Gold’s Bullish Path Ahead: Outlook, Miners and Portfolio Positioning

追加: 2026-05-07

[00:00:00]Morning.

[00:00:03]Thanks for joining us today. I'm Andrew Musgraves, product manager for Vanex Resource Equity Strategies. Um, excited to have everyone with us today to discuss gold markets uh with a panelists of of experts here today. Um, gold has obviously seen some heightened volatility in the past several months.

[00:00:21]Uh, reached all-time highs in January, experiencing one of its sharpest corrections in decades after that. Um, we presume central banks, Fed policy, strong dollar have been some of the main culprits there, but uh, we'll discuss and we want to kind of dig into some of those broader themes such as DD dollarization and and how that's playing out longer term. And what about the miners, right? Coming off their strongest years of performance ever. um still seeing record margins, strong free cash flow, lots of questions around whether they'll be able to outshine other equity asset classes um in a year with this pronounced volatility. So, here with us to discuss all this today are three experts in the field of gold and gold equities, including president and uh CIO of Merk Investments, Axel Murk, um Vanac Gold portfolio manager, Emma Kasanova, uh as well as Vanax head of multiasset solutions, David Schassler. Um really what we're hoping to to answer today is several key questions that keep coming up in conversations that we're having with clients which are you know what's going on with gold? What's driving all this volatility? How did we get here? Uh how are the miners fairing? Um strong profitability cost pressures um you know what's next for them? Uh and what's next for gold? Uh how have our views about gold's outlook changed uh if at all within the past quarter? So, um, ideally we'd like to keep this more conversational as we have with some of our our recent presentations, webinars.

[00:01:49]And so, uh, we also ask you guys to please answer your questions at any time in the window provided so that we can we can try and get them answered. Um, we'll touch on gold's uh, VANX gold capabilities just quickly. You know, Van has been managing gold investments for over 50 years. It's one of the longest track records in the industry, manages nearly 50 billion uh in gold related investments across a variety of vehicle uh types today uh including the largest gold mining ETF GDX as well as IMO's fund international investors gold fund uh one of VANC's flagship uh actively managed strategies. Um, you know, Vanak also has an established partnership with Merc Investments through its uh marketing agent role for VANC merc gold ETF, ticker ounce, o n. And it's the only gold to go only gold ETF to offer physical deliverability uh in gold in exchange for underlying shares. And then there's David's fund, uh, the VANAC Real Assets ETF, ticker RA AX. Um, actively managed exposure to real assets, but currently with a pretty sizable allocation to gold around 20%. So, lots of uh, experience uh, with gold here today. Lots of different angles and approaches we can kind of take to discuss some of these topics. Should be an uh, exciting conversation. So, hoping that we can uh, start it off here. I guess I'll begin with a a fairly broad question aimed mostly at sort of Axel and EMA, but uh David also kind of curious to get your feedback as well.

[00:03:19]You know, what's going on with gold today? Um we've seen a lot of Villa volatility here, a pull back from all-time highs. Um what are you seeing uh in gold today that is perhaps not well understood or uh recognized by the market? Maybe Axel, we can we can start with you. Yeah, thank you and thank you for including me here.

[00:03:40]In my assessment, I think the first thing to to keep in mind is the market is pricing the Iran war as a shock rather than a structural change. And what I mean with that is it's the short-term impact. If you look further out, markets look more normal. What it means translated to gold is that in the short term yields have been moving higher but long-term inflation expectations haven't moved as much and what that means is that real yields as priced into the markets in the long run are higher and ultimately gold is competing with cash in the long run and uh independent of the fact that we have no idea what inflation will be in the long run the market metrics make provide a headwind to the price of gold in the short run. And so it's a key reason when tension flares up, when the price of oil goes up, that's that's kind of the environment we're in and then gold gets a little bit of a headwind. The other thing to keep in mind to just stay with this theme before I'll pass it on is that gold tends to react well to the secondary effects. Remember this is supply shock. Um, think price controls in the 70s, things check writing um during the pandemic. In the rest of the world, we have some rationing. We got some subsidies in the US. Policy makers have been reasonably constrained with regard to quote unquote helping consumers. That help that will be provided is what tends to be good for gold. But in the short run, the the reason why why gold has had some headwinds is because it's uh on a relative basis the rate environment has tightened. And I'll be glad to expand, but let me just leave it at that for now.

[00:05:25]That's that's super helpful the context there. I think you know maybe one thing we didn't um hear from you on is just about some of the the central bank demand. Um is there any views that you have with respects to some of maybe some of the sales that have been taking place as well? How how are you viewing uh in that context?

