00:00Jack, how would you, you follow this obviously at a granular level, how would you sum up the year in gold?
00:05It's been a remarkable year, it's kind of been one of those periods of time when gold I think has managed to punch its way into the mainstream of kind of the debate in financial markets and I think that has been mostly just a reflection of its price, you know, it's up about 63% now, something like that, which as you say is its best year since 1979.
00:30And then I think, as well as that, I think it's been what's driving it and there's been all of these various developments coming out of the White House, for example, which have been kind of bullish drivers for gold and that has pushed into the headlines in a way that it hasn't been for years, I think, maybe since the 1970s.
00:49So talk to us about what's been going on in the White House and some of the other catalysts, whether it's central bank buying or ETF flows and what has been underpinning this pretty remarkable rally that we've seen.
01:01Well, there's a lot of kind of buyers that you could point to, you could point to obviously the ETFs, this is really the year when the ETFs came back.
01:09So usually it's kind of a pro cyclical thing, the gold price goes up and investors buy ETFs, which is unusual, but they buy in when the price is higher.
01:19That hadn't been the case through 2024, there'd been continuous outflows, there'd be investors taking profits, even as the price rallied through 2024.
01:29And then this year was when the two lined up, investors were piling into ETFs and the price was rallying.
01:34So they bought more than 500 tons this year, which is a big, a big addition when you look at the margin.
01:41And so that's been, I think, a really important driver of the price.
01:44Then obviously we have central banks.
01:45This is the big story with gold that really this is something that they've been buying.
01:50They've been met net buyers since the global financial crisis.
01:54And it's been since 2022 when that buying is really ramped up to about a thousand tons a year, up from about 500 tons a year.
02:02And that, again, has been a really important addition at the margin, which is kind of supported prices.
02:08And they tend to be quite price inelastic in their purchasing habits.
02:14So that's quite a useful driver for the price as it maybe doesn't tend to be as, it doesn't contribute to volatility in the same way.
02:24And then you look at why they've been buying.
02:27There's many different reasons, but I think most of them come down to the new administration.
02:35I think one of my colleagues said the other day, you know, gold loves Trump.
02:38There's been earlier this year we had Liberation Day.
02:41People were talking about the Mar-a-Lago Accord.
02:45More recently there's been all these narratives, the debasement trade, all this kind of stuff.
02:49Well, he's put half of it in the White House, hasn't he, as well?
02:51Yes, exactly.
02:52Yeah, maybe that's what's been driving gold higher.
02:56Hey, Jack, what's the outlook then for 2026?
02:59I've seen targets of 5,000.
03:00We're just below $4,300 per troy ounce for gold right now.
03:04I've seen people coming out confidently saying we're going to get to 5,000 by the end of 2026.
03:10What is the outlook?
03:11What are you seeing when you speak to analysts and those in the space?
03:14I think Goldman Sachs had a really interesting note the other day.
03:17They're calling for 4,900 by the end of next year.
03:21They've been kind of quite consistently bullish.
03:23One of the things they identified, which I think is an interesting theme, is if you look at in the portfolios of private U.S. investors,
03:31how much of their portfolios of equities and bonds are in gold?
03:35Actually, it's a really tiny amount.
03:37It's less than a fifth of a percent.
03:39And so they've identified, they think that a one basis point increase in that share gets you a 1.4% increase in the gold price.
03:48And it still is really marginal.
03:50So I guess an important part of that is if these narratives set in about the debasement trade,
03:56maybe, you know, you feel less safe holding treasuries.
03:59You're worried about the purchasing power of your dollar and you don't see many good ways to hedge that.
04:04But if that really sinks in with U.S. retail investors, this vast amount of wealth that's held in private portfolios in the U.S.,
04:12that could be a really important driver of the gold price going into next year.
04:16And that's one of the bullish factors they identify.
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