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Speaker 1: Welcome to Fear and Greed Q and A where we

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Speaker 1: ask and answer questions about business, investing, economics, politics, and

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Speaker 1: plenty more. I'm Natalie MacDonald and today why is gold

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Speaker 1: still considered a safe haven asset? The price of the

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Speaker 1: precious metal sailed past the three thousand, five hundred US

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Speaker 1: dollar mark yesterday, hitting a new high. But what's driving

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Speaker 1: it and why in twenty twenty five are we still

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Speaker 1: going back to gold whenever investors get nervous. Evan Lucas

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Speaker 1: is an economic futurist and the host of Money News

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Speaker 1: on nine Radio. Evan, Welcome to Fear and Greed Q

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Speaker 1: and A.

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Speaker 2: Thanks having Natalie, How are you good?

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Speaker 1: Thank you. Let's jump in to this current surge that

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Speaker 1: we're seeing in prices, what's particularly driving it and how

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Speaker 1: much of it can be linked back to US President

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Speaker 1: Donald Trump and his social media posting about prices being

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Speaker 1: way down in the US with virtually no inflation.

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Speaker 2: Yeah, gold at the moment is fascinating because this has

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Speaker 2: actually been a trend that's probably actually been going since COVID,

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Speaker 2: so it really did take off during the COVID period.

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Speaker 2: It hasn't relaxed. But you're right to highlight the president's election,

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Speaker 2: not just his election in November, but actually also when

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Speaker 2: he nominated. So if you have a look at when

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Speaker 2: the real risk off trading gold took off, it was

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Speaker 2: when he was nominated as the Republican candidate. In fact,

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Speaker 2: he didn't even have to nominate. He was just the

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Speaker 2: only candidate that really went through with any form of

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Speaker 2: pressure to the upside. And then what you then also

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Speaker 2: can start to see, you can see flashpoints with geopolitics.

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Speaker 2: So if you look at when the Russian Ukrainian conflict

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Speaker 2: kicked off, there's another kick there, the conflict in the

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Speaker 2: Middle East. But it is around geopolitics, and as you

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Speaker 2: said at the start, it's also about the relationship between

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Speaker 2: risk off but also US inflation, US rates and the

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Speaker 2: impact that the President is currently having on his very

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Speaker 2: very unconventional attack on all institutions, but particularly things like

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Speaker 2: the FED, which leads to that real rates thing. If

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Speaker 2: you have a look at what's been going on in

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Speaker 2: particularly the US ten year Treasury bill, it's pretty introvertedly linked.

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Speaker 2: So as there's any sort of risk in the US

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Speaker 2: market and particularly around the US bond market, gold's gone.

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Speaker 2: Or if there's also any form of signs that you

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Speaker 2: alluded to his truth social or with any form of

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Speaker 2: social media posting he does around attacking the FED and

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Speaker 2: therefore undermining the strength of the US treasury market, the

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Speaker 2: strength of the US sovereign bond market, that too has

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Speaker 2: been a trigger. So they're the traditional things, and that's

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Speaker 2: where you can really see gold just kept going and

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Speaker 2: going and going. It's now filtering into other precious metals

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Speaker 2: silver is it a fourteen YEARI He is probably the

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Speaker 2: easiest beacon to highlight, but he's not the only one.

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Speaker 1: Well. With that in mind, Evan, talk to me about India,

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Speaker 1: because there is a dtionill narrative happening here when it

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Speaker 1: comes to obviously US trade tensions, India now getting closer

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Speaker 1: to China. Walk me through this sort of chapter in

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Speaker 1: that story.

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Speaker 2: And also their close relationship with Russia needs to be

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Speaker 2: highlighted very clearly as well, because neuendumodity has been pushed

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Speaker 2: into a corner and he's probably been pushed into the

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Speaker 2: arms of shijiping. And also Vladimir Putsin, India on physical

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Speaker 2: gold overtook China as the highest consumer of physical gold.

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Speaker 2: Interestingly enough, the physical consumption has actually hit a five

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Speaker 2: year low because of the price, so jewelers etc. Aren't

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Speaker 2: picking it up. But India, as a nation on a

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Speaker 2: paper trade are buying it in droves and it is

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Speaker 2: clearly linked to the threats that came with tarists the

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Speaker 2: reciprocal tariffs back on April second for US here in Australia.

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Speaker 2: Then it got even higher as he started to single

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Speaker 2: India out. Then it got even higher again once the

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Speaker 2: new fifty percent tariff has now been put on India.

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Speaker 2: It's a real burden for them because again they normally

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Speaker 2: try and go after safe haven assets. India has a

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Speaker 2: very strong track record with gold and now at the

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Speaker 2: moment their physical ability is limited by the cost of

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Speaker 2: the fact that it is hovering around thirty five hundred

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Speaker 2: US announced. But paper trade wise, in terms of that protectionism,

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Speaker 2: it gives you that underwriting of the fact that the

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Speaker 2: rupees under under pressure, the outlook for the Indian economy

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Speaker 2: is under pressure because of the tariffs, explains exactly why

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Speaker 2: Indians are paper trading into gold.

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Speaker 1: It amazes me though that the year is twenty twenty

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Speaker 1: five and still gold is that historic safe haven asset.

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Speaker 1: When we think about the huge variety of other asset

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Speaker 1: classes where investors have to put their money and run to.