[00:05:44]>> Well, gold goes to the folks that that can afford to have it. Some central banks need the gold now, need the cash to spend. others like China continue to to accumulate. Um the the broader context is of course that central banks are quote unquote incentivized to diversify out of the dollar and gold is but one of the beneficiaries. If anything that has been reinforced with the events that we have been seeing. So I see that trend to be intact. Um, more broadly speaking, I think um, the the world is not the place from a decade ago. Um, the peaceful era since World War II is over. We have been weaponizing the financial system. We increasingly talk about choke points. Um, the the dollar is is one one reason. We we see it with um with the um the the boycott or the the embargo in in the straight of Amusa as well. And so investors will need to think about what they do with regard to the dollar. Um the other one, let me just add that angle here in this context. When we have tariffs, it doesn't just impede the flow of goods and it impedes the flow of currency. And so when there's less trade, there might be fewer dollars to recycle. So all of those dynamics will have an impact. Um but for the time being, I think there's a doubling down of of countries not friendly to the US to be less dependent on the dollar. That won't work overnight. It may not even work over decades. But keep in mind that the gold market is slow is small and so as there are marginal changes benefiting gold, we can have a disproportionate impact on the price.

[00:07:28]>> Andrew, I'll add I'll add some color on the central banks just because just today this morning in fact we got um some figures out of the world gold council. As you know, central bank data lags. So, we got some Q1 figures which I was dying to get and they actually confirmed that precisely what Axel is saying. This trend is intact of continuing uh net buying strong net buying of gold from central banks. The figures show record not record but um central banks Q1 net buying of 244 tons.

[00:08:08]You can do the math. That's one quarter.

[00:08:10]Uh almost surprising to me because of course a lot to your point earlier, Andrew, a lot of speculation that a lot of the weakness that we've seen or um in this last few months is from central bank selling, but in fact 244 tons would be a better quarter than every quarter last year. And so yes, of course, we've seen some swaps and Turkey was doing some stuff and France sort of repatriated some sold here, bought there, but overall the trend like Axel said is that this banks are going to continue to want to add to their gold reserves and to the point where all this Iran war crisis uh leading to sales. Uh we were discussing in our investment call this uh morning. It's like well that's what gold is for, right? you have it as a reserve because you it is liquid because it can't come to your rescue in times of crisis and that's something that central banks have been very much um uh aware of and exercising for the past uh four years like those bars show there and what we need as investors to get on that on that same trend.

[00:09:21]Oh, that's would that's very helpful.

[00:09:23]The the recent context, we'll definitely have to update this. And maybe just sticking on sort of the uh investor flows portion of this, you know, there was sort of a liquidity crunch that I think here in March. Um, you know, it's been sort of structurally supportive otherwise. How are how are you thinking about, you know, some of that? Um, I I know that Axel probably touched on that briefly, but how how are you thinking about uh monthly gold ETF flows?

[00:09:50]something that you you guys track relatively close when it comes to gold price. Yeah, we that's that's our our proxy for western investment demand. And I think it's very important this uh numbers that we got today from the world gold council also include buying of gold back ETFs to the end of March uh of 62 tons considerably lower and even though we were you know those were much higher um you know before the war we have basically seen draw downs like you're uh showing here through now year to date um ETF holdings are actually at below the levels that we were at at the beginning of the year. And I think that that um it's it's relevant. Um what we saw in prior to 25 um it was the central banks sort of going at it alone alone um in 22 23 24 and in fact another important um center of demand Asian investors and if you look at those numbers again by the way which are public role council everybody can access them you'll see that bar and coin demand was very strong 474 tons uh in the quarter which is um the highest quarter on record. Um and that was Asian investors leading um that that center of demand. So Asian investors are still there. They're buying coins.

[00:11:16]They're buying um ETFs. Likely central banks, as much as they might have had some activity on the on the sales side, are still in there. What we're lacking this year is the Western investor investor with flows basically now netting zero for 2025. So a pickup in um ETF demand in western investment interest um I think is what we see I see as a big driver of gold prices here as they be still remain anchored by central bank and nation uh buying >> on the on the previous chart we did not have uh bars and coins which I think is an important point to bring up. Axel maybe just sticking with you really quickly. I mean, do you buy this this narrative that if we continue to see the inflows here into gold ETFs that we should see a potential rebound in the price here? We have not reached, you know, the highs that we saw back in 2020 uh in terms of ETF gold holdings. How do how do you how do you think about that?

[00:12:18]>> So, the way I think about this chart here, look at the gray bar, the total ETF holdings in ounces or million of ounces here. Note that we are not back in of the peak ounces in 2020. I think that's difficult for many people to to to um understand. We have in in dollar amounts we've reached record highs, but in ounces we are off the high. It's one of the reasons that that I believe that despite the significant runup we had in the price of gold um last year and by the way year to date we're up in the price of gold despite the volatility um that I don't think we've had a speculative frenzy a speculative blowout of sorts and it's this is retail demand obviously in some ways um in in the ETF flows but historically a a a peak in gold is driven by by euphoria and retail and this chart is is but one of the indications that we haven't had that and and so I think that's a that's a very important context that people tend to to underestimate >> maybe um I we got a question in um Axel too while we just have you I just want to have you maybe rehash some of the points I know that you covered it in in detail but maybe this person just missed it says so if central banks fought 244 tons in Q1 what what is the reason for the weakness behind gold, right? We've seen some of these outflows from individual investors. Um, you know, the narrative was big central banks selling to subsidize higher energy costs, but if they bought so much gold, how can that thesis hold? Um, what's the what is the major reason for the weakness in gold?

[00:13:59]And I think again you touched on that, but just to rehash for this person so that they >> Well, I like to go through the the different types of investors in gold.

