Is There Still Time to Invest in Gold?

Welcome to another episode of the Market Pulse Podcast. Brett Elliott from APMEX sits down with Joe Cavatoni of the World Gold Council to break down what sets today’s gold rally apart from past cycles - and answer a key question: is it too late to invest in gold? 

This podcast is for informational and educational purposes only. It is not financial advice, investment advice, or a recommendation to buy or sell any asset. The views expressed are opinions only and should not be relied upon for financial decisions. Always do your own research and consult with a licensed financial professional before making investment choices. The precious metals market is dynamic, and spot prices are updated by the minute based on trading activity in exchanges across the world. Spot prices at the time of recording may not match spot prices at the time of listening and/or viewing. 

This podcast was recorded on Monday, March 

#apmex #marketpulsepodcast #gold #silver #preciousmetals 

00:00 Introduction to the World Gold Council
 02:11 Understanding Gold Market Dynamics
 05:19 Impact of Geopolitical Conflicts on Gold Prices
 08:20 Analyzing the Current Bull Market
 11:20 The Role of Central Banks in Gold Investment
 14:24 Global Market Trends and Investor Strategies
 18:58 Central Banks and Gold Demand
 20:24 Record Gold Purchases and Market Trends
 23:10 Investment Opportunities in Gold
 25:01 Economic Conditions and Gold's Role
 27:18 Long-Term Gold Investment Strategies
 32:17 Volatility in the Gold Market
 34:54 The Future of Gold in Digital Transactions
 41:23 Advice for New Gold Investors

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This podcast is for informational and educational purposes only. It is not financial advice, investment advice, or a recommendation to buy or sell any asset. The views expressed are opinions only and should not be relied upon for financial decisions. Always do your own research and consult with a licensed financial professional before making investment choices. 

The precious metals market is dynamic, and spot prices update by the minute based on trading activity in exchanges across the world. Spot prices at the time of recording may not match spot prices at the time of listening and/or viewing.  

Transcript

SPEAKER_01 0:01

This is the Atmex Market Pulse Podcast, your front row seat to expert discussions on precious metals. Hello, I am Brett Elliott, host of the Market Pulse podcast with Atmex, and I have with me today Joe Cavitoni from the World Gold Council. Joe, thanks for joining us today.

SPEAKER_00 0:20

Brett, it's great to be on. Thanks for having me.

SPEAKER_01 0:23

So, Joe, if you wouldn't mind uh telling our audience a little bit about yourself and a little bit about the World Gold Council, I think that would be great.

SPEAKER_00 0:30

Sure. Let me start with the World Gold Council. We're a membership organization. We're global in nature. We've been in place since the late 1980s. Our goal and our objectives are pretty clear. We're here to educate people on the gold market, provide insights, data, and research, but also where opportunities arise to do everything we possibly can to make the gold market better trusted, more transparent, and actually all in the spirit of making sure people feel comfortable and confident to own gold. We have a membership that backs our company, which is not for profit. It's the world's largest gold mining companies, and we draw funding from their membership fees, but also from our engagement as a sponsor of old listed exchange traded funds, GLD and GLDM being too specific. We were the firm that actually helped bring gold ETFs worldwide. So in that capacity, we stayed on as the sponsor, kind of overseeing the ops and the financials of those products. And that's a big part of our funding source. So we use it to actually do market development research and information.

SPEAKER_01 1:36

Great. Thanks for that background, Joe. And you know, today's kind of the theme of our podcast today and our show today is, you know, gold has recently had a very uh very strong year, historic run in 2025. Uh rose, depending on what numbers you look at, about 65% for the year, ended around$4,300 per troy ounce, and not even a quarter done into 2026, and gold peaked at 5,600. It's been kind of retreating, it's been on its back foot for a few weeks now. We've had a really interesting week this past week. Um, but it's got people asking the question, you know, have we have we missed the opportunity to invest? Where are where are we? And so I think this is a a really you know a great point to ask that question. You know, what's the context behind the most recent bull run that we've had all the way up to 5600 and then uh and then the move, the retreat down from there to where I think today it dropped as low as 4100 before bouncing back up?