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Speaker 2: Why so, I think the question also begs another question,

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Speaker 2: where else would they go? So historically they would have

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Speaker 2: gone to the US bond market. Right. So, the completely

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Speaker 2: risk free rate, as written in textbooks is the US

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Speaker 2: tenure treasury, and that is now being undermined completely by

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Speaker 2: the US President. I mean that is very clear that

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Speaker 2: his policies, his unconventional style. As I said at the start,

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Speaker 2: his attack on institutions that govern where US treasuries go

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Speaker 2: has probably therefore meant well, if I can't get risk

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Speaker 2: free rate in the US tenure, where else am I

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Speaker 2: going to go? Crypto? Well, that's not risk free in

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Speaker 2: any shape or form. Even though some will argue that's

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Speaker 2: a new hedge for inflation, that's clearly not the case.

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Speaker 2: Equities are not that either. US property is not the answer.

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Speaker 2: We've seen that with a subprime mortgage, and that sort

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Speaker 2: of history is still in people's most minds. Gold is

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Speaker 2: still it. I mean gold has been it for not

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Speaker 2: just for twenty twenty five, but it's been there for millennia.

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Speaker 2: Like you are talking, going all the way back to

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Speaker 2: the ancient Egyptians. They were attracted to gold. It's always

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Speaker 2: had that underwritten material. Again, though, the Warren Buffett quote

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Speaker 2: keeps coming back in my head is that if he

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Speaker 2: had a choice between every single ounce of gold squashed

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Speaker 2: into a cube or all the arable land in the US,

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Speaker 2: what would you choose? Well, he would always choose the

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Speaker 2: arableland because it's a returning asset. It's a nert metal

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Speaker 2: with no underlying capital return to you unless you sell it.

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Speaker 2: So I understand the question. That question still absolutely stands

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Speaker 2: up in twenty twenty five. But the catch is where

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Speaker 2: else do you go for risk free considering the risk

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Speaker 2: free rate is currently under attacked from a geopolitical issue.

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Speaker 1: Yeah, that's a really fair point given that the trigger

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Speaker 1: here then has been US President Donald Trump's commentary how

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Speaker 1: high can it go? When the trigger is words? Ultimately,

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Speaker 1: and we know that the US President has a few

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Speaker 1: of those, like is there.

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Speaker 2: And two thumbs to tell everybody about it.

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Speaker 1: So, but is there a ceiling on it? Or can

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Speaker 1: it just keep going? Or does you scarcity and demand

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Speaker 1: and physical demand? Where's the inflection points?

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Speaker 2: Yeah, so that's probably the best part of the answer,

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Speaker 2: is that the upper limit A good question and I

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Speaker 2: get and you know, you look, if you want to

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Speaker 2: go into the technicals, some people will tell you a

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Speaker 2: certain level. I don't think you need to do that.

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Speaker 2: I think it's very clear that at the moment it

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Speaker 2: is around risk off, it is around having that protectionism idea.

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Speaker 2: It has gone into euphoric buying. I'm not going to

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Speaker 2: deny that either, Like that needs to be very clearly

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Speaker 2: pointed out. It he's gone into euphoric buying again around

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Speaker 2: particularly the things that we saw over the last seventy

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Speaker 2: two hours in the state, which was Friday when we

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Speaker 2: are talking about this, which was the twenty ninth of August.

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Speaker 2: You know, personal consumption expenditure, which is the core metric

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Speaker 2: for the FED two point nine percent, highest it's been

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Speaker 2: since February. Trump put out a tweet over the weekend

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Speaker 2: so that he was taking trillions of dollars in tariffs

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Speaker 2: and that inflation was non existent. And then you've had

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Speaker 2: the issue around what we spoke about before with India,

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Speaker 2: but India, China and Russia CosIng up and where they

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Speaker 2: sit as well. I think that sort of pushed it

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Speaker 2: to where we are and why we're talking about it today.

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Speaker 2: But overall, the momentum is still to the upside, and

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Speaker 2: we've got four more years, well three and a half

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Speaker 2: more years technically of a Trump presidency. He's technically threatened

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Speaker 2: to run for a third term, even though the constitution

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Speaker 2: implicitly says that he can't. The risk is always there

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Speaker 2: and it's underlying, and I think if you look at

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Speaker 2: what has gone in you know, China is something we've

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Speaker 2: sort of skirted around. The renaissance in the post COVID

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Speaker 2: world of China hasn't happened. So you know, investors that

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Speaker 2: used to would go down the property arm in China.

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Speaker 2: It's probably also heading towards gold, and you can see

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Speaker 2: that too. Chinese yuan's under pressure. The overall Chinese economy

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Speaker 2: isn't moving at the same level as it was. Therefore,

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Speaker 2: you know, you get out of risk and you get

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Speaker 2: into risk golf, and the Chinese are the second largest

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Speaker 2: consumer of physical gold and paper trading gold. So I

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Speaker 2: would say, where does it go? But at the moment,

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Speaker 2: the upside is clearly still there and it probably will

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Speaker 2: be for a little while. But you know, I was

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Speaker 2: hesitant to say that it was going to get to

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Speaker 2: sort of two thousand US dollars and ounce, you know,

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Speaker 2: twenty four months ago and now we're talking about thirty

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Speaker 2: five hundred US announce four grand isn't off the cards

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Speaker 2: by Christmas?

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Speaker 1: What a Christmas present that would be. Evan, thank you

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Speaker 1: so much for talking to Fear and Greed. Appreciate it.

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Speaker 2: Thank you so much, Sanlie.

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Speaker 1: That was Evan Lucas, economic futurist and the host of

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Speaker 1: Money News on nine Radio. If you've got something you'd

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Speaker 1: like to know, then send through your question on LinkedIn, Instagram, Facebook,

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Speaker 1: or at Fearangreed dot com dot au. I'm Natalie McDonald

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Speaker 1: and this is Fear and Greed Q and a