[00:14:06]You mentioned central banks. Um on the uh there is the the gold bug who thinks about the purchasing power of gold is going to decline. Those are around and well you do have the speculator. The speculator tends to use leverage and uh and a year ago the speculator came back to gold. Um speculator was busy with meme stocks and and now maybe has moved to betting markets um or and but there has been a deleveraging. So that had been a headwind. Um on the on the real investor side, the one headwind that happened is that real interest rates have moved higher with inflation going higher but inflate but central banks not suggesting that they will kind of throw in the towel. They they're sticking the course. They'll be quote unquote higher for longer a little bit. Um the other investor group um that I we haven't mentioned is the the classic diversification investors. Presumably many of them are on this call. um from what we have seen those haven't really changed much of an indication. They haven't been a a big driver in that. Um and and so the the the one thing to keep in mind to just make the broader point here again the gold market is fairly small compared to most other markets.

[00:15:20]And so when there is a change in allocation, it can have an outsized impact. and the the trend that people are worried about the fiscal sustainability and the like those are still there. Now in the short term we're all glued to the screen of course what's happening to the straight of Hermoose and that's been driving it that has caused real rates to be higher as priced into the market. I don't think anybody believes, at least I don't, um, that in the long run inflation will be much lower, but that's somewhat what the market is pricing in right now. And, um, it's one of the reasons why might some might think this might be a buying opportunity.

[00:15:55]>> Andrew, I'll add that remember the central bank figures that I quoted are to the end of March. And of course, a lot we've seen a lot of uh, a pull back in April, which those figures we don't have. And so perhaps you know uh net buying was not as strong from central banks in the month of April. So I think both to to today clearly maybe there is an influence there to in the price from the central bank weaker buying. Um but primarily I think it's it's uh uh the source of investment demand drying up here especially in the west but maybe globally that has um you know gold at the prices that we have now. For all we know, central banks were buying a lot of those tons in the first couple of months of the year, which drove, you know, along with speculative maybe investment demand uh to the 5600 high that we had.

[00:16:55]>> All right, this is great. I I want to get David roped in here. I know David, you had kind of taken sort of a longer term view of of gold and its volat recent volatility. you you have sort of a narrative around uh you know how this is not uncommon for this asset class to operate like this just based on its previous price um action. Do do you have any comments here just to frame it in terms of historical price action um or how you how you guys think about this recent volatility um within your asset allocation frameworks?

[00:17:28]>> I do. I think you actually have another chart that's one behind this if you could push to that. Yeah, this chart exactly. So I'll say I'll say a few things. I'll start off big picture as it relates to volatility. No bull market, no asset class goes up in a straight line. Bull markets aren't linear. This isn't the one exception.

[00:17:46]So, let's let's start there. So, when you make a lot of money really fast and you give some back, that doesn't necessarily mean that the bull market's over. Often times, it's just a pause.

[00:17:56]Gold in a gold bull market is very, very different than gold in a benign risk environment, right? So, so gold's responding to key forces that are that that are that that that are driving it, right? Geopolitical shocks, debt, deficits, right? We all we all understand what those are. Givebacks in gold are are fully expected. And what this is showing is that during the last two bull markets, 1970s and 2000s, you had five corrections of 10% or more.

[00:18:21]Now, Axel hit on something that was really, really important, which is the structural difference in the size of the gold market relative to the fixed income market and the equity market.

[00:18:30]When gold performs as well as it does, and keep in mind this gold's outperforming other asset classes by a wide margin over any reasonable look back window, short, medium, or longer term windows, gold's a top performing asset by very, very wide margin. So you've got people migrating from one asset to the other. And when they do that, they're introducing volatility.

[00:18:47]Now given the size of the gold market relative to the equity market, the fixed income market, that mean gold acts a lot different during gold bull market. It's a lot more volatile. Our expectation is you're going to get higher highs. you're going to get more volatility. You're going to get deeper draw downs. You're going to get more frequent draw downs because in the last two gold bull markets, the market cap ratio of the gold market to the equity market and the gold market to the fixed income market was a lot smaller. So, what we're saying here is that gold's doing exactly what it is. So, when you think about it that way, you can become opportunistic and then you realize that the volatility is a feature. It's not a flaw and you can come to expect it. So when you see periods of weakness like we have right now, you can say to yourself, are the catalysts that got the gold bull market to where it is, have they accelerated, decelerated, or have they flatlined? And our argument was they're actually accelerating. That means it's an opportunity to buy. And that's exactly what we've been doing.

[00:19:37]>> It's excellent putting that into context. Um I I think one of the things that kind of gets lost is that, you know, despite this pullback, you know, gold and gold stocks have really been some of the best performers over the past year. Um, so it's helpful to kind of always pull it back into into that context. Um, I could like to turn it to the gold miners now. Kind of again, one of our aims was to to explore how the miners are fairing uh amid all this volatility and whether we believe they can still kind of potentially outshine other asset classes or themselves in the coming year. Um, we've seen a few of the the Bellweather uh miners report earnings recently. Um, potentially some higher costs amid um energy and labor prices. So, I'm going to start again here with with Emma uh and then maybe to Axel. Um you know, how are things shaping up for these these miners right now? Are we excited about their prospects heading into the summer for the remainder of the year? Uh what are you looking at?

