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Speaker 1: Gold is having its strongest years since the nineteen seventies.

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Speaker 1: What a statement. A up sixty percent so far? This

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Speaker 1: yere Now what's driven this incredible rise is the question,

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Speaker 1: and of course should you invest in it? Sam Dickey

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Speaker 1: from Fisher Funds is with us. Hallo, Sam, you know

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Speaker 1: what is the investment case here for gold?

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Speaker 2: It is on fire, up one hundred and fifteen percent

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Speaker 2: of the pass eighteen months or so. So there's three

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Speaker 2: primary investment cases. The first and foremost one is it's

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Speaker 2: a safe haven head, so it's got a near perfect

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Speaker 2: hit rate of not only holding its value, but often

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Speaker 2: appreciating value in stock market correction, so the eighty seven crash,

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Speaker 2: the GFC crash, the European financial crisis crash, and various

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Speaker 2: other corrections, gold would almost always go higher. And that's

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Speaker 2: because simplistically, it carries no credit risk, it can't default,

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Speaker 2: it holds its value and that becomes almost self fulfilling.

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Speaker 2: So investors pile into gold in times of uncertainty. So

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Speaker 2: that's the first one. The second one is it is

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Speaker 2: considered an inflation hedge or b its track record there

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Speaker 2: is a bit more patchy, so the assumption goes unlike

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Speaker 2: fiat currency, central banks can't print any more gold, and

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Speaker 2: while inflation erodes the purchasing power of fiat currency, gold

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Speaker 2: is a stable store of value and the third one

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Speaker 2: is a little bit more bearish. So central banks and

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Speaker 2: investors buy gold to diversify away from the US dollar,

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Speaker 2: And twenty twenty five has been one of the weakest

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Speaker 2: years for the US dollar in the past couple of decades.

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Speaker 1: Now, how does the current period then compare to the

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Speaker 1: nineteen seventies.

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Speaker 2: Yeah, it cast in the mindbacker but definitely similar some similarity.

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Speaker 2: So like now, investors had lost a bit of confidence

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Speaker 2: in the US dollar. Back then it was because of

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Speaker 2: persistently high inflation. They couldn't get a handle on inflation,

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Speaker 2: unsustainable US government spending, and then of course throwing an

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Speaker 2: oil shock there for good measure too. Today inflation is

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Speaker 2: a little bit stubbornly high, but it's not anything like

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Speaker 2: that was the problem back then. Today, they've lost a

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Speaker 2: bit of confidence in the US dollar because of high

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Speaker 2: US government debt levels, which you and I have spoken

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Speaker 2: about before, and volatile policy decision making. So investors are

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Speaker 2: piling into gold is a more stable alternative. And back then,

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Speaker 2: if you think about the circuit breaker. It was Paul

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Speaker 2: Volka hiking interest rates to twenty percent to break the

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Speaker 2: back of inflation, which restored confidence in the US dollar

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Speaker 2: and pop the gold bubble. The circuit breaker today could

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Speaker 2: be a bit of Austeria in the US, some really

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Speaker 2: sensible and prudent management of the government balance sheet. But

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Speaker 2: the problem is, and again you and I have talked

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Speaker 2: about this, no democratically elected government wants to be the

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Speaker 2: one to remove the punch bowl from the party. They

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Speaker 2: don't want to crack down on government spending.

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Speaker 1: Yeah, so what does all of this mean for investors?

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Speaker 2: Then? I think it can be a really helpful hedge

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Speaker 2: in a diversified portfolio, particularly as a safe haven hedge.

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Speaker 2: But this time it's had a really powerful run already.

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Speaker 2: And the tricky thing is it's really hard to value,

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Speaker 2: so it doesn't yield anything. It doesn't produce any income,

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Speaker 2: unlike a share or bond or property. And as Warren

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Speaker 2: Buffett said, the best gold gets dug out of the round.

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Speaker 2: We melt it down, dig another hole, bury it again,

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Speaker 2: and pay someone to stand around guarding it. So it

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Speaker 2: has no utility in anyone watching from Mars would be

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Speaker 2: scratching their head.

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Speaker 1: Yeah, all right, thank you very much, Sam appreciate it.

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Speaker 1: Sam Dickie Official funds. It's twenty one away from seven.

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