[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Joe Cavatoni, senior market strategist, America's at the World Gold Council. Thank you so much for being here. Always great to have you. >> Great to be back, Charlotte. And what a good time it is, right? >> I I really agree. I think it's the perfect time for us to be talking. And just before we turn the camera on, I was asking if you were in Beaver Creek or Denver Gold. These are events that are


going on the last couple of weeks and I know now that you weren't at that one but you're at another event and so I thought we could start there talk about where you were and and any takeaways that you could share with the audience. >> Yeah. So it's a great question and look I would have loved to have attended the gold industry events but wasn't able to do so because I was included at uh an event in Chicago focused on asset allocation and investment consultants talking about what really is fitting


into alternative portfolios. Now, I did hear through the grapevine that the energy is very positive in the gold industry events like Denver gold. Um, but coming off the back of this event that we had at Chicago where we participated on two panels focused on alternatives, gold is prominently being talked about by the investment community. >> Well, I would have certainly liked to be there, too. It's good to get takeaways and to hear where you were as well. And let's get into what's going on with the


gold price. It's definitely been an exciting couple of weeks, especially this week. We've seen the price on the move even getting past that 3,700 per ounce level. So I'm hoping that you can break down what is behind this latest move for gold. >> So I think that what's really taking place right now, Charlotte, and what's really on the mind of many is exactly what they're looking for in terms of risk diversification in their portfolio. So you're talking about price levels. I


think we're at 36 record highs when you calculated in text of the LBMA PM fix, but you're right, we've crossed that 3,700 level and people have price predictions out there looking to 3,800 44 4,000 in terms of the price level. So, we're actually on an upward trajectory. At the heart of all of this is a question around the role of the dollar, the role of dollar-based assets and diversification in portfolios. And that's where people are looking at alternatives. Alternatives that can give


you safe haven characteristics like gold and it's actually becoming much more important with risks in portfolio geopolitical risks changing but still remaining very high and outlook for the economic conditions in major markets like the US signaling that there's risk on the horizon. Well, and as we are seeing gold at these record high price levels, are you when you take a look at it seeing shifts in who is interested in gold? What are you seeing there? >> It's a little bit of an interesting


dynamic because it ne isn't necessarily a shift in who's interested in it. It's more of a shift in the discussions that we're having about gold. It's more of a move away from short-term mentality of looking at it just as a trade or a quick win and a quick opportunity. more along the lines of saying, "How am I looking for assets that can actually give me the right diversification?" Now, if you think about what gold's doing in a portfolio, it's adding that steady income of averaging 8% over the


long term, 10 years, 20 years. Those are the returns you get from gold holding it strategically. Of course, 2025 has been an exceptional year with nearly 40% return. But this shift into this strategic allocation, how much and what percentage will I have there to protect me in draw downs, but also preserve my purchasing power as dollar weakness is likely to develop and people are understanding that they need to have safety and certainty around what they're holding. That's where I think there's


the real shift in the dialogue. So yes, retail investors, institutional investors, but more along western investors saying, "Okay, so I've had my run with risk. Now I need to balance that out with safe haven." And that's where gold's coming into play. >> Well, and this ties into a topic I wanted to pick up on from our last discussion just a couple months ago. You were talking about the high degree of risk and uncertainty, in particular, the risk of a systemic event. And I wanted


to touch on that with you and ask if there's anything in particular you're watching or if this is more of a a black swan situation that we're kind of waiting to see what happens here. >> The the real risk on the horizon right now is the move with which money comes in and out of risk assets, the speed with which we get draw downs. Interestingly enough, what we've seen with the draw down experience in portfolios, gold does exceptionally well when you have those sell-offs and


actually we're starting to see those sell-offs become more frequent and actually more severe but rebounding quickly and actually this liquidity need in a portfolio is key and actually gold's fitting into that dynamic. So your question around is there a black swan event on the horizon there's not an easy way for us to identify that simply because the definition of black swans but what I think that we continue to face the conditions of economic deterioration moving into a stlflationary environment and actually


moments of risk that actually are unexpected and cause shocks to portfolios and again people are looking at bonds they're looking at diversifiers they're looking at correlations and they're trying to determine what has that right kind of correlation and I think they're realizing gold rule is actually coming into play much more substantially than maybe they have had in the past. So I think the western investor is having a real moment of understanding that and just alone looking at the ETF market that's about