[00:20:35]Yeah, the miners are you know that that slide there, you know, you can read it at your own uh leisure, but basically the point that I've been trying to make now for quite some time is that these companies are fundamentally in such a strong shape that um they they they should be able to navigate the cycles. I think we're used to an industry perhaps from 15 or 20 years ago or maybe during the last gold bull market where gold mining companies had to have high not just high but you know rising gold prices for them to to show their profitability and you know as soon as the gold price pull back that meant you know um margins were were eroded and that's not the case here. We've been trying, obviously, we've been making this point for for a long time now, but you know, companies don't need $5,600 gold. I put $4,700 gold in there because that's the price that we had post war.

[00:21:34]Basically, it's been a it's been where uh gold has sort of been um trading in that in that range and that is a fantastic gold price for gold mining companies. Um you mentioned it um the bell weather pneumont the largest coal mining company in the world reported and the results were actually um surprisingly good. Everybody obviously was expecting um strong profitability and record free cash flow and that came but um what also um came was costs that are very much contained. Granted, pneumont uh this is was sort of an exceptional quarter for Newmont. It's not necessarily that it's going to repeat in Q2, but cost um byproduct cost which sort of u take some credits from silver and lead and other uh byproduct production were around $1,100 an ounce, which sounds incredible. Now, the guidance for Newman for the rest of the for for 26 it's about 1680. So that gives you an idea. New pneumon is guiding uh that it will produce at around $1,700 per ounce. And here we sit about $4,500 goal. So the the as long as these uh sustain uh prices even at the levels we are today at about 45 4,600 are there, these companies are going to be generating a lot of cash. And that's the point this slide is trying to make is yes clearly if gold go trends higher from here even better. But can they outperform the metal in particular in a rangebound scenario? We had a you know we've had a rough couple of days here with this last pullback but I still believe that the companies uh are have the possibility to outperform the metal even if gold just sort of sits here at this levels uh for for some time because um of this you know continue uh record profitability and even if gold bag were to pull back that's the last scenario there like I said they don't need 45 they don't need 5,000. They don't even need $4,700 gold. These stocks right now are pricing in. We did we ran our models and we basically did a goal seek to see, you know, what gold price do we have to put in this models to get the current share prices to get an idea. And uh it has been consistently about a 20% discount to the spot price. So we think somewhere around 3,700 for a universe of our companies uh is what they're discounting. So you know there there is a case to be made that as long as prices remain above this level stocks should hold up really well here and that picture that you show it basically tells the story. We this industry has never been in better shape. Uh margins um are still very strong. the the main question investors line honestly in our mind too is as we get through this first uh earning season of the year is what's happening with cost and that's particularly relevant and I'm sure a lot of the participants have those questions is what about this higher fuel um you know oil prices and how do they impact the profitability of the miners obviously at an energyintensive industry and what we note is that it's about on average about 15% or so for some minor fuel and energ uh cost and exposure to oil prices is as low as 10 for some is as high as 20 but let's call it around 15%. Um and so so obviously there is exposure and if we obviously continue to have sustain higher oil prices we'll see some of those that margin uh will uh so cost will go up but we have a lot of buffer there and the sensitivities that some of these companies have given us are you know perhaps another 40 bucks on the go on the oil uh price um per barrel equates to you know $40 an ounce in in cost. So nothing as perhaps as uh significant as um uh investors are expecting and also I will note that these companies do have inventories.

[00:25:49]They do have uh fuel uh that they can still access for the next couple of months. So it is very much a question of how much this situation uh persist uh for how much longer and they're hedged.

[00:26:00]Some have hedges as far as six months out. So should we, you know, should this continue and this supply uh crunch continue for an an excess of six months, then yes, I I do expect costs to to go up and I we just expect cost to go up in general in this environment simply because of you know some of the aspects we show here. the fact that you know we we have higher gold which automatically means higher cost because these companies have to pay uh royalties uh that are linked to the gold price and um producing uh uh gold producing countries and especi you know uh also tend to you know the current could affect the currencies which could appreciate which also erodess some profitability. So there are some external cost pressures that will lead to some uh increases in in the in the cost and and yet the companies continue to be very focused. I think in some of the questions ahead of the webinar I read are these companies you know what what are they doing are they showing discipline and the discipline that we see um as far as allocating capital also translates to what they're doing at at the operations.

[00:27:10]We meet with companies, you know, several of them uh weekly and, you know, we met with one recently that is still very much, you know, doing um full asset potential um processes in all of the operations trying to squeeze the towel.