SPEAKER_00 2:41

Sure. Look, there's a lot to unpack there, but let's start by simply laying out a couple of conditions that I think are pretty important for everyone to understand. And first, I like to talk about the strategic nature of the market and actually what's really driving the long-term pro growth of the gold market. That would be market risk and uncertainty, long-term conditions of that, and economic expansion. Those two kind of different types of conditions, whether you're having fear and concern about markets, or markets are doing well and they're growing. Both conditions are favorable to support a market for gold. Fear and uncertainty, the flight to safety and quality, market economic expansion, savings and spending in the consumer context. Where we've been for the last two plus years has really been in that world of market risk and uncertainty. With that, are conditions of debt levels at sovereigns, not just the U.S., but major countries around the world, whether it's Japan, whether it's France, whether it's the UK. These are all markets that are debt laden with large, substantial carry costs of that debt. And that's actually putting pressure on the currencies that are from those nations and actually calling into question whether or not it's sustainable. The cost of running the U.S. debt, you know, there's large numbers we talked to. These are conditions that are actually giving us a very sound base case for the gold market to continue to be appreciating because you see people moving away from just saving in dollars, a depreciating value of fiat currency, and saving it in the form of gold. Now, add to that, we have some very tactical and some very short-term conditions that I and I and I chuckle a little bit because it's actually hard to even try and stay on top of it at times. But you have a very, very aggressive administration, you have a very disruptive policy platform that's in play, you have trade, geopolitical tensions that are actually very pronounced, and you have conflicts, and and even as as recent as what we've talked about with respect to the conflict with Iran, these are all tactical moments that are leading to very much momentum and opportunity costs being understood by people, and that's giving us this really substantial increase in volatility that we're seeing in the gold market. So these big jumps up and these big pullback stack, but again, all along that trajectory of going from 2,500 to 3,000, 3,000 to 4,000, 4,000 to where we are today.

SPEAKER_01 5:26

Yeah, I think uh, you know, we almost can't avoid talking about the conflict in Iran if we want to talk about short-term uh drivers of gold. And I think a lot of what we're seeing there has to do with um, as you said, the fear of uncertainty, but also uh the energy prices uh going up, the price of oil going up because of what's going on in the Strait of Hormuz over there. Do you want to touch on that briefly?

SPEAKER_00 5:50

Sure. Look, I I think this is actually a really interesting example, and actually one that's helping everybody get a better understanding of how gold actually is embedded in global economies. Because one would think conflict in its own right would lead to a spike in the gold price, which it did. But then when you start to understand the conditions of what the conflict is looking like, how the conflict might be disruptive and impact economies globally. Not unknown to people, but the price of oil is going to go very high. It has gone very high, it's pulling back, it's ebbing and flowing. In addition, it's being showing up at the pump here in the U.S. But consider what it means for the emerging market economies who are heavily dependent on the price of oil and Middle Eastern oil. That's showing up in much more substantive concerns around the equity markets there, the condition of those economies, and it's actually been a big pull on the price of gold down because global consumption for gold includes Asian markets, emerging markets, and actually as risk assets have sold off. Look at equities in the region, you'll see that the assessment of this conflict is saying I've got concerns around emerging market economies. They'll be more impacted economically than the U.S. might. So I'm basically concerned about it. Not only international investors in those emerging markets, but domestic investors. And actually, gold's being used in the context of being a liquidity vehicle. So people are selling it in addition to what they're doing with their risk assets. So you're seeing this kind of creep into the economies and into the overall risk asset and landscape pretty, pretty pronounced. And actually, gold's reaction is pretty typical when a conflict has broader implications than maybe what we would have seen when the Russians invaded Ukraine. It was isolated, it was very major, but it was very isolated in terms of how it was going to impact global economies at that point. This one's definitely much broader in terms of its implications. There's more to it. There's more to inflation. I think people need to understand that inflation, yes, on the short term, this type of condition does lead to higher potential for inflation. But we've got to look a little bit beyond the immediate headwind and reaction, which is inflationary signals right now impacting the Fed's decision not to make a rate cut this past week that we talked with that that they've talked to us about what their plans are. But again, you got to think about global implications as well, inflationary conditions in these emerging markets as well. So lots moving, lots of interesting factors at play. But overall, you know what, the gold market still very strong in terms of the overall profile.

