[Music] I'm Charlotte McLoud with investingnews decom and here today with me is Joe Katon senior market strategist America's at the world gold Council thank you so much for being here great to have you great to be back Charlotte thanks for having me really good to be speaking with you it's our first conversation of the year and already so much is going on so of course we're here to discuss the world gold council's latest gold demand Trend report but definitely we should start with Gold's recent price activity


we've seen another new record high getting over 2,800 per ounce I know there's so much going on but can you talk about the main drivers you see that have gotten us to this point yeah look I think 24 which I think will unpack in a moment has been exciting but we're already off to a fast start like you said a couple of factors that are at play are definitely the Highlight that we brought into the end of the year post election which is what and how is the administration going to basically put policies in place that are


going to impact overall US economic conditions the strength and or weakness of the dollar but also the implications that these policies might have on risk assets so far I think many investors are seeing the benefits and the merits of having gold as a diversifying asset in your portfolio I think they're understanding that risk shocks that you might see to risk assets will continue to be something that'll develop over the next two three months at a minimum as we start to hear and see the policies


unpack but these are factors that are all giving Tailwinds to Gold that mixed with the expectations that the direction of rates in the US market in particular and also Western markets will be in a declining direction or cutting cut cutting rates all of those factors are stacking up to continue to be a very strong performance driver for gold I think in addition to all of that Charlotte there's also a lot of talks around what's happening with economic and trade related activities so the actual trading market around gold the


speculators and those that are actually supporting the market flows are actually very active and very engaged and I'm sure you'll want to talk a little bit about that as well but those are all factors that are continuing to make gold friend Center Performing well I think we're looking at seven seven and a half% as we speak in terms of a performance year to dat and like you said off of 24 getting 40 record highs let's see how 25 looks yeah really really what a start to the year and we'll continue to see how


that blazs out I think definitely I want to talk a little bit more about the trade situation of course tariffs is the talk of the week for sure right now and one thing I've been hearing around the tariffs is that they're created a shortage of gold in London vaults I wondered if you could weigh in on that because I think it's it's a little bit of a tricky situation that people might not understand it is and actually I think it's a very good topic for us to spend a minute talking


to and I think that with the London Market being principally an over-the-counter Market or Market that doesn't clear through Central mechanisms that are very transparent it's hard to get information Beyond sound bites that come from the market so what's playing out right now is that you have many mechanisms to access gold including the physical Market in London also exchange traded products that might be linked to the price and those gold markets that trade in London but you also have


mechanisms like Futures contracts in the US now specifically around those Futures contracts in the US they require the need for gold to physically support them because they have a physical to deliver option related to them now they get priced regularly they roll in periodic periods of time and they often need to reflect the fact that the metals that back them can be physically delivered in if an investor chooses to settle on that contract so what the dynamic has been is with tariffs being rumored talked about


now as we speak being announced on Canada Mexico and China the fear that further tariffs could be impacting the import price and the the mechanism that it takes to get that gold from where it might be coming from like London over to the US so there's stockpiling as they say gold in New York to physically back the contracts that are still open and in play what it is doing is it's increasing that stock in New York and it's actually drawing a lot of that stock out of London or from sources that may have


been pushing it to London so I think if you look at what's playing out in the London Market the lb may have been in the market to talk about the fact that the Market's still liquid there's plenty of Supply Etc it's important to note that you're not seeing a significant concern as it relates to liquidity in London but you are seeing that flow of gold to New York and you're seeing it to the US because it needs to get ahead of any implications that it could have to the gold contracts that are trading on the


CMB now in short if these tariffs become clearer implemented and they unwind the need to hedge against any price differences of getting the gold into the US you might see that that those those medals go back to London but for now you're going to see tariffs the question of their implications and the implementation dates of those I think Mexico just announced that theyve struck a deal with Trump that they have one month before they can actually have the tariffs become imple implemented that could could be an implication on Silver


for example you're going to see this still be in play and in INF flux but interesting the price is strong the liquidities are are very high and actually access to the gold market is still very strong you know it's more to London than just the stocks that might come to New York there's plenty of dealing firms there's definitely liquidity but again this all puts gold front and center in the discussions even if the tariffs and intention of the tariffs isn't necessarily to get after a