[00:27:25]What else? How else can we uh reduce cost? So, not because the gold price is so high and margins are so huge, are they just sitting back? they are still trying to um improve efficiencies, increase productivity, and reduce costs to try to offset some of this um inflation. Um the probably more concerning than um energy and oil uh prices and fuel costs are labor. That's probably the one that keeps my team more focused on what's happening in Canada and in Australia with as far as labor availability and what that means for um labor labor um uh cost. And so all in all, we you know estimated a 10 to 12% increase in 26 relative to 25. And that's pretty much what the companies have guided. Um, of course, if this uh energy crisis continues, we could see cost uh increase a bit, but again, because uh there is so much buffer, we are comfortable with the fact that these companies are continue to generate a lot of free cash flow. I don't want to run up too much. I could talk about the health of the sector and how well they're doing. The one point I will emphasize because I know a lot of investors are focused on that when it comes to the miners are returns to shareholders. Newman is a perfect example. They just announced um another um 2.6 billion in share buybacks. They completed their 2.6 billion that had been approved, launched a new um uh 2.6 billion by backs which is you know goes right back to the shareholder. And then in dividends uh the dividend uh number didn't increase but of course you know the total but it is a per share uh amount. So as less shares out there, the higher the dividend. Um and so they remain very much committed in increasing those dividends as the gold price increases and as profitability increases. They had record flow this year. Just to give you an idea, Newman um generated about $3 billion in free cash flow in the first quarter. Again, an exceptional quarter, but you can do the math. It trades at $110. So, free cash flow yields that are getting close to 10%. I did a a Bloomberg search for free cash flow year for a basket of large um uh gold miners, six five six% or so. Um so, pretty healthy um um comps there and still very undervalued, which is what we're showing here. This shows relative to to gold which you know obviously it's it's a a good way to look at it but also if you look at valuations historically for this sector and um relative to other industries the sector looks very attractively uh priced in a time when uh fundamentally they're in in in the strongest shapes. So I'll stop there, Andrew.

[00:30:30]>> Axel, thank you. You know, I Axel, you also manage a portfolio of gold equities as well. Kind of wanted to just get your feedback on on how you think these miners are positioned. We have a question here um talking about uh mergers, consolidations in the sector as well. I I know you have some views on some of the the smaller names down market cap and just generally speaking, how are you thinking about how are you thinking about the gold miners? Well, let me let me add a perspective that Adima didn't mention the investor perspective. The in 2011, Mark Andre came out with his famous essay that software is eating the world. Fast forward to today, AI is eating software.

[00:31:13]The reason I mention it is AI is an investment that is very capital inensive, different from software and the margins are uncertain. In mining, it is very capital intensive and in precious metals mining in particular, margins are very good. And the reason I mention this is that what is different from the bull market 15 years ago is that suddenly mining competes on a level playing field, not just gold mining compared with other asset classes, even technology. And so as far as asset allocation is concerned, suddenly it becomes um it becomes an interesting proposition and uh when you go to presentations of midsize mining companies, you suddenly which you haven't seen before see portfolio managers of large fund complexes in the room that had previously not looked at the mining sector. So I think that's a that's that's that's quite relevant for the dynamics in the space and again the mining space is is fairly small. Um as far as mergers and the like is concerned and the the big companies um have been divesting after big mergers that provides an opportunity for others to acquire it. I think the scarcest resource if you go to smaller mining companies is good management and there's a lot of opportunity in active management in in that regard and and as these small companies grow bigger they tend to go to the market for fundraising rounds bigger investors come in and the opportunities beyond the price of gold but as far as the broader point is concerned I'm 100% on board with IMA that that yes um there is costs are going up which happens in every bull market. Um, however, the margins are so good and there's such a good focus on on on costs more broadly that the and and especially with valuations um that I I think we we have even more um conservative views on on how much is priced into into these these securities, there is a huge buffer um for these companies to be still be profitable. The one thing to just keep in mind is when somebody is is looking for gold, they're not assuming $4,500 an ounce gold.

[00:33:29]They're looking for a much lower price.

[00:33:31]Um they're looking at the operational efficiency because if you only go and and and were to go mining, if if you need to have $45 an ounce, um it's not worth it because the risk is just too high. And so there is an enormous opportunity here if even if the the price of gold were to come down a bunch more.

[00:33:50]>> Andrew just for accuracy um our senior analyst Adam just correct my buyback figure. I don't know where I came up with the other number but it's six billion program. I don't know where that 2.6 came from but six billion is what uh Newman announced as their new buyback program after completing a six billion program before. So, I just wanted to go wreck that.

[00:34:12]>> Healthy. Very healthy. Um, all right.

[00:34:15]Thank you guys. I think we're gonna go ahead and pivot now to our last part of this discussion. Um, this was a chart that was put together by our gold strategist, Joe Foster. Um, I think you can, you know, probably look at these bull markets in lots of different ways.

[00:34:30]Uh, the way he's laid it out here, it still looks like there's a lot of a lot of room to run. So kind of helps me preface uh the last part of this discussion here today which is you know what's next from gold? Where do we go from here? Um I would like to hear from everyone on this but second part of this too which I think David really can uh hopefully dig into is you know how are we thinking about gold in the context of asset allocation right now. Are we buyers? Um how are we repositioning? So um I guess you know David maybe if we want to to start here you know how are you thinking about gold right now? uh what is your your view on positioning and and and moving forward?

[00:35:08]>> Yeah, perfect. I I like what Axel was saying before when when he was basically define the three types of gold investors and I I think we we squid we fit squarely into two of those categories.