SPEAKER_01 8:44

You know, and that's a good point. When you zoom out and you look at it, I mean if if you look at the start of each month to the close of each month, going all the way back to I think 2024, we've had almost nothing but green months where the price of gold has gone up. I think there's been maybe a half a dozen uh months where it ended a little bit in the red, and it was only by a very small amount. We haven't had a true pullback since before 2024. This is shaping up to be a pretty sizable one. I think I heard that this was the the worst week we had last week since like 1983. But you know, it's the first, it's the first major pullback we've had in years.

SPEAKER_00 9:32

I think go ahead.

SPEAKER_01 9:34

Sorry. Sorry, yeah. So I I think gold prices going up the way they have, it's been it's been rallying like crazy. Um, and the conditions just feel a little bit different than some of the other rallies that have happened in the past. You know, what why do you think that is? Is there anything that makes this bull market different than say the one that happened in 2011?

SPEAKER_00 9:58

Right. I you know, I I sense that there's there's um a need for everybody to get a flavor for the fact that the diversification of who's buying gold right now, that's actually kind of the interesting dynamic for us. The first thing I'd say is that the market still has a healthy jewelry consumer that is in play. But with higher prices, they've slowed down quite a bit in terms of the overall tonnage that they're taking up. They're still spending and spending in healthy ways, but not nearly as substantial a percentage as what we might have thought they would be, you know, if the conditions were different and prices were lower. The real dynamic that's unique and different here is that we're coming out of a central bank selling condition to actually reloading in their reserves gold as a strategic allocation. And that reserve diversification has been substantial over the last four years, record setting or near record setting for each year. Now they're diversifying away from fiat currencies, the dollar and the euro. In our survey that we have with them on an annual basis of central banks, they tell us that they're going to be less dependent on fiat currencies. They're looking for liquid diversifiers, and they're definitely using gold as a component of that. And we're looking at central bank reserves somewhere in the neighborhood of 20 to 25% on a global basis, made up of gold. So that's been a uniquely different set of circumstances. But the other dynamic that's been very interesting is while we've seen jewelry decline, particularly in the Asian markets, which have been traditionally how you save and own gold in the form of jewelry, that market for investment is picking up quite a bit. You have instruments that are actually available in the physical market, whether it's at an exchange, for the example, in China, the Shanghai Gold Exchange, where you can buy physical bars or financial instruments like exchange traded funds in India, China, um, or Japan, uh, or institutions declaring that they're going to pilot gold as a component of their portfolios, like in the case of mutual funds in in India, but also in the case of um insurance companies in China, all looking at saying, how do we get the right kind of diversification into our into our investment portfolios? So these this has been a big growth area for us. And actually it's taken away this concentrated US-only investor or Western investor buying and selling more tactically and more just momentum. And I think it's actually been very interesting to see this longer-term understanding of gold in a world where financial conditions, which I talked about earlier, you know, over time, weakening dollar, you know, depreciating fiat currency, these conditions are weighing in. So people are starting to see the benefit of real assets and seeing it on a global scale. And I think that's kind of a different dynamic that we're seeing now. Now, with all of that, comes much more liquidity and more players and more speculators and more momentum, average trade. So you get a bigger, happier, healthier capital market, which leads to a little bit more volatility, a lot more price movement. Maybe what you saw in January, which was a 30% run in January for gold. That's not normal under any condition. And we actually were pretty clear to say, hey, look, don't expect this. Period. This is not normal. That was momentum. It came back off 20%. Now here we are resetting again. It's probably profit taking. It's looking like people are rebalancing. It's looking like people are using the asset when they need in risk moments. All these conditions are uniquely different, and the market's much bigger than it was back in 2011 in terms of the players, the diversification of investors, the users, the central bank interest, and the overall price level.

SPEAKER_01 13:44

Yeah, that's a good point. There is I I don't think people realize how big of an impact that um some of these more international markets are starting to have because you go back 15 years, 20 years, 30 years, you know, we really didn't have these big exchanges, like uh we have the Shanghai gold exchange in China now, um, India's exchange is starting to play a bigger role. And there's price discovery happening there. So there's there's definitely uh there's definitely a new impact uh impact to that. But how how should how should an investor be looking at the overall gold market knowing that price discovery might not happen exclusively in Western countries anymore? Does it change anything?

