00:00We normally look more closely at gold than at silver, and on the gold side, we see that the main drivers of this push higher have been higher ETF positionings in Western ETFs, as well as higher central bank holdings, whereas more the net spec positions seem to have been more stable.
00:20And this matters because this type of driver is stickier. So when you look at ETF positions, they tend to stick around and central bank holdings as well.
00:30So when we look at this step up and then we look at what can come next, we still expect a little over 20 percent upside from current levels.
00:41So we had, as a result of this run up, we had to raise our forecast for December 2026 from 4,300 to 4,900 as a result.
00:51And silver is interesting because you mentioned that the impact to prices was higher than in gold because silver is a smaller market.
01:00So you can have sometimes the same notional show up in the market, but the impact you can have, the volatility you can have in price is going to surpass that of gold.
01:10Yeah, so the distortions maybe show up a little bit faster in the silver market.
01:14One thing that we've been pointing out is the dollar and how it's recovered since mid-September when it hit a three and a half year low.
01:21The dollar and gold tend to trade inversely, right? When the dollar weakens, gold goes up and vice versa.
01:26If you have the dollar rising, how much further can gold go?
01:29You know, the way we look at these two assets is not that dollar will drive gold, but that sometimes you have a common underlying driver behind both and pushing them in different directions.
01:44I think because, you know, I mentioned the upside for gold in our view over the next year is a little over 20 percent.
01:50Almost all of it, just about 19 percentage points of that come from what we expect to see in central bank holdings of gold going forward.
02:00And this is just a diversifying push that we think happens, whether the dollar is a little higher or not.
02:05To be fair, if you have higher, let's say, recession concerns for the U.S., you were just talking about the tweets earlier today and concerns with trade.
02:16This can absolutely add to ETF positioning in gold.
02:20But that aside, the dollar aside, just from a central bank reserve diversifying push, we see a pretty significant upside to gold.
02:30So when you look at the two big drivers for gold, ETF fund flows and central bank buying, is it as simple as to say the ETF inflows are fast money and the central bank buying is long-term money?
02:43Well, we see ETF money as long-term as well.
02:47But the way that tends to move historically, it has such a strong correlation with real interest rates.
02:54And because we still expect about 100 basis points of cuts from the Fed over the next year or so, we still expect that ETF inflow to continue and, importantly, to stick around.
03:08It's just that the magnitude of what we expect to see in terms of gold buying from central banks is a lot higher.
03:15So, again, about 23 percent of upside over the next year, 19 percentage points of that coming from central bank buying, only about five coming from ETF, in our view.
03:26OK, thank you for that breakdown.
03:27We talked about gold.
03:28We talked about silver.
03:29Silver, of course, an industrial metal as well.
03:32What is your take here on copper?
03:33Because it's so much more economically sensitive than those precious metals.
03:37Yeah, absolutely.
03:38And we just had recently a big mine disruption in Indonesia.
03:42So, we do think that this step up in copper prices now in the $10,000 to $11,000 a ton range, this is going to stick around.
03:52We do see fundamental support to that.
03:54That said, in the near term, we think that $11,000 can work as a ceiling against that.
04:00Just because the higher prices are, we tend to see a response in scrap production.
04:05We tend to see, depending on the price level, the Chinese kind of moving out of the market a little bit.
04:11And, again, the higher copper goes relative to aluminum in particular, you tend to see more substitution into aluminum.
04:18So, yes, now sustainably in this $10,000 to $11,000 range, which is something copper had not done sustainably before, but with a limit for the moment.
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