Gold Climbs Near Fresh Record on Fifth Day of Gains

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00:00Can this rally be sustained?

00:04Well, I think you have to kind of stand back and look at the bigger picture.

00:08You know, the rally that we saw, for instance, in the late 70s and the early 80s was something that was remarkable at the time.

00:16But if you look at today's rally in comparison, you know, it's still barely a scratch on that.

00:21I'm not obviously saying that necessarily it's going to go to the same extremes.

00:24We're already ahead of it in nominal terms.

00:26But in terms of when it's a regime shift, which is what I think we're in today, you have to keep an open mind.

00:32So, you know, I think it could be a slightly more tougher year for gold next year.

00:35Like it could be more volatile and there could be a pullback on the way there.

00:39But the fundamental reasons, I think, for the bull market remain intact.

00:44So what is driving this?

00:48What are those fundamental reasons?

00:49Why are we seeing gold at well over $4,300 a troy ounce?

00:54Yeah, I think, look, there's quite a few things going on.

00:58I mean, the initial driver of the rally, the cycle was emerging market central banks started buying.

01:04I think they start to feel, especially after the financial crisis, but more so after the Russia-Ukraine war,

01:10that their risk of their assets, dollar assets being seized was something that they wanted to or didn't want to live with.

01:17So they started to diversify. Gold is obviously the natural thing for central banks to buy.

01:21But that has widened to retail traders. Retail traders are now starting to buy more and more gold.

01:28Out of Asia as well, I might add, and in Europe and the U.S., they were a little bit slow off the mark.

01:33But they certainly are participating right now as well.

01:36So you've got this rally that's kind of broadening.

01:38But what I think people are really worried about, really, is gold is a tail hedge.

01:42It's not only is it an inflation hedge.

01:44When I say inflation, I mean extreme inflation.

01:46It's also a deflation hedge as well.

01:48So the two tails of inflation is when gold tends to do best.

01:53It's not an overall inflation hedge, because when inflation is kind of petering around the middle,

01:57gold is not necessarily going to be the thing that's going to salvage your portfolio.

02:01But at extremes, it's something that is beneficial for portfolio.

02:06People think Bitcoin might be an alternative.

02:08But, you know, in this environment, I think it's untested.

02:11You know, Bitcoin may end up well pulling through the next kind of crisis that we have,

02:15whether it's be governments debasing their currencies or there's some sort of private credit event and there's debt deflation.

02:20But at the end of the day, you know, if you want to take insurance,

02:22you probably want to go for something that you know has worked in the past, and that applies to gold.