SPEAKER_00 14:32

I think that's actually a really interesting point. A lot of the returns and the gains that we've been seeing, for example, in gold, you know what, you I think we've had somewhere in the range of about 50-52 trading days in the year, somewhere in the range of about 35 of them have been seeing most of that price push up in the Asian markets. So it's actually quite interesting. So I think people need to step back and probably modernize their thinking around gold. This is not just an asset that is only impacted by the Fed and interest rates in the U.S. It is. We saw that last week when the Fed said no rate cuts, but so did the ECB, so do the Bank of England. So there basically is an impact that comes from it, but it can be something that actually, you know, fits into a bigger picture. That's what people need to appreciate and understand. You know, when we first started doing our gold demands trend report back in the 1980s or 90s, I think it was 85% of the gold demand back in 1990 is when we started it, was uh jewelry. And today it's about that's the demand, not the level of holdings, but the demand that comes out on an annual basis. And if you look at where it is between 21 and 25, 2021 to 25, jewelry is about 28%. So you see this big divergence in terms of where the gold's going. Bar and coin, which is the physical investment of gold, it's not just ETFs, right? That's only like 2%. It's really been bar and coin and physical investment and central banks that have actually stepped up and really picked up the difference in terms of the overall flows. So you have to understand that it's global, it's type of consumer, the user of the gold market that's involved. Um, and you just need to modernize your thinking. The same way you think about what's going to happen with bonds and equities. You should say, okay, you know, gold could have an impact because something interesting and good could happen in Asia or something risky could happen in Asia. You just have to be switched on to that whole thing. But underneath all of that, we encourage people to say you should take a look at gold as a strategic allocation. You should think about it long term. If you're trying to time the market, trade the market, it's really challenging and more challenging today than it's ever been. So we say buy your gold, hang on to your gold, look at it as a bigger component of what a real asset allocation could be in your portfolio of ownership.

SPEAKER_01 17:02

You've mentioned central banks a couple times, and you really can't avoid talking about central banks if you want to talk about this bull market because uh they're they're the ones who have been kind of backstopping it all the way up. Um, they're big buyers, they'll they've been very uh uh very supportive and very confident buyers. Um, is there any risk that they'll start to monetize those gold assets? You know, we saw Poland was recently talking about using some of its uh gold reserves to fund defense spending. Yes. Um what what happens if if that materializes, if they stop accumulating and start using it?

SPEAKER_00 17:43

Yeah. Well, look, I I have to be honest with you. I I was trying to understand exactly what was being said by the central bank in Poland, and I I think they were were signaling a few things that they were looking at what could be done with their gold, they were looking at what they needed to do to continue to raise their profile in terms of of what they hold in their portfolio. Um, but it wasn't crystal clear that they were selling. Um but but look, they've made money um in terms of their reserve holdings, and they've been moving their limit up in terms of how much that they're allocating. I think I think the the important thing to understand here is a reserve asset is just that. It's it's an asset that's needed where there is a concern or risk, and that could be on a global scale with the international trade, or it could be on the home front with inflationary concerns on the home front. We have examples of when uh Turkey was coming out of an election result, it wasn't quite clear, the lira was under pressure, central bank stepped in, used its gold to sell into the community to buy back the LIRA and stabilize the currency. So you have examples of this happening, and we're seeing this as well with a couple of countries in Africa saying, hey, we're gonna make some use of our gold right now, Ghana and Tanzania. So these are markets that are actually selling. And there's a couple of other countries that have regular programs of selling when they get to a certain level. Some of the stones do that. I think if we see a condition where a central bank or broadly central banks, emerging market central banks, are in need of their condition for gold, then we should be expecting price pressure on it, because that'll simply be what we should be expecting. They've accumulated quite a bit, and if they're selling, it's selling for a reason. But you know, the conditions we're seeing right now aren't conducive to broad, wide ranges of selling from central banks. Pockets here and there, people talking to it. But at this stage, we see them continuing to allocate and can accumulate gold and the conditions for that to be favorable for the next two to three years. What I'd add is we do release a central bank survey report every summer. It's coming in June. I would say pay close attention to that because that'll give you a lot of signals of what's top of mind for these central banks and how much more they might have an appetite for. One thing to appreciate with central banks is that they don't move quickly when they do policy reviews. So policy reviews take time and take energy, so they have to actually really get it buttoned down before they can increase a level. So they'll be continuing to accumulate till they get to that level. But if selling does happen, we think that that could be a condition for more headwind pressure for the gold market. But like you've highlighted, they're usually the ones that step in on these moments of price corrections and price downturns. They're the ones that step in and often pick up the price.