[00:35:19]First off, we're we're we're asset allocation diversifiers, right? First and foremost, that's that's where most of our performance comes from. Owning a nice mix of diversified assets, that's where gold comes in. It's a second top performing asset class over extended periods of time. You've got global equities generally produce around a 10% annualized return. Gold generally produces around 8% annualized return and fixed income generally produces around a five. You factor in the case that or the fact that gold historically performs the best when other asset classes struggle.

[00:35:50]So when should you own gold? We think all the time, right? So start with that.

[00:35:54]Secondarily, the volatility creates a lot of opportunities and this bull market we believe is structural. We think that there's a lot more room to run. It's likely if we had to pin it, which is very, very difficult to do. We're probably about, at least from my perspective, about a third of the way into it. Um, the problems that have driven it this far, we believe are strongly accelerating.

[00:36:15]You look at other previous gold bull markets, the one that I think that draws the biggest comparisons just in sense of magnitude would be the one in the 1970s.

[00:36:24]And you know you had a gold bull market that was some upward somewhere in the range of 500%. If you look from 2000 you know the early 2000s that gold bull market was up around 600%. So we think from a diversification perspective from from an [clears throat] opportunistic perspective given it selloff we think it's a really attractive entry point >> that sorry I was hopeful David that you might be able to to contextualize at least some of the the views that you've had with respect to how this this is a different time uh in place for gold right now. we can't really think about it uh necessarily as as as we did, you know, a long time ago. We have to kind of contextualize it uh in a different framework and think about it that way.

[00:37:11]Um you touched on it a little bit, but maybe, you know, can you talk about how how this old and new worlds are are different and how we need to be be cognizant of that moving forward when we talk about asset allocation?

[00:37:24]Yeah, this is one of the most simplistic but I think most informative charts that we have which just basically defines the world in in in pre and post and in in the precoid world before we basically increased the money supply by 42% overnight and poured gasoline on the debt fire that we we've been accumulating now for decades. Um in that world you had price stability. Assets went up in both dollar terms and gold terms because at that point the dollar was the unquestionable yard stick. We're in a new regime and and I shouldn't say new, I should say newish because we've been here for about 5 years. We're about 5 years into this gold bull market.

[00:38:00]There's a lot of information in that.

[00:38:02]We're in a period of financial accountability. Debt matters, deficits matters, spending matters. So that's that's the regime that we're in. Debt doesn't matter until it does and then it matters a lot. And that's exactly the situation we find ourselves saying. Gold isn't some random commodity. It's the original store value asset. It's original unit of account. when you've got gold the top performing asset by such a wide magnitude across the board basically outperforming all other major asset classes on a reasonable look back window there's a lot of information that [clears throat] so our our argument on this from an asset allocation perspective is really simple this is the ideal time to own gold you know we reach into our asset allocation toolbox and we and we reach in this is the tool that we grab because it solves the problems that investors are faced today so from our perspective you want to own stocks you want to own bonds but you do not want to omit real assets in particularly do not want to omit gold. It's a very simple argument that leans heavily into diversification.

[00:38:59]I >> think we have maybe a bit of a an outdated slide, but um just talking about you know the percentage waiting that you're thinking when you talk to uh your strategic asset allocation uh framework. So I I'm assuming that this probably still holds in the context of a larger portfolio. um probably still hasn't changed much. Uh but just just to clarify, yeah, some somewhere around 5% of a core portfolio uh allocation.

[00:39:28]>> Yeah. So I let me frame it this way. So we run all in asset allocation portfolios. Those are model portfolios, ETF model portfolios, and that's our wealth builder suite of models. Now, our objective in that is to outperform the standard market portfolio, which is in this regards a 60/40 portfolio. So no one's telling us that we have to buy real assets and we have to buy gold. We buy them because we strongly believe that it will give us a more resilient base, more resilient framework to generate consistent meaningful performance. Now how how do we do that?

[00:40:02]So instead of running a 60/40, think about it really simply is we're running a 55 3510 and within the real assets we're up to around 50% of that into gold. Now that creates a more stable asset allocation framework to deal with the four major economic regimes which are high growth, low growth, high inflation, low inflation. So with that strong foundation, when you put your head on your pillow at night, you don't have to worry about what happens tomorrow because you have something to perform independent of the economic regime. That's the purpose. And if done well, if done as we described, the net result should be a net neutral from a risk portfolio perspective. So meaning that the volatility of your portfolio, if you take it from your equities, you take it from your fixed income and you reallocate it to a diversified mix of real assets with gold as your anchor, your portfolio volatility should be effectively the same. Not exactly, but effectively. And if that's the case, if you're risk neutral, but we're expanding your opportunity set, well, by definition, that would create a more optimal asset allocation mix. And that's our argument. And then if you layer on top of that, we're in a clearly undebatable structural bull market and real assets. You don't have to believe us. Just look at the prices which are without a doubt validating that. If that's the case, then you could expand that a little bit more and potentially go overweight, which is what we're doing. So to your point, this would be our neutral, but we're actually overweight these assets right now. So, you know, you could be anywhere from So this has us at 8% real assets. We're at 10% real assets and digital assets, which are included here as well. And I don't want to get too far into that, but if you're open to that idea as well, that adds additional diversification benefits, [clears throat] but that will bump up your volatility.

