00:00I know you write in your research that you are structurally bullish on gold.
00:04Does elevated energy prices that keeps pushing up real yields, does that start to chip away at that thesis at
00:09all?
00:09Yeah, absolutely. I think you've got, at the background, you've got obviously the debasement, de-dollarization, diversification sort of theme
00:17driving gold higher in the medium to long term.
00:20But in the short term, you've got now oil probing 110. You've got real yields higher. And you've got the
00:27market pricing and basically 100 basis points of Fed hikes over the next year, which gold, it's an extremely tough
00:34environment for gold to contend with in the short term.
00:37So you are going to push out those weak hands into more structural, longer term hands. We're seeing ETF inflows
00:44coming into the market again as the yield curve inverts. We're looking at recession risks rising.
00:50And central banks still continue to diversify against the dollar and against other fiat currencies.
00:56So in the here and now, gold is falling some 4% this morning. It's having a really bad day.
01:02But it's strange, Nikki, because you think you would have thought that the bad day would have been last week
01:06when the rates started to move higher because of U.S. PMIs.
01:09What do you make of just the short term volatility day to day in gold that you can have a
01:13day like today where it sells off on higher oil prices, but the big macro event of last week seemingly
01:18didn't have as large of an impact?
01:21There's a ton of sort of confusing signals coming through in the gold market, but what we are tending to
01:27see, it is really re-correlating a lot more and increasingly more with real rates and with short-term rates
01:32especially.
01:34If you take a step back, I think since the last time we spoke, we've got both FX and fixed
01:40income intervention coming from both BOG and the U.S.
01:44And I think, again, that plays into that structural theme.
01:46But in the short term, when you've got China sort of off a golden week at the end of this
01:52week, you've got a ton of event risk with NFP, with inflation data coming up this week,
01:57your investors that had re-engaged over the last two weeks are probably offloading at these levels.
02:03And then to your point, it goes from those weak hands into more of the institutional ones.
02:07You mentioned central bank buyers or rather sellers of the dollar.
02:10Where do those flows stand at the moment in terms of their interest in gold?
02:15It's still predominantly led by China, Asia, and some emerging market countries, including Eastern Europe.
02:22You know, China, at the moment, there's been a big report.
02:25Bloomberg covered it really well.
02:26A thousand tons of imports into China.
02:29Look, a lot of that is the PBOC, but it's jewelers, it's funds, it's institutional, sort of accumulating.
02:36There's just very little confidence in local assets.
02:38There's very little confidence in geopolitics.
02:41And I think, you know, central banks just continue to have that sort of long-term playbook
02:48where there will be bids sort of on any steep drawdowns as we've seen today.
02:53They're still committed to the metal, but more widespread volatility over the past month,
02:58has that been enough to erode retail interest in gold?
03:01Yes.
03:02I mean, you talk a lot about it on your show where capital is hiding out, right?
03:05It's in AI.
03:07And retail interest was hands down involved in precious metals in Q1.
03:12We saw that sort of debasement trade, Google trended.
03:16It sort of reached a peak all-time highs in Q1.
03:19And as retail re-engaged, that's shifted into AI and tech right now.
03:24So, you know, gold has sort of lost that, which I think it's healthier.
03:27I think it's a healthier two-way market where you do have more institutional
03:32and steady central bank buyers on the bid.
03:35Can I just say something about that feels counterintuitive,
03:37that instead of gold, you'd buy AI.
03:39Like, one is quite steady, and then the other one is this huge speculative thing
03:42that we have no idea what's going to happen in the future.
03:44Right.
03:45I think a lot of it is due to, I mean, it's the narrative, right, du jour,
03:51I think, and we'll see now with higher rail rates and higher yields,
03:57you saw that narrative maybe pressure test a little bit more in AI.
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