Why Gold Volatility is Exposing "Weird" Market Forces

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00:00We couldn't agree more. It is indeed a very weird market. Things that you historically could rely on,

00:07you can no longer rely on. I mean, whoever would have thought that the kind of volatility we're

00:12seeing in developed market currencies versus the emerging market currencies are doing relatively

00:17OK. And that kind of feeds into the whole theme around gold as well. Danny, we've heard three big

00:23arguments as to why we're seeing the volatility in gold or why gold has actually been the best

00:29performing asset class year to date. I mean, it's related to investors trying to hedge their dollar

00:33exposure. It's related to collateral for digital assets and cryptocurrencies. You know, there's

00:40a number of different reasons. And also because there's an increasing retail participation in the

00:44market and gold might be seen as one of those main areas for retails to participate in. We don't

00:50really know. But what we do know is if you look back 30, 40 years, gold has same kind of returns

00:57as equities, but twice the volatility. And that's what we're seeing come true today as well. And

01:02you know what we would expect going forward as well. That volatility is real. And maybe that is a

01:07historical correlation that's holding up because it's an equity market that, yes, you've had some

01:12wobbles around trade. But for the most part, it has this melt up quality to it that it just feels

01:17inching towards new highs or slightly above them. Nima, are you surprised that equity market volatility

01:23has been relatively calm that some of the issues in the gold market, for example, this morning,

01:29aren't seeping over to wider sentiment shifts?

01:33Dani, actually, one of the data I saw just yesterday on Bloomberg said that volatility,

01:39equity market volatility is actually at its highest level outside of recession years.

01:45So we are seeing the volatility. I think when we think about volatility, we think up and down.

01:50The problem is we've only seen volatility going up, right? A lot of upward movement. But I think

01:56what is surprising is the kind of euphoria we're seeing in the market. In some ways, it makes sense

02:03because you're saying, OK, you've had this huge boom from AI contribution coming through, and now it's

02:09going to trickle down to the other sectors of the economy. I mean, you look at GDP estimates for Q3,

02:143.9 percent, inflation 3 percent. And this is an environment that we're looking to cut interest

02:20rates. So talk about adding fuel to the fire here. And we've got deregulation. All those things are

02:26bringing out what we would call animal spirits.