market like gold in monetary sense it's basically looking at bigger and different other tackling uh problems like like uh maybe more along the industrial side or manufacturing side so I think it's really not specifically a gold issue it's more of a bigger issue for the US and trade so lots going on there and hopefully that's clear for people to understand that yes more stocks sitting in New York but still ample stock in London to keep the market liquid yeah I think that definitely


helps me understand what is definitely a complex situation and just one more small followup there is this type of Market activity is this something that we've seen before are there other times that this has happened that's a great question and I think that what's really quite Dynamic about what's happening in the market right now is it's something that we did experience in the early days of when the onset of covid hit us and there were lockdowns and shutdowns and things that we would take for granted


and do on a daily basis like get on a plane or ship something some from here to there all of those things came grinding to a halt it was the last time when we saw the Futures contracts trade at significant premiums or that efp as people refer to but it had a lot of unique set of circumstances that went along with it Outlets that we might see develop as a result of the Tariff implementation implications were not necessarily available at the time or couldn't be judged at the time so wasn't


as if we could go to other locations and get the gold it wasn't as if you could retool a fabrication facility in the US or even imp the introduce a new fabrication facility in the US to deal with some of the supply needs so I think it did surface in covid it was quite unique and more limiting in terms of what was happening but it was pretty quick in the case of Co and it hasn't been drawn out like we're seeing it play out here with the Tariff talk because that threat's been out there since early


November late into November and we've continued to see it go into March or sorry I should say January and February of this year and as long as these discussions continue to happen it'll still be a question of how long it's going to continue to play out okay okay also really helpful to go into that and it does help me understand quite a bit as well so let's move over now to the world gold council's demand Trends report so interesting numbers in there and notably gold demand hit another


record in 2024 and central banks I believe responsible for more more than a thousand tons of that so I thought we would start with central banks because they've been such a a notable driver of gold in terms of demand in recent years who emerged as the the top buyers there any other highlights you'd pull out so it's a great point and a really exciting time again in 2024 for for the Central Bank demand you know we're looking at our third year of over a thousand tons as the report is highlighted you've


mentioned and actually uh what we're seeing is again continued diversification amongst the central banks in the Emerging Market side as it relates to the reported Holdings through the IMF which is one mechanism that we track Poland turkey China these are all central banks that were heavily active again leading the the the demand chart from the reported side and then when it comes to the reported and metals focused unreported numbers again China emerging again as another strong participant in


the market but it's again mixed amongst number of 14 to 15 different Emerging Market Central Banks and what's really quite exciting and interesting for the outlook for 2025 I think the investment case that a central bank would see by having gold in their Reserve portfolio remains quite strong so we think that there'll be continued demand we might caution that it might not be as again strong as 2024 even I personally thought it would come in lower than it did it came in quite strong towards the end of


fourth quarter but again the case remains strong there and the use case when a central bank needs to actually step in and use the gold reserves to stabilize their own economy above and beyond anything else whether it's inflation concerns around a us or dollar strength or weakness or maybe even geopolitical tensions that use case on Shore is a great great case that they'll have in their cers that might lead them to buy or sell a little bit more to their reserves but again fundamentally a


really strong case for central banks to stay engaged yes and of course that's exactly what I was going to ask you if you had any ideas about whether that demand would stay strong in 2025 and it sounds like the drivers do remain so we'll watch and see how that plays out I also wanted to take oh yeah go ahead one quick point you know on average up until the last three years we saw the Central Bank demand hovering more around the 500 ton level so we're exceeding it and driving that average up but we still see


a strong case as I've mentioned so you might see that number come back from a thousand or just over a thousand maybe 800 or so but again let's see how it plays out and I think what's at at the heart of all of this is a strong case for these Emerging Market central banks in particular to see gold as a diversifying vehicle in their portfolio Okay really good to go into that as well and and let's take a look over at investment demand from last year which I believe came in at a four-year High it


sounds like gold ETFs were a strong component there so we had inflows and H2 balancing out outflows in the first half of the year so I wondered if you could add some some color to the numbers there and explain what we saw going on yes ETFs again I'll put it into the context it's a good component of the investment Market it's small relative to the overall flow but a really interesting one and it was The Tale of Two Cities over the course of 2024 the first half of the year was a strong


investment story including ETFs in Asia and in the Emerging Markets outside of the developed markets or the Western markets the second half of the year was characterized with with what you've just said gold ETF death flows in particular in the US market started to react and respond as we expected to the potential for rate cuts and then those Ray cuts that did move into play so that took us from negative flows in the beginning of the year to positive Flows at the end of the year that coupled with the Asian ETF


