gold news

 [Music] I'm Charlotte Mloud with investingnews.com and here today with me is Joe Cabatoni, 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. Always fun. Really good to be speaking with you. It hasn't actually been too long since our last conversation, but a lot has happened. So, we've got plenty to go over today, starting with gold. So, we've seen gold get past the 3,000 level, which is

exciting, but it's been a pretty quick move. So, I want to start there and ask you how you're feeling about that. Does it feel sustainable to you? How are you feeling? Well, you're right. This has been a pace of growth in gold that has never been seen before. So, moving from 20,000 to 30,000 happened at a record pace. Uh, and I think we got there in about a year. But we like what we see. We actually think this is a very good milestone for the market. This elusive 30,000 price point has always been a

challenge uh in in in many investors mindset of saying will it get there won't it get there what will it take to get past there but we've come and crossed it at this stage all for very good fundamental reasons that speed might be have been I should say exacerbated over the last year because of conditions that existed in addition to the fundamentals that are out there and so just to unpack that a little bit for you some of the fundamentals that are behind this are risk and uncertainty in portfolios, the strength and/or

weakness of the US dollar and the US economy under a new administration and geopolitical risks that have been at heightened levels. Now with some of the actions on the part of the administration here in the US what's playing out is a lot of trade related tariff related talks and those are moving things fast and furious as people try to assess what the impact is going to be not only on the US economy but on global trade and on foreign economies. So those momentum activities and those momentum kind of drivers have been

kicking in with both the strategic and underlying factors to contribute to this move quickly to the past 3,000. And here we are again today as we record this at about 3,10 as a price. And we feel like we've crossed that level. We've cleared out some of the people who had that as a selling point. And it looks very good for a sustainable level and continued growth in the gold price going forward. Yeah, I think that's a a really good summary of where we are and how we got here. And we talked a last a lot last

time about many of those factors that are driving gold right now. And and we can see as you've outlined here as well, there's so much going on. If you had to pull out one key factor that you would say is driving the gold price the most, what would it be? Or or is it more just it's a confluence of everything going on right now? It's definitely a confluence, but I think that what people continually need to be reminded of is that one factor alone won't be what's driving gold. It's a unique commodity, a unique

asset. So, global investment is continuing to be a driving factor behind the gold market growth, the price performance. Central banks continue to be at the table. Now behind those big use cases, investment and also central banks were a myriad of different factors driving the decision. But at the end of the day, this global asset which gets consumed by investors in Asia as well as North America and Europe continues to be growing in terms of popularity and allocations to portfolios. And ultimately these central banks that

we've seen at record pace over the last 3 years continue to be adding to their reserve portfolios. Just pointing out some of the numbers year to date on ETFs. You know, we've had a lot of publicity about ETFs having outflows. Even when the AUM levels, the, you know, the overall assets under management were rising with the price appreciation, which was a good signal for us that people weren't unwinding their holdings, they were basically pairing back their allocations. They were keeping their

core allocation. Now, we've seen near 19 billion of inflows just in this year alone, and we're only in the end of March. So investors are back at the table. The largest component of that is actually in the US market where it's nearly 11.5 billion dollars of flows in maybe more than that at this stage. Um but at this point we're seeing big interest in it and it's not only trading and speculation it's buy and hold clients buying lowcost versions of ETFs as well as those that trade around the

more capital markets oriented instrument. So the allocations are coming and people are actually making the allocations not only in North America but in Europe you've seen near 4.5 billion of inflows and in Asia that's a continuing trend of 2 and a half billion adding to the table. So you you've got a lot of interest just in the ETF alone. Now we're not even talking about the OTC market which we'll have more color on as we get into our GDT trends, our gold demand trends into the

first quarter here of this year. Yeah, I'm sure there will be a lot of data to to look out when that comes out. Is there anything else though you would add on on these ETF inflows right now? I think it's interesting to hear that there's this strong western component because that's one of the topics I touch on quite often, the western versus eastern interest of gold. Yeah, look, again, like I've said, some of it's tactical trading. So when you look into the detail of the the different

instruments, there's definitely a tactical element to it, but really at the core of what you're seeing here are allocations and interest in the instruments coming back to the game. So you've got price appreciation and you've got net new assets coming into the funds. Those two products tell us that this is an increase in allocations. Now remember, ETFs only make up about 7% 8% of the overall investment landscape. So there's lots more to figure out when it comes to the OTC market. But these

signals, even in the signs of the Fed giving us a signal last week of on hold this time with rate cuts looking likely for two, but there's definitely this undercurrent of saying, you know, we we need to keep a closer watch on how the economic conditions are going to develop. They're concerned with the trade related policies coming out of the administration, how that's going to impact many different aspects of the economy. So, they're basically assessing like everybody else, like what is it

really all going to mean for us? And that's giving people questions around risk assets. And you've seen a lot of those risk assets under selling pressure over the last 3 weeks. And you can see that gold performance has actually hit its record high during that period of time. So, it's doing exactly what it should be doing even in the face of the Fed not moving on rates, opportunity cost for bonds high, you know, different factors in play. Gold's still doing what it's supposed to be doing, which it's