6% of the total investment market worldwide. You can see that we've got nearly $30 billion coming into the ETF market and that's substantial and a real shift in terms of what we've seen over the last couple of years. >> I think that's a good leadin to talk about some current events. So, of course, there's been a lot of discussion around the Fed lately, and we had the latest meeting where we got the 25 basis point cut, which of course was widely expected at this point. But when we look


at the Fed's statement, comments from Jerome Powell, what would you pull out to highlight for investors who are are looking at this? >> Well, I think it's underpinning this message that we've been expecting to hear, weakening economic conditions. That's going to play out in a performance of the dollar. That's going to impact Western investors. It's going to impact global investors. It's going to impact central bank flows. It's going to impact the performance of treasuries


and the yield curve. So, effectively what they're signaling is what we've all been expecting and waiting for, which is when will the risk in this system start to show itself in the economic conditions. They're signaling that it's happening. So, we had to cut 25 basis points. a bit of debate over 2550 little shock here or there I think people need to move on from that question of 25 to50 and understand the bigger picture the bigger picture is ongoing concerns around risk and again I'll I'll


highlight this again it's about what you can hurry in terms of returns from gold and also it's by diversification benefits when it comes to the portfolio everyone should be looking at an allocation or an increase in their allocation at this point to understand what it could mean for your protection, Don. >> Looking further at the Fed and Powell, they've definitely faced criticism from Trump on the speed of rate cuts and I think that's generating a lot of conversations about Fed independence.


So, I'm wondering if you can comment on that and what countries around the world may be thinking as they see this play out. Yeah, this is actually an interesting risk that's in the system now and it's getting a little bit more amplified, a lot more recognized and it calls into question independence of Fed. And simply put, that's something that needs not to be disrupted. The market needs to invest in US assets and US denominated government assets and the dollar for that matter knowing that there's


independence. any risk of that being threatened, any pressures that can actually influence that in a different way calls into question the governing structure. So all it's really doing is raising people's question around risk and uncertainty and again voting well supporting the case for risk diversifying assets like gold but other assets as well and ultimately that's where I think it's an important factor for people to pay attention to. I don't know if it's necessarily factually


correct or not. It's hard for us to ascertain all of that, but the criticisms are there. The media is covering it at the heart of what we're seeing. We can see a rate cut. We can see the signaling that they're giving us in terms of their outlook, the Fed that is. And I think that that's what people should trade off of. But again, it's really increasing the risk profile of US assets and assets that are actually under the purview of the government. Risk and uncertainty definitely seems to


be the main theme right now. And I want to go back to another topic that we talked about a couple of months ago, which is the tariff situation. And during that conversation, when it came to gold, there was still some uncertainty about what was actually going to play out when it comes to tariffs. And of course, there is still a lot of tariff uncertainty, but it seems like we've gotten some clarity at least on the gold side of things. So, I wanted to have you take a look at that and highlight what you would want investors


to know. >> Yes, I think it's a great question and a great topic and actually we're in a very good spot in terms of interpreting what the situation is for the gold market. So, gold is not a critical mineral and gold hasn't been singled out in any way. It's problematic asset when it comes to trade flows with or by the US. What has happened though is early days of tariff discussions and implementation all assets were caught in that net. We had clarity and certainty that gold was


not to be included in that bucket anything changing or any tariffs that were excessive. But when markets were getting into the granular detail of our assets that were moving around, particularly 100 ounce bars and kilo bars and ounce bars, assets that are predominantly backing comics futures, there was questions over certain codes that were being used for import and export. as the industry impact that what ended up happening was a position paper was taken by the customs bureau stating that certain


assets under certain codes 100 bars and kilo bars in particular were subject to tariff and the white house immediately came back and countered that to say that's not correct so I think what we have is a consistent position by the administration which is that goal's not the issue trade relationships are the issue trade balance is the issue and if gold happens to be involved in that, it's exempted from their excessive increases in the tariffs that are at play. But until you get that clarity,


sometimes the market needs to protect itself. That's what we had. But right now, as of today, gold in those investment forms that we talked to, kilo bars, large bars, which have never been in question, 100 ounce bars and ounce bars, they have been given clarity from the administration. And again, the administration understands gold. It's favorably disposed of gold and actually was very quick to say this is our intention around it in the market. So I think at this stage there's never


clarity that says we're always in forever out of the woods on anything. But I think at this point the certainty we need for that comx market, those bars backing it and the OTC market in London to kind of trade in parody like they normally would under normal conditions. That's where we are and that's what people should be expecting. >> That's very reassuring. And can you say more? You mentioned that the administration is favorably disposed to gold. Is there anything more you'd say


on that note? Cuz that's that's quite interesting. >> Well, I think the administration speaks a lot about the fact that it understands the gold market. It understands mining. It understands how mining works and maybe gold and other minerals might be coming out of the same sort of mine. But I also think it understands the importance and the historic significance of a goldbacked currency, a goldbacked system and actually the relevance of gold in terms of savings and safeguarding and also just in terms of