flows which were record setting in Japan China and India we saw two strong regions with ETFs being prominent investment vehicles on use in interestingly enough we had a negative number for 2024 and actually that's turned the corner into 2025 so really exciting to see that what started off with early days of rate Cuts in the central banks amongst the European Community leading to early days of investor dollars picking up gold through ETFs that turned negative in Europe over the course of the second half of the


year but 2025 again New Year we're off to a strong start and Europe has very significant flows in the first month of the year and we look over to bar and coin demand seems like it was pretty similar to 2023 and 2024 although bar investment higher are there any highlights that you would pull out from from that segment of demand yeah I think it was a bit more in line with 2023 and actually a very very strong number of just about uh just about 1,200 tons in total I think that the coin and bar demand breakdown and


what it signals to us is that this is not necessarily collectors this is really investment and that's what I think is key so when you think about not only exchange traded funds never Overlook the fact that just about 1,200 tons of demand is really making its way into the hands of people who are looking to save in store in particular when they buy bars and and and and use these as Vehicles as a as a way to get that exposure and I think what's interesting about it is you had markets that had


significant slowdowns like Germany you had markets that had years where it was more or less in line with what we had seen and expected from 2023 but then a couple of markets where there was an increase and that includes China so overall again a global market for coin and bars and actually one that really does tell a good story that people are looking at their savings and they're putting money into savings with gold they see that benefit and they see it in that physical form and I think a theme


that we've talked quite a bit about over the the months and years that we've been looking at these reports when it comes to investment demand is overall Western versus Eastern interest in Gold so I wondered if there was any points that you would add on that note yes I think the key thing is again in the East the emergence of sophisticated Investment Portfolio management again looking at gold and understanding that when a market like China experiences a decline in equities challenges around property that there's


real value in diversification so the emergence of the Eastern investor being a lot more interested in portfolio construction and adding gold as a component of that and when we go back to the Western markets while there are Global Dynamics moving the price of gold and actually may might not necessarily have an appreciation for that just yet they're still looking at us rates us opportunity cost where that market is right now you know we saw a lot of money in the western markets flow into money


market funds over the course of 2024 that's been a big challenge for us to attract dollars back to the gold market if you can get a 5% deposit on your cash deposit and then that looks pretty appealing on the short term but in a rate environment that's going to be heading south or declining I should say we should watch for those dollars to make a move and actually Gold's perfectly positioned for that you know again Western investors are hanging on to their gold allocations dollar based


not necessarily in tonage but dollar based because it's proving to do what it definitely always does in Market downturns or sell-off moments or what we call draw downs and actually it helps protect that volatility in your portfolio and give you a liquidity vehicle choice so you can actually feel good about having it as an allocation we just saw that this past week when we had a Monday with a sell-off on the back of news on AI and disruptive AI That's coming to the market equity's under


significant pressure gold doing exactly what it needed to do giving you the ability to generate some liquidity maybe buy a dip or protect your portfolio downside by liquidating gold so overall I'd say Western investors are realizing there's a global Dynamic to play here so let's see if they respond appropriately as we see the global 25 demand play picture play out yeah definitely let's let's see how people respond and just because you had mentioned the interest rate environment in the US I think


that's a very hotly watched topic as is of course inflation this year as we have all the Tariff discussions any further thoughts you would add there on what we could see in 2025 well if I had the answer to that question Charlotte I'd be a better off man than I am today I think we're all sitting and waiting and I think the key point for people is they need to remain calm digest the news Digest the news from what's really the news versus what's the noise and what's really trying to prompt the response and


reaction the Administration has some clear messages that it's sending wants to negotiate on trade it wants to deal with the challenges around raising revenue which I think is an interesting Dynamic when you think about what tariffs are going to do for it also needs to deal with its tax challenges on Shore and that debt burden is hanging out there funding the US market funding the US economy it's really a big and challenging moment so I think that it's not a big surprise for us to see that


the fed put on hold the cut that we were maybe expecting in January last year but we'll see where things develop again this is going to take time I know no one wants to hear that kind of an explanation it's just unfortunate that that's what we're going to have to deal with like if you think about exactly what we're seeing with the announced tariffs this past weekend they've moved from a reaction from the Canadian and a reaction from the Mexican side radically different a retaliatory move by the