SPEAKER_01 20:30

So I think if I remember correctly, last year we had uh record volumes in terms of gold bought in tonnage, but also in price. And I think there was the World Gold Council that released these numbers. That's right. And it was a record year, wasn't it? Something like 5,000, 5,000 tons.

SPEAKER_00 20:46

That's right. Record tonnage and record dollars spent on the gold market.

SPEAKER_01 20:51

Are we seeing any slowdown of that in the first quarter of this year?

SPEAKER_00 20:57

Well, we haven't released our gold demand trends for first quarter yet. But one would would say that what we've experienced for the last few years, and I think we've been running before this more recent um pullback on the price, I think we were pushing up about a hundred and forty percent return on gold over the last year and a half, two years. So that's a pretty substantial run for what we would normally be expecting out of a gold market. So my natural inclination to say to you, looking at what we can see in the transparent flows around investment, is that we're seeing that ebb and flow and it's coming in and out in markets like the Americas or in Europe and staying in in in places like Asia. I would expect that we won't likely reach a record level for flows. Because it's going to be under different conditions that we're looking at the market right now. We've got a lot more volatility on the geopolitical front. So this emotional kind of governance structure that we're all dealing with. It's going to lead to real hard challenges. And actually, it's leading to cracks in risk assets, which are really going to be having much more impact on assets like gold. Because when you're selling risk assets and you're looking for liquidity sleeves or making margin calls, it's probably going to be probably going to be a good year for gold in terms of the overall flows. It'd be hard for me to see that we could have another record year in terms of the dollar spent and the tonnage going through the system. But by no means will it be a bad year for gold. I think we're going to continue to see investment in central banks playing the key role here. And it's a question of do they take on a lot more or are they ebbing and flowing in terms of sentiment around kind of short-term noise in the market and tactical activities that are taking place.

SPEAKER_01 22:49

So I want to circle back around to kind of the the theme of this conversation, which is, you know, how is there still opportunity in the gold market for your average investor? Right. And so what we've determined, I think, is that one, central banks are still good customers. Uh they're buying strong and and holding long. And then we also have uh kind of a more diversified global market, might be a good way to put it, where we've got China and India on board and others on board, and there's more and more countries that are getting involved in gold, um, as well as a stronger, I think a stronger gold market in the West as well. We've got more vehicles and participants in the gold market today than we did in years prior. Uh so you add all that up um on coming off the back of a record year. Where where are we at in the cycle? I mean, did are are we still somewhere mid-cycle in this bull run? Or was 5600 the peak and we should just sort of expect it to go to go down from here until we consolidate sideways for the next several years?