[00:41:40]>> I just want to uh add some questions here too from uh folks. It seems a lot of people are chiming in right at this particular time to ask about, you know, other metals as well, right? Silver, platinum, palladium, copper. Is that is that included in this mix as well?

[00:41:57]>> And how are you thinking about it? Y >> for us it is. So when so within our real asset solution which is racks R A X we own lots of gold. So so we own lots of gold but we also own silver. We al also other precious metals. We also own other industrial metals which are still still fairly highly correlated to individual to to gold. So for us it's the entire mix. Um we lead with diversification. Um you know silver in particular right gold leads silver amplifies. It has both the scarcity of gold and the industrial side of it as well. If you put those two things together, it's very very powerful. Um, we've been buying both silver and gold recently.

[00:42:38]>> Great. I guess um, uh, there was sorry, a couple more charts here. Did you want to talk about some of the positioning that you've had within one of the top holdings you own within Racks? Um, uh, that you also manage as well, uh, uh, Pit. I I know that you had talked about trying to monetize on some of this volatility that we're experiencing in gold and maybe a good time to rehash that uh as well for folks.

[00:43:04]>> Sure. So, what this is showing here really simply is our POS. So, you've got a couple things here. So, what you're seeing here on the dark blue, that's our metals waiting. So, that's not just gold, but that's gold plus our our precious metals, other industrial metals. So, that's our total metals waiting. And then what you're seeing here is the price of gold. that those red boxes represent when we were actively selling. And the and the green is when we're actively buying. The purpose of this chart is really really simple. And this goes back to what I said before. When is it a good time to own gold? All the time. When's it a good time to buy gold? Now, which is what we're doing. And then last year, gold was gold's was overbought short-term.

[00:43:40]And our position size just got too big.

[00:43:43]If if if we're big proponents of gold, but there is such thing as too much. And and and and we were broaching that levels. And we also had what we believed to be a short-term overbought condition.

[00:43:54]So what we were doing last year throughout the entire year basically which you could see with the with these red boxes was constantly recycling the gains, reducing the size of our active overweight in gold, still staying bullish, still still leading into the strength of gold bull market, but reducing it when you're getting those big surges to the upside. Recycling it.

[00:44:12]At the time last year, we were recycling into oil because that was the next up from from a diversification as well as from an oversold perspective. And now when you saw the huge run up in energy prices, now we've been going the other way and reducing our energy position, moving to the backward back months and also increasing our exposure to precious metals. So this this reinforces what I was saying before which is and I'll leave it with this is that if you understand the idea that we're in a structural gold bull market and you understand with that you're going to get a lot of volatility which is what you've experienced in other gold bull markets, then you could think about gold volatility as a feature and not a flaw. And then you could use it and with patience and volatility you can take advantage of the opportunity set. And right now the opportunity set in our opinion at least how we're behaving is increasing our exposure to gold.

[00:45:04]>> Guess uh give Axel Emma a chance to comment you know on their their respective views with uh respects to to gold price outlook. How are you guys thinking about it uh right now? Do you know you're not going to talk target prices, but just generally speaking, are are you still bullish? Do you have some near-term concerns about, you know, consolidation?

[00:45:27]How how are you how are you thinking about it?

[00:45:30]>> Sure. Well, I mentioned some of it earlier. Let me just add one perspective that we haven't touched on is we're talking on a day the Federal Reserve is meeting and uh I think it's noteworthy we haven't talked about the Fed. Um the Fed has become less relevant. We all glued in what's happening the straight of Hermuz. We're talking about fiscal sustainability. It's a good thing that the Federal Reserve has pushed back into the background. If you look at what's being priced into the market, we kind of have a flat rate outlook. We have a transition as a Fed share happening. One thing and of course there are very important nuances that are different between Powell and Kevin Walsh. But I would argue that last December Jeremy Powell started talking about productivity gain. Well, that is what Kevin Walsh has been talking about. And so, in many ways, Powell has been trying to present the Fed on a silver platter to his successor. And we sometimes that gets lost in all all the politics about the next Fed share. Now, that said, Kevin Walsh historically is considered a hawk despite what the political environment is suggesting right now.

[00:46:35]Indeed, he did say during his nomination hearings that um there is still a little bit too much inflation out there in the perception in the market and he has indicated in interviews that the Federal Reserve can control inflation. It's not due to a war, not due to this or that.

[00:46:53]Um how the Fed gets to its target might not be popular, but it is the Fed that's in charge of inflation. So, I just throw that out there as as far as context is concerned. Um to me um the the current headwinds have been driven by by the short-term shock. Um and two drivers for for price of gold to move higher is one is if that shock is perceived to be less on the one hand um and we saw that whenever gold has been trying to rally in recent weeks and the other one is to the extent that this were to become structural. the increased interference by policy makers that should ultimately be beneficial because that sort of interference and keep in mind we have a midterm election coming up in the US. Um neither of the big parties is is interested in fiscal sustainability at least not in practice maybe in words.

[00:47:41]And the time I've said I'll sell my gold is when fiscal sanity is returning to Congress.