overall financial stability. So the president and the administration understand it, speak highly about it and even understand it in the world of more challenging areas, the corners of the market where it might be involved in illicit finance. So there's a very smart administration that has a very good understanding of the gold market but also recognizes that the scarcity challenges with critical minerals might not get it on the US list for now by the USGS but they still call it out when they talk to strategically important


assets and strategically important minerals in the world. >> Definitely I think we can see that shift and that relates to another point that I wanted to mention. So, we all know at this point how supportive central bank buying has been for the gold price in recent years. And I'm seeing questions at this level for the price. Are central banks going to change what they're doing in terms of gold? Will it get too expensive? I know this is a topic that we've touched on before, but I think


it's worth bringing up again as the price continues to climb. >> So, it's a good question and it was one that I was unpacking a little bit with some of my colleagues around the world. So I think the central banks are definitely astute to the price levels and very sensitive to them. We don't think that their mindset around diversification to include more gold in their reserve portfolio is a shift at all. We think it's going to be a continual trend and a continual buying behavior by the central


banking community. What's interesting though is that they have certain limits that they might be subjected to, certain permissions that they might be allowed to buy under and all the rest of it. They'll obviously need to adjust those as percentages of their portfolios have reached higher levels on price appreciation, but also they might be looking more strategically at when their entry points are appropriately met and actually being a little bit more price sensitive. So, not necessarily just


blindly buying the top if they might see it that way, but a little bit more strategic and looking probably for a little bit more of a stable price positioning like we've got a 3600 level that we're comfortably trending around at this stage and there may be some conditions where they start to say, "Okay, here's our new edge level." But we see the trend continuing. Actually, we just had an announcement from Poland that they were seeking to take their 20% allocation in their reserve portfolio up


to 30%. And that gives us a big indication that they need to change policy statements to get more gold into the portfolio, particularly with the price appreciation that we've seen. So it takes time. They're methodical about how they go about doing work. But again, I point back to our survey on an annual basis, which indicates to us five years out there looking at diversification the way both the euro and the dollar. >> Yeah, I think the the survey is very indicative of their thinking at the


moment. So great to go into that with you and looking a little bit more at the price. I know you can't do predictions, but you mentioned looking pretty comfortable at that 3600 level at this point. So I'm wondering I guess that's that's the question I was going to ask you. How are we looking at this level? Does gold need to take a breather? Any any thoughts on how you're feeling? So I think that the way I would encourage people to understand the gold market because we get this question a lot maybe


asked in the context of have I missed the run. The conditions remain strong for gold and diversification to add gold to a portfolio. Poor economic outlook a signal from the Fed that the economic conditions of the US in particular are starting to show signs that they need to react and respond. questions around the strength and weaknesses of the dollar and also US dollar asset performance. So I think if you keep in mind those conditions, you start to understand that the environment for diversification


into gold is highly likely to continue. And if you aren't seeing the wave that you might be expecting in terms of the upward trajectory, demand really outpacing supply. Supply comes online at about a 2% annual basis. Then what I'd ask people to understand is to try and determine in their own mind what would be a big signal for someone in the investment space or in the overall central banking space to start unwinding their gold in a major way. We haven't been seeing people unwinding through


recycling and jewelry and there's a strong case to hold on to your gold not necessarily sell it even if you think it is a bit on the higher end pricing side. So again, it's hard for us to see a downside scenario that could develop, particularly in the next 12 to 24 months, but more importantly, pay attention to how people are responding to that risk and uncertainty we've talked to and economic conditions that are getting clearer. And I think that you'll find that the case for gold is


well supporting the price predictions you're hearing from the analysts in the markets. >> I think that gives us a really good idea where we're at for the gold market right now. So, I will let you go, but before I do, any final thoughts you would leave people with, maybe about the points that you'll be watching most closely in the gold sector as we head into the second half of the year. >> So, key for me, keeping a close watch on what the money market funds are doing, that $7 trillion, and if it's going to


start to move as we would expect when rates start to move. That's one key element that I'd keep a close watch on. Second, I'd keep a close watch on the sentiment amongst investors on the Western markets and particularly the US investment side where we're starting to see that uptake become even stronger and bigger. And kind of echoing off of what I said at the beginning of our program about attending these uh events with clients and advisers, we're starting to hear those percentages of allocations


increase to two, five, upwards of almost 8% as a strategic allocation in your portfolio. watch to see how that develops in the western markets in terms of people adding. >> Well, I think this is a nice place to wrap it up, but thank you so much for coming on to go over everything that's happening. It's definitely been an exciting couple of weeks and we'll be sure to have you back soon to go over what's next. >> Thanks for having me, Charlotte. It's always a pleasure.


>> Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Joe Capatoni with the World Gold Council. >> Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]