Pierre Lassonde, Former Chair WGC 2005-2008
• Despite the record high gold price, interest in gold is not present in America but is in China and India.
• Central banks in China and India have bought 1,200 tons of gold last year, one third of all gold produced every year.
• The gold ETF has seen over 100 tons of gold disappear in the last 12 months, but the gold price is at a record high due to demand from China and India.
• The crypto market and the gold market are two separate markets, with different investors.
• The gold market currently presents an incredible opportunity for gold stocks.
• China and India’s understanding of gold is cultural, as gold has been a part of their economies for thousands of years.
• The gold market is disparate, and the Magnificent Six, the sixth largest tech company in the world, control most of the S&P 500’s performance.
Pierre Lassonde, co-founder of Franco-Nevada, discusses the current state of the gold market and why interest in gold is not present in America, but rather in China and India. Lassonde explains that the gold price is not reflecting the high demand due to central banks, particularly in China and India, buying up to one-third of all gold produced every year. The disparity between the gold ETF and the high gold price is an example of this. Lassonde believes that the gold market and the crypto market are two different markets, and while the crypto market is narrow and easily manipulated, the gold market is vast, with over $15 trillion worth of gold in existence. He also highlights the opportunity in gold stocks, as the value of reserves in the ground should be the same as the net asset value, yet gold stocks are not even trading at net asset value. Finally, Lassonde attributes the cultural aspect of gold being part of the Chinese and Indian economies for thousands of years as a reason for their continued interest in gold.
Bullet Summary:
– Interest in gold is not present in America, but rather in China and India due to the central banks buying up to one-third of all gold produced every year
– The gold market and the crypto market are two different markets, and while the crypto market is narrow and easily manipulated, the gold market is vast
– There is an opportunity in gold stocks, as the value of reserves in the ground should be the same as net asset value, yet gold stocks are not even trading at net asset value
– The cultural aspect of gold being part of the Chinese and Indian economies for thousands of years is a reason for their continued interest in gold
Summary #2
Summary
Gold prices are at a record high, driven by China and India’s central banks buying large amounts of gold. However, North American investors are not showing much interest in gold. The mining industry and gold stocks present a great opportunity due to the high contango and undervaluation. Canadian Pension funds should invest in the resource sector to support the mining industry and create jobs in Canada.
Highlights
0:00 💡 Gold prices are at a record high due to China and India’s central banks buying large amounts of gold.
3:15 💡 The gold market is not showing much interest in North America, but there is great potential in the mining industry and gold stocks.
5:45 💡 Canadian Pension funds should invest in the resource sector to support the mining industry and create jobs in Canada.
Key Insights
💡 The cultural significance of gold in China and India, as well as the promotion of gold by their governments as a diversification from the US dollar, contribute to their high demand for gold.
💡 The gold market and the crypto market are two different markets, with different investors and dynamics. The gold market offers a great opportunity due to undervalued gold stocks.
💡 The US dollar has peaked, and gold is seen as the anti-dollar. Gold serves as an insurance policy during times of high inflation, dislocation in the US, and trade deficits.
💡 Physical gold is being bought, but gold ETFs are not attracting much interest. The mining industry has implemented measures to catch up with the high gold price, such as dividend policies and cost reduction.
💡 Canadian Pension funds should prioritize investments in the resource sector to support the mining industry and prevent the loss of mining giants. Lack of investment in the mineral sector hinders the growth and development of the Canadian mining industry.
💡 The Canadian government should create policies that encourage Pension funds to invest in the resource sector and support Canadian entrepreneurs. The current allocation of Pension funds outside of Canada is detrimental to the local economy and job creation.
💡 The mining industry plays a crucial role in discovering new deposits, and without support from the mining giants and adequate capital, the junior mining sector is struggling, leading to a decline in exploration and potential discoveries.
h/t monicka