SPEAKER_00 23:56

Well, I think the way we would encourage people to think about it is probably just to look at the overall underlying economic conditions that are actually being dealt with at the big country level. And I talked about this earlier about this the countries and their debt levels and their sustainability levels of these debt of this debt. That's the real problem at hand how does a government fund itself and how likely and realistic is it to continue to do so? And I think that that's the big risk that I think is driving most of the underlying interest in gold and and and actually will continue to be the driver as fiat currencies are questioned in terms of the value. And and government's ability to sustain itself on budgeting is a question at hand. Are treasuries still gonna perform the way they will in a portfolio when you need a diversifier? Or are are my dollars going to maintain their buying power over the long haul? And it's not just a U.S. condition, it's a condition in Europe that's developing with this announcement that Europe's gonna spend more on defense, and they'll do so through raising debt, raising levels of government debt. Is that a condition that's going to be sustainable over the long haul? Or will you see a weakening in these conditions? And and are these governments really going to be able to maintain this game? And I think the bigger question at that at that point is to simply say there's a lot of risk with that, and there's a lot of challenges that come along with that. Fixing the U.S. debt level problem in its own right is very, very complex, if at all doable. So when you think about it in that context, I'd say to an investor, you should be looking at gold in that context. That's why when we speak with institutional investors and when we talk with financial consultants or the investor consultants that work with institutional investors, they're looking at real assets, at things that will continue to hold their value over time. And they're including in that gold. They're including in that real estate, they're including other assets, but gold's a component of that. It's going to hold its value over time. And we want that kind of diversification into our portfolio. And that's why Morgan Stanley, as an example, have been out in the market saying your equities is what they are. They're a risk asset. Your bonds are a diversifier with a coupon, but you need gold to get that diversification benefit that you really want. So I'd say that's the underlying condition for the gold market to continue to be strong, favorable, and likely to give you the positive returns over the long haul. Where it gets more challenging for everyone is to understand your entry point. And if you're thinking long-term, your entry point becomes less important to you. It's important, but it's less important to you because we're actually advocating for long-term holes in the gold portfolio and long-term gold in your port in your own in your ownership, even at the retail level. So be conscious of your entry point, but I would say be conscious to also not get caught up in the noise of the short term, because that's where it can be kind of very challenging, very difficult for you. If you enter it at 5,500 and you're seeing it at 4,500 and you're feeling this is not where I thought it was going to go, you've got to look beyond the quarter, you've got to look beyond the six months, you've got to look out over the years, because that's where gold long term gives you that 8% return on average since 1971 when the gold standard was lifted. And that's what makes it very competitive in a portfolio of equities, bonds, and other assets. It's inline, if not outperforming, equities over the long haul. And it's actually that diversification that helps you. So that's how we position it right now.

SPEAKER_01 27:52

I think that's a very, very good point. Uh the gold market has done so extraordinarily well over the past few years that it's attracted all kinds of investors, many of whom just don't know that it's not supposed to be going up 65% at a year. You know, this is a bit of an unusual, an amazing year, but an unusual year nonetheless, right? So um 8% average return is the is the number that you know we all, many of us longtime gold investors know about uh and cite frequently, and that's that tends to be more normal. And so, like you said, if you're at if you enter into it today and you intend to hold it for 10 years, 15 years, 20 years, um, eight percent is is around what we should expect to see from an average return perspective. And you know, that's that's where you start to look at it and you start to not worry as much about where we are in the cycle. And you know, just looking at past cycles too. Even if you had bought at the top in say 1980 or 2011, if you had held it, uh you eventually would have gotten your money back and then some correct. So very, very good point.

SPEAKER_00 29:05

Yeah, and and again, it all depends on what your objective is of getting involved in the gold market. If you're just purely a consumer and you like the bling factor, then have at it. You know, enjoy it because I think that can be quite quite fun. Um, and it's not to be overlooked. Um, but if you're worried or you're looking at it as what it what it has traditionally been, something of stable savings and holdings over the course of the long term, then then think about your entry point, do your homework to get a good good price and then on a trusted price that you can rely on. I wouldn't be pushed into anything, I wouldn't be pressured into anything. Make your decision and then hold on to that gold investment and ride that long-term wave with it.

SPEAKER_01 29:53

Yeah, and I would I would also say don't put 100% of your your savings into gold or or your 100% of your portfolio into gold. Um we we have seen some pretty aggressive allocations at times and some pretty aggressive advice, but it it is a part of a it's a portfolio diversifier, right? Right.

SPEAKER_00 30:11

Um one of the things if if I may on that, Brett, I think that like with every asset, there are those that are you know always looking for the opportunity to to um to step in and and you know maybe not necessarily do the right thing for the market. And if someone's telling you that that you should be concentrating everything or you have to hurry up to do things and and it's all because you need to get into a gold IRA or precious metals IRA, which are, by the way, terms that don't exist in IRS code. There are no such legal structures, they just happen to be the way that the market refers to them. Do your homework.

SPEAKER_01 30:48

We could do a whole podcast on that topic alone.

SPEAKER_00 30:52

But I think the I think the key message is there's no pressure cooker. You don't need to be pushed into an investment decision, and before you do anything, you should consult with someone on the financial advice side to give you good guidance because that kind of pressured environment for selling is exactly what we want to avoid and why we spend our energy focusing on retail gold investment principles, where we can say, you know, follow these guidelines, ask these questions. If you're not getting the right answer, there's a reason.

SPEAKER_01 31:26

Don't put money into it if I'm not comfortable leaving it there for five to ten years.

SPEAKER_00 31:31

It's a good principle.