Canadians and a Mexican government which seems to have negotiated a one-month window for negotiations so you've got two responses two reactions all of that's going to impact what it means for the implementation of tariffs which could mean onetime cost implication and the increase in terms of overall inflation how it's going to all play out we we still have a Glide path to wait and see fed's actually sticking to its guns around what it wants to do and what it's watching in terms of its numbers


again they talked about the stickiness of inflation they talked about being comfortable slowing down if they need to and I think that that's the key so stay calm and watch the watch the developments because they're going to happen fast and they're going to happen frequent and all of that's going to play into how they respond and where we see rates head over the course of the year but the Market's still looking and expecting two potentially three cuts throughout the course of the Year again


we'll see how it plays out yeah I appreciate you taking a stab at trying to unwind what's going on here when the situation is changing so quickly so if we take a look back at the Gold demand Trends report again looking at jewelry I believe it was a little bit lower in 2024 the demand and I'm assuming that's due to high gold prices and that's probably normal any any thoughts there it it it's a really interesting Dynamic uh um and for those that don't necessarily follow a market like gold


could be something different and unique because it was new to me when I started looking at the market but I also remember that when I first started paying close attention to these numbers jewelry demand was a lot higher than it is on average today it was hovering closer to a 10e average of around 40% and that numberers now over the years dropped down to less than 40% but it still maintains a significant and very material role in the gold market and you're absolutely right it's highly price sensitive because at the heart of


what it is while it is a form of savings for many people it is a consumable form of savings so when you think about higher prices and where you're going to spend your dollars today you might be moving towards bars or coins or Investments when in the past you may have been a little more comfortable spending on jewelry it's sensitive to price and what has to happen over time is that new price level that maybe we stabilize around has to get accepted into the jewelry psyche before the consumer can come back on board that


plus changes that maybe onshore in China the government can affect to raise and continue to bring up consumer confidence ultimately could bring people back to the table so you got to keep a close watch on China and India two largest markets for the jewelry consumption the fabrication that goes along with that as well and see how consumer confidence is developing in each of those Market markets and where their money is going to go as a con as a consequence of that will it go back to spending in the


jewelry space will they be more interested in getting after risk assets which are also up for grabs when you start to see the economy's turn so again let's see how things play out in 25 but in the case of jewelry it's very price sensitive so not a big surprise for us to see the overall tonnage for the year down about 11% year on year yeah certainly I think it makes a lot of sense when when you explain the market dynamics there and I want to I know that you always like to spend a little bit of


time on technology demand for gold which is a smaller part but quite interesting and it looks like it increased at least partially due to AI applications which seem to be so any points you would add on on technology demand yeah we love technology it rounds out a really clear picture of our use cases for gold that are crystal clear not hard for people to track and understand where you've got investment central banks jewelry and like you said technology where you might not think it's a key component it's a


key component in chip manufacturing and the technology for high-speed and long duration and very sophisticated uh technological applications in that corner of the market so while we're seeing this growth in AI it's where we're starting to hear that the gold component in the technology while small is playing a key role so really exciting and really good to see that technology still 7% increase over year onye which is again rounding out those use cases for gold again not going to be The


Driver of the price not going to be the largest consumption of gold but again nice to see that technolog is not fading now on the flip side of that we'll see if that all turns into something recycled over the years uh but we've got a long way to go before all that happens perfect well I think we've gone through the report and what's going on in the gold market in a a pretty thorough way in the time that we have available any final points that you would leave investors with as we're heading into


well not really into but forward into into q1 yes I think the key thing right now is that you can clearly see the benefits of gold in a in a portfolio that's Diversified you can see the benefits of having it as a component of your allocation mentality and I think overall what I'd say is that clients and investors and those understanding the gold market need to understand there'll be a lot of noise we're going to be in the discussions around everything ranging from tariffs to trade to money


money money supply the the whole Global Dynamic of geopolitical risks which is kind of gotone a little bit quiet with a lot of the different economic conditions that are developing but rest assured Gold's involved in all of it and actually you should be looking at it when you think about what you're doing with your portfolio it's going to be an additive return profile to minimize your risk in your portfolio Okay well great place to wrap it up and really good to have you on at this time to discuss


everything that's happening in Gold thank you so much for for being here it's always a pleasure Charlotte we'll see you soon of course see you soon once again I'm Charlotte McLoud with investing news.com and this is Joe Katon 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]