[00:47:50]>> I like that.

[00:47:52]Um, Emma, any other comments you want to uh add as far as outlook is concerned?

[00:47:58]>> Sure. Um, I'm, you know, not surprisingly perhaps very bullish on the gold price for all the reasons we've discussed here. I think the market is market has been quite complacent right now. I don't know if all the risks when it comes to debt and inflation um and so on are and just geopolitical instability and what that means for the global economy are being priced in that's being ignored in the gold price right now. And I think you know initially we could kind of understand why everybody's too worried with what's going on. You know we're trying to put out a fire. we're not really worried about the protection for the next fire.

[00:48:41]But around this time, it it feels particularly complacent because now we we we're have time to digest what's going on. Uh whether you know the straight remains closed or it opens up tomorrow uh and the implication that has in inflation um to you know if the investors should wake up to a framework that should resemble what David said.

[00:49:04]you know, you put gold in there, you let it do its thing. At some point, I think it's going to be hard for investors to ignore that need to diversify and protect their portfolios. And when they do, we'll see gold pick up again in in my view. And I'm even more bullish, like I said, on the gold miners. So, um it's a pretty constructive um outlook in my view for both gold and gold miners here.

[00:49:30]>> Well, thank you guys. It's uh been a great discussion. We we covered quite a lot. I'm not sure that I can u digest all of it right here. I'll have to to take some of this away and uh come back and and and have another conversation about this with you guys. Of course, um you know, we talked about structural tailwinds. Um how it should continue to support gold um central bank demand, geopolitics, debasement. Uh we covered how gold continues to demonstrate resilience in crisis despite this volatility, reinforcing diversification benefits. We covered how gold miners should continue to offer leverage upside with these strong margins and then finally how how uh gold should continue to play a central role in portfolios and and maybe even some opportunity emerging uh amidst this volatility. So uh just wanted to allow ourselves a few minutes too to to rehash some of the fund offerings here uh at VanC for you um ways in which you can access gold and gold miners. If you're looking strictly for access to physical gold, uh, want that kind of pure expression of gold beta with the optionality of physical deliverability, um, you have the VANC gold ETF, ticker O, O N Z, uh, which gives you that at an extremely compelling 25 basis point expense ratio.

[00:50:44]Uh if you're looking for access to the miners um in an actively managed mutual fund rapper uh EMA's fund international investors gold fund um ticker INBX one of the longest operating funds in the gold mining space gives you that leverage to rising gold prices but also access to the full market cap spectrum.

[00:51:03]Finally, uh if you're looking for set it and forget it, uh exposure to real assets with a manager, you know, focused on a quantitative approach to real asset allocation, we have our VANC real assets uh ETF, ticker RA AX provides diversified exposure across growth oriented um income generating and capital preservation assets um including a sizable allocation of gold. So, I'll leave this up for just a brief second if any of you guys would like to comment on this. um Axel, Emma or David um or anything else before before we close out?

[00:51:38]>> Well, only that um people that look at ounce as we call it, if you have any questions, reach out to Venick. Um sometimes people have questions about the physical deliverability. Most people don't take deliverability. One nice feature about ess delivery, you're taking delivery of the gold that you own. It is not considered a sale for tax purposes. You retain the cost basis.

[00:52:02]You're literally just taking delivery of the gold and there is a conversion into coins that investors can do. Most people of course don't want to have the London bars that that the trust is holding. Um and you can convert you obviously have to pay the premium to convert into coins. So it's it's a unique feature in the industry and a side effect as I mentioned earlier. It tends to attract a more long-term investor rather than the trader. Um and uh that's good for everybody involved.

[00:52:28]Andrew, I'll highlight just the active part of uh the our fund, the one that I manage and just how important I think active management is for in the gold mining sector as well as the team behind it, a team of engineers and geologists that has a proven track record in being able to to manage um the different cycles.

[00:52:51]>> Yeah. So, so I I I'll I guess I'll wrap it up then and I'll say what I think about each of these because I've you knowve I've allocated each of these and what I would say generally speaking is that um you know we own ounce within within Rex um and we work closely with EM and her team. We also own GDX as well which is the gold equity piece of it. So from a do-it-yourself perspective we think that Alance and I and IVX are awesome solutions. The reason Rax is available and the reason why it was even born in the first place was because it helps people solve the problem of I don't want to build a real asset portfolio myself. I want to let somebody else do it. And that's why Rax was born.

[00:53:26]So it basically combines all the diversified real assets into one easy one-stop shop. And that's what Rex is.

[00:53:34]>> All right. Well, thank you guys um Axel, Emma, David for joining us. Um, if you'd like a copy of today's presentation, you guys can reach out to us at [email protected].

[00:53:45]Um, we'll have a replay of the webinar up available shortly on our website. Uh, we also encourage you to visit vanac.com host materials and content that's published by some of the panelists here.

[00:53:57]um including uh monthly commentaries um as well as uh uh other asset classes, papers covering other asset classes, blogs covering other asset classes um from gold to resource equities um and emerging markets. So uh check it out at vanac.com. Uh thanks again to everybody.

[00:54:14]Uh have a great day.