playing a role as a risk mitigator and a safe haven in these portfolios and people are adding to the to the allocations. At least we can see that transparently in the ETF market. And to a certain extent, you can see that as well um if you separate out some of the trading flows that you're seeing in the futures market. But again, when it comes back to the physical market, let's see what our GDT numbers look like for first quarter because we're hearing mixed signals around the globe around bars and

coins, which is a big component. And we'll have to see how those numbers look in North America, also in Europe, because in the past those numbers have been slowly declining, and maybe we'll see a trend that's different when we see the first quarter numbers. Yeah, I think it'll be definitely interesting to look at those with you once they're available. And I think so important to have that context on what each component of demand makes up in terms of the overall market. So good to go into that

to the extent that we can right now. I want to touch a little bit more on the Fed because everybody's always watching so closely what the Fed is doing and we did have the latest meeting last week. Any any further thoughts on what the path forward may be for the Fed in 2025? It sounds like definitely they are feeling the uncertainty as much as anyone else is. I think sticky inflation might be here to stay. So, if you're sitting in long cash earning a deposit rate on that, you might want to look at

the real rate of return on that cash because that might be an opportunity for you to look elsewhere and see what kind of asset will be managing your portfolio risks better in a sticky inflationary environment. I think in addition, they're signaling that they're still feeling like we've got work to do around their remitt. Inflation doesn't feel like it's completely under control and done at this stage. So, right now there could be rate cuts on the way. We don't know exactly how these trade policies

are going to play out, but let's take a look. You know, we've got big dates ahead of us still. April 2nd is the potential implementation of tariffs on Europe. So, let's see what plays out there. So, I hate to leave everyone kind of in this world of what they're already hearing, which is confusion and complexities around how geopolitical tensions might play out, but that's actually what makes gold such an important component right now is that you can get certainty around questions

with respect to trade, questions with respect to geopolitical tensions, as well as certainty or uncertainty about the weakness or strength strength of the dollar. Um, and actually the dollar's been weak year to date. has had some performance that kicked in the last couple of days here, but ultimately you're looking at a weakening potentially of the US dollar and that's actually been very strong as a factor for for gold. Yeah, I think good to go into what's the outlook is for the

dollar there. And the other thing that I wanted to bring up, I know there's so much uncertainty that you've already covered, but the other question that's lingering around is this recession question. And I know that Powell E seems to have kind of a more optimistic attitude about what they can do to to get around that. Any thoughts from you on recession outlook for the US? I think I think I think like everyone, we're looking with keen eyes to see if there's an official formal definition that we

could constitute to say we are in a formal recession or not. Regardless, I think that when you think about what's ahead, challenges, opportunity to hold gold, the questions around the strength of the dollar, with all of these factors at play, you need something that's going to maintain value, if not appreciate in value during times of questionable economic conditions, that's where gold fits in. So whether we have sticky inflation and the Fed can manage, whether we end up moving into what's

more of a formal in the recessionary kind of condition, I I think it it it's to be determined. Well, you could probably get better people to talk to those those definitions and what would really ultimately come into play with that, but right now we know for sure what you'll find as a performing asset will be gold. Yes, I think certainly we can we can say that with quite quite some certainty. Another topic I wanted to make sure that we touch on is this flow of gold from London to New York.

So, we spent uh a bunch of time discussing that in our last conversation when this was relatively new and people didn't really know what was going on and you were explaining this is really to do with what was happening with tariffs. So, that's right. Curious Yeah, curious how this situation has developed and if we're still seeing that flow, to what extent is that happening? Well, I think the m like like the significant impact that it has been happening the again this issue known as the premium that the

uh futures contract trades to the spot price in London but the EFP as it's the exchange for physical I think that when tariffs were first being introduced and the uncertainty as to exactly what now they will be applied where the real target of the administration is I think what the market's signaling to us now is this pace of movement of gold that's still happening from outside the US into the US is actually slowed and I think that the premium levels have come down from where they were at their highs and

I think that's a factor of a couple of different things. First probably more clarity that the administration's target is something other than gold whether it's base metals or or industrial metals or or or manufacturing linked critical minerals. It's definitely not the monetary medal of gold. So I think that people have certainty that uh we're less likely to be something that is explicitly called out at this juncture. Things could change but at this juncture. So I think that that concern

that gold will be definitely caught in the net dissipated somewhat. But again it's not done. We we still have like I mentioned April 2nd when EU Europe sanctions come into place. Um and we're going to see how the reaction from the market is at that moment. Now I think the other factor of play is that markets are starting to respond to this as well. Canada, Mexico, China and now also Europe and anticipation of April second are all calling for questions, responses, feedback, retaliatory tariffs

of their own. So these are all creating more complexity and I think this is getting to be more challenging. But I think back specifically to the topic, I don't think the gold market is the problem. I don't think it's the target. So I think it's interesting to see that the EFP and the market traders are giving us that signal as well. But again, the pace of gold has slowed that's coming into the US market, but it's still coming in. And I think that's prudent behavior on the part of the