SPEAKER_01 31:33

If you if you have to sell it, if you think you might have to sell it in an emergency within the next five years, probably shouldn't put the money there, right? Because you don't know what's going to happen over the over the next few years. You might have to sell at the wrong moment. Right. Um, but if you're holding it for the long term, usually it's it's pretty safe. Um, but you know, things are a little bit, I think we we kind of mentioned this. You you mentioned stability a moment ago, and I and we talked about volatility uh earlier on in the podcast, and I think we have to talk about this because gold has traditionally been a very low beta, very stable investment. It's been a little bit more volatile lately. I think today it it had a a range of like three, four hundred dollars in the uh swing in the price of gold. Very unusual. Um, should we expect to see this kind of volatility moving forward as gold has become you know more sought after globally? It's got a higher volume associated with it. I mean, is this increased volatility? Is this a permanent fixture going forward, or is this just like a feature of the current cycle that we're in?

SPEAKER_00 32:43

Well, it's definitely a feature of the cycle we're in. My my sense at this point is it's likely for us to start to see this level of volatility be more sustained over time. And I think that you know, what we talked to before the last four, three, four years of the gold market, which was a rather mundane market of flatlining on the price, lack of interest. I think that we're not seeing that much anymore with all this added interest in the market. Remember, from a liquidity perspective, on a global scale, there might be might not be completely connected in terms of all these pools of liquidity for gold. But you're talking about liquid assets in the commodity states, oil, gold, these are these are the most liquid. So this is gonna attract more interest, more speculation, more players, more investors, and actually, as more investors are involved in this market, you should expect that they're gonna buy and sell gold as they need it, as part of their portfolio construct. Think about it this way: if I have a 5% allocation to gold against the rest of my risk assets, and the market's up 70%, I'm now well in excess of 5%, particularly if some of the risk assets have held or come off in their value. I need to sell out of that and rebalance down. That's selling. That's not pressured selling, that's rebalancing. That happens at a time of year. That happens at a time of year when a lot of other people are rebalancing. So these types of pressures are different to what we might have seen in the past. And to that, I'd say that plus what we're dealing with in the administration and these news cycles that we're dealing with. A lot of momentum, a lot of a lot of activity in terms of hedging and speculating and trying to read these trades. I think it's safe to say that these levels they might not be as high as we're peaking, but I think we're expecting higher levels of volatility to be here for some time.

SPEAKER_01 34:38

Is there a scenario where we see gold evolving beyond its traditional role as a reserve asset or a strategic reserve asset? I think the last time we we spoke, we talked a little bit about digitized systems, and I know you don't like the term tokenization, but we can talk all about that.

SPEAKER_00 34:57

I love that.

SPEAKER_01 34:58

You know, there's there's uh and and just to set the stage for for uh some of our listeners who who don't really understand or haven't had to think deeply about the logistics of gold, if you wanted to actually transact with gold, you have to take the physical gold from location A to location B. And you know, just even between countries, from the UK to uh to the United States, there's all kinds of things that could go wrong. And these are two very civilized countries, right? I mean, if you could you could have acts of uh acts of God occur and your your plane goes down carrying gold shipment in the right over the ocean and then it's lost. Um, there's security issues, you know, stuff gets stolen. But then it gets even more complex if you say had to transport a truckload of gold through, say, Mexico, uh, where there's cartels operating. So one of the things that I think would stop gold from being treated as a currency in international trade and settlements the way that the US dollar currently works, is that it doesn't yet have a widely accepted digitized version that could be easily traded in fractional amounts. Uh how realistic is it? Because I think the technology exists today, or it could exist if we put our minds to it. Um how realistic is it that a system like this could be developed and deployed?

