doubt about that. I think the XRP community is more holistic than you might think when you come in. Because they're looking at exactly that. You bring up a good point, KYC, that's been brought up to me in a lot of meetings with some very serious investor type people who are looking at this and they all say things aren't going to move as fast as everybody says. Even if Ripple somehow replaces Swift with its own technology, that the banks are going to slow it down. Not intentionally, but KYC is important. Right?
Bilal Little:
Correct.
Sal Gilbertie:
And that's really critical and that will slow things down like it or not. Now, that brings up the whole digital DNA talk, which is really cool and really creepy all at the same time. We can go down that road.
Bilal Little:
We're already in a police state, right?
Sal Gilbertie:
Yeah. But it goes even beyond that, I think. And so talk about security and paranoia and things like that. So I think you hit right on it, but bringing up KYC, most people don't talk about that, and that is why things will go a little bit more slowly than you think.
Bilal Little:
Well, let's put you on the hotspot. What else are you looking at? Are you excited to potentially launch any new products in this space?
Sal Gilbertie:
We are. We're of course not allowed to talk about it ahead of time.
Bilal Little:
Yeah, of course.
Sal Gilbertie:
But I think what we'll look at doing is more customized products. There's a lot of different investor needs that can be fulfilled and that's what we're looking to do. So any products that Teucrium itself comes out with will be to fulfill the perceived need. And of course, our white label will come out with a plethora of products that are serving all kinds of different purposes. But they're not ours. And that's one of the reasons to being white label is we don't have to have all the good ideas.
Bilal Little:
That's true. That's true. So look, this is the point of the conversation where I ask in your lineup of ETFs, is it nine today? Nine active.
Sal Gilbertie:
I believe so.
Bilal Little:
Okay. I believe nine ETFs. What's one product, what I call the underdog that people don't own enough of, or they haven't looked at enough that they should be paying attention to?
Sal Gilbertie:
It has to be one of the ags. There's no question. I am a corn fan. Most people tend toward wheat. But corn is, if you just look back historically, and this is not a price recommendation, it's not a prediction, but historically looking at historical patterns, corn gets back towards that spot price of $3.50, under $4 a bushel, and it goes sideways for a while, but then it explodes higher on the year it doesn't ring. And so it's why wouldn't somebody put just a piece of that in their portfolio? And it's very seasonal.
During the North American harvest, peak harvest time is literally the week before and after October 1st. So last week of September, first week of October, end of the quarter, beginning of the quarter, whatever. People like to look at the price of an ag, and if it's trading flat sideways at a long-term level, look at a five-year chart, a 10-year chart, a 20-year chart, okay? Going back at least to 2007 in the new era of ags here in the US, when you see that base price hit there, to me, you're going to park some money that's not going to earn you a dividend.
That's part of the problem with these things, okay? People are chasing dividends, chasing cash flow, chasing weekly and monthly distributions. That's not necessarily the best thing to do. It's also not necessarily a well-balanced portfolio. So if you want some stability, I would look at ags. When they're trading towards their cost of production during harvest time, that's a good time to consider speaking with your financial advisor, making a proper decision of do I layer some of this in?
I mean, we tell this story often. We had a financial advisor come to us and he said, "I wait for exactly what you just described," W-A-I-T Then I weight corn into my portfolio, W-E-I-G-H-T. And then I wait again for the drought and then I get out. And he said, "It's worked marvelous for me because I put 1% of my portfolio in your corn fund." If corn goes down 10% from there, I've lost a 10%. It means nothing. I'm diversified. On those years that corn doubles... And the ETF may or may not double. Okay? I'm going by spot corn.
Now, my 8 or 9% target portfolio has turned into a 9 or 10% target portfolio. My clients are happy, I'm happy. He said, "I love this." So we said, "Do you mind if we use that? Wait, wait, drought out." It's just a fun slogan. But I think ags are underrepresented in people's portfolios. They don't think about them enough. And they do have patterns that are historically visible. I don't want it. Past performance is not indicative of futures.
Bilal Little:
Of course, of course, of course.
Sal Gilbertie:
[inaudible 00:33:00]
Bilal Little:
I like it. Sal, thank you so much for joining. This was really helpful.
Sal Gilbertie:
It's a true pleasure.
Speaker 1:
That's a wrap for today's conversation, but the ETF discussion doesn't stop here. For more insights, deep dives and voices shaping the market, stay connected on etfcentral.com. From the New York Stock Exchange, we'll see you next time.
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties expressed or implied. As to the accuracy or completeness of the information, and do not sponsor, approve or endorse any of the content herein all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.