market to have it physically there because as we talked on the last episode, um you need it if you're called upon to deliver it. So it has to be physically here in New York. Okay, good to get an update on that situation. I know it's very complex. So thank you for going into that. And you know, we've had a very, I think, US focused discussion so far, but you're always so good at reminding us that gold is a global market. So we have to pay attention to what's going on elsewhere in the world

as well. And one point I know you've been talking about is how in China, China is allowing some of its insurance firms I believe to invest in gold for the first time within I guess particular parameters. So what would you say about that? How significant is that? Well, we think it's a really interesting and a very you exciting development in the market. You know, we do a lot of work with industry to make sure that any impediment to a different use case could be removed. This is a great example of

how the insurance companies in China, the top 10 insurance companies by size have been given permission to run a pilot program of adding gold to their investment portfolios, which is like very pioneering and very exciting opportunity for sure. It's bringing a large component of the savings market that's growing to the game to talk about how gold can play play a role in that. And since the introduction of this pilot program, and again, this is a moving carefully kind of experience for the

insurance companies that they're going to move carefully and cautiously. But since the announcement of that pilot program has gotten into the market, what we have seen is that four of those insurance companies have announced that they're actually um seeking membership of the Shanghai Gold Exchange, which is really a good thing. They're actually saying, "Let's take this forward. Let's make some prudent steps to go about getting true access." So that will give them access to the the 49's contract

that the uh Shanghai gold exchange trades. It'll give them direct access. It'll give them great price experience and and and and access which they can do with maintaining a level of anonymity which I think is important to them. So really um things are moving and moving in the right direction and again it signals for us global use cases continuing to come online. Um, and I think that that's actually the big story for gold, which is continuing to see people wanting access to it, industries

having a need for it, and actually impediments being removed. You know, we we talked previously about some of the legislative work that we've got working here in the US as well. And interestingly, in the last congressional session and just recently in the new 119th Congress of the US, we introduced legislation that would actually take precious metals, gold, silver, platinum, and palladium, and move it from what would be deemed bad income in the US took good income from mutual funds, 40 act registered investment companies. to

date they have an ability to buy gold but they actually have an like a a rather ownorous and actually um um overwhelming kind of tax treatment that would be applied to it. So it discourages their real adoption of gold in their portfolio. But if this legislation goes through which it looks very promising that we have the right people talking to this legislation and you know an opportunity to talk taxes in the US in 2025 that would remove the impediment. would move gold and silver, platinum, platium from bad income to

good income, meaning that they could own it without the concerns of an ownorous tax treatment if they exceed certain earnings from the holding that they have in their portfolio. So again, we're looking to remove these impediments, give more access to more channels, more opportunities for investors to own gold, to pick it up in part of their components of their portfolios, and see the benefits that come along with the diversification because that's where gold stands out against other commodities, which is it performs well

in risky markets, but it also grows with economic expansion and and actually gives you positive returns, which we can see you over time. Historically, we're averaging at about 8% return uh since 1971 and and compete with equities in that regard. Yeah. So, I think it's so important to do that kind of work to make it more accessible for people. So, that'll be very interesting to watch how it plays out on a global scale. Anything else that you would mention that people maybe with a a US or Western centric

viewpoint might not be aware of right now? Well, I I think the the removal of impediments, reminding yourself that gold's a global asset, probably one additional area of just interest that's actually starting to develop and an area where the World Gold Council is spending a bit more of its time is really seeing how we can add solutions to a growing challenge around artisal mining. So, artisal and smallcale gold mining constitutes about 20% of the production these days. And actually we've

commissioned a report with the former deputy prime minister Dominick Rob that's been issued gold silence is the name of the report. But I would encourage people to read that report because in that report we call out just about 24 to 25 different possible ways of global economies, big nations to think about challenges that come along with artisal mining that's actually grown from a small component of supply to a larger component which is much more substantive um but actually in an alarming way where gold's being used uh

as part of illicit activities. ities or criminal activities and we want to get that and put that under control. So, we're working to see how we can mobilize these large nations that have resources and a keen interest in kind of tackling this issue down to really kind of get on top of it and look at these solutions that we're offering and see if we can't bring together the G7 to G20 and say, "Look, there are ways of doing this beyond, you know, the the the normal channels you might think of of sanctions

or criminal charges or whatever the case may be. there are other ways to deal with it and actually that's a really exciting body of work that's underway again it's a global initiative it's actually touching you know emerging markets but also developed markets to say look how do we tackle this issue together so very exciting stuff yeah definitely very important as well and I can put a link to that report in the video description so that people can check it out if they'd like to that'd be

great yeah I think I think we've covered a good amount of what's happening in the gold market right now and certainly looking forward to the next demand trends report where we can look at things a little bit more deeply on that side. But any final thoughts you leave investors with? I think it's an exciting time but again with a lot of uncertainty. I think uncertainty leads to the fact that even past the 3,000 price point the case remains strong with central banks continuing to add reserves

and investors continuing to look at how it can help in their portfolios. And ultimately those have been the driving engine room for for the gold performance so far. and uh we see those cases remaining very strong. Okay. Well, a very good note to end on and we'll look forward to having you back very soon. Thank you, Charlotte. 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

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