SPEAKER_00 36:21

Uh I I I think this is and and you you you say I don't like the word token. Uh, I don't dislike the word token, but I think I think what is an opportunity for the gold market, and for for that matter, broader commodities, once we get it right for goal, is dematerializing it in a way that you can use a digital construct to actually make make the market much more efficient. Now, one thing to remember gold always has to be physically somewhere, and that's actually an important element. And to that end, we've been doing a lot of thinking about what and why the current environment where the tech, like you said, it exists for us to deal with these issues. The real issue is marrying that technology up with what the market can support right now. And that's why we've got two bodies of work that I think are really worth I'll I'll say three, include one more, which is I think something we've done very early on. The first is we introduced gold bar integrity in terms of a programming that's been done with in in coordination with the LBMA, the London Bullion Market Association. Um what we've done there is actually introduced a simple technology that actually helps people log and track all the gold in the good delivery system. So, number one, you start getting your head around where's all the gold and who owns it, how is it held, where does it sit, et cetera. All under the cone of high levels of scrutiny and and secrecy in the database, but basically it's in the database so that you can actually track and put numeric codes to it in terms of a digital asset. Um, so that's the first thing. The second thing is we've looked at the wholesale market and have said, you know, when bullion banks start trading, these bullion banks uh have a limited amount of use that they can make of their gold. So it becomes everything you talk to in terms of the physical movement of gold, if you wanted to use gold put up as futures collateral, it requires a big movement of gold to get it done. And that becomes clumsy and it becomes costly and it becomes inefficient. So that's an area where we've said, look, under the wholesale construct, could we agree that certain gold could stay in one place and we could digitize it, and then its utility in that trading wholesale context could become much more efficient? And we're doing pilot programs on that right now to prove out the case that there's a use case for it. And why I am always negative on token is people say, we just tokenize gold. You're like, yes, we can do that. It's been done a hundred plus times. The use case just isn't there yet because those tokens that people talk to are the ones that you and I can buy on our phone. And we're not ready for it yet. It's it's it's there, it can be done, but the real database around gold, utility in the wholesale market, and what we're now promoting under our most recent announcement is goal as a service, which is saying, hey, look, it's a call to action for people to come to us. We'll work with the industry to organize the back office, the gold side of the market, so that it becomes much more efficient and that it can be much better at being a you know an underlying market for multiple instances of tokenization that become much more adopted in the market. That's that's where the market needs help. The market needs help in the gold side. Like, can we agree legal structures? Can we agree standardization? So we take away all this fragmentation that exists around the world of Switzerland gold and UK gold and New York gold and India gold, and see how we can actually bring it together without losing the element of physical gold and agree that we can actually digitize that. That's that's the goal that we have at this stage. Um and it's a lot more work than just putting together a token. We talked ad nauseum about the ease with which a token could be brought. The question is, is there a use case for it? And to date, not much have been not much has been taken up. And many of these tokens have failed because they just don't have a use case. Um and we see the utility of gold in the wholesale market and the utility of gold over time in the digital market to become much more prominent. So it's it's a question of when, not if. And I think the question is now's the time for us to continue to push more aggressively to get the market to say, let's get ourselves better prepared so that we can take away some of these impediments or some of these risks and some of these challenges and really bring digitization to life.

SPEAKER_01 40:54

Amazing. Thank you. And I, you know, I know we're getting close on time here, so I have a final question to wrap things up. Um, you know, gold's moves over the past few years has just pulled in a wide range of investors. Tons and tons of people have gone into it from your longtime stackers and investors, retail, institutional, uh, but yet we've also seen an increase in you know, day trading, um, investors who are piling in for the short term, uh, people expecting outsized returns. What's your message to someone who's considering gold today?

SPEAKER_00 41:30

Well, I'm gonna say if their intention is to try and trade the market, good luck. It's very challenging and it's a very, very liquid market, but uh moves pretty aggressively. If they are looking at gold as an asset and they're trying to understand how they could make use of gold, I'd say understand what your portfolio dynamic is, what your objectives are, understand that gold can be additive in terms of performance and return while also reducing risk. So you can talk to your advisor or to your consultant or to whomever it is that helps you manage your money and say, what do you think gold would do to my portfolio? Will it give me a liquid instrument that's helpful? And does it add to my diversification benefits over time? And that would be what I'd suggest to people do your homework, take a good long look, understand that the price is going to move a bit more aggressively than maybe it has in the past, but you can feel good about the fact that the underlying conditions for the long-term return of gold still remain. And actually, once you've determined what your objective is, then comfortably make a decision on your entry point.

SPEAKER_01 42:40

Joe, thank you for taking the time to join us today and sharing your insights. It's been a pleasure having you on the show.

SPEAKER_00 42:46

It's been great to be here, Brad. Thanks so much for having me.

SPEAKER_01 42:49

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