Is China’s Gold Buying 10x Higher Than Official Reports? World Gold Council Responds
Summary
Market Outlook: The podcast discusses the current economic environment characterized by stagflation, with high inflation and economic slowdown, impacting investment strategies.
Gold Investment: Gold is highlighted as a key diversification asset, with its price rising over 40% this year, reflecting investor sentiment towards economic uncertainty and dollar performance.
China's Gold Imports: New analysis suggests China's gold imports may be 10 times higher than officially reported, indicating a significant strategic accumulation of gold.
Central Bank Activity: Central banks, particularly in emerging markets, continue to be net buyers of gold, with a trend towards reducing reliance on the US dollar.
Western Investor Behavior: There is a resurgence of interest from Western investors in gold, with significant inflows into ETFs, reflecting concerns over risk assets and economic conditions.
Trade and Tariff Policies: The US administration's tariff policies are discussed, with gold being exempt from tariffs, signaling its strategic importance in the global financial system.
Global Gold Market Dynamics: The shift of physical gold from West to East is noted, with potential implications for the global gold market structure and price discovery mechanisms.
Key Takeaway: Investors are advised to monitor the purchasing power of the dollar and Federal Reserve actions, as these will significantly influence risk asset performance and gold investment strategies.
Transcript
[Music] Welcome back. I'm Jeremy Saver. Well, we're at a fascinating and volatile inflection point for the global economy. Spot gold is trading at record levels above $3,600 an ounce. And it's driven by two powerful conflicting forces. Now, this morning, we saw US jobless claims surge to a 4-year high, a clear sign of economic weakness and a problem in the labor market. Yet, at the same time, inflation is running at its hottest level this year, according to the latest CPI print. This dangerous mix of a slowing economy and rising cost is what economists call stagflation. And it's a scenario that prompted legendary hedge fund manager Ray Dallio to recently warn that the US markets are at risk of a quote heart attack. Now, while the West grapples with the crisis, a massive strategic pivot has been underway in the east. Now, our audience is familiar with the ddollarization trend, but that may be only the surface of the story. A new credible analysis of China's own customs data, for instance, suggests its true gold imports are potentially 10 times larger than what's officially reported from some of the Western nations. Now, this is masked by massive purchases routed through global hubs like London and Switzerland. And of course, we got to get the understanding and what's really happening behind the headlines. And to welcome back Joe Cavaton, of course, market strategist for North America, the World Gold Council. Nice to see you, Joe. Welcome back. Thanks for having me, Jeremy. It's always a pleasure. Now we we we'll get into India. We'll get into China. We got lots to get into today, but let's start with that warning from Ray Dalio. I mean, you know, you talked to a lot of people in this industry. Are you seeing signs of that potential market heart attack in the way that real money is moving right now? Well, I'll tell you, it's very easy for us to have conversations with clients and actually echo what Ray Dalio is saying. I'm not necessarily sure I'd call what's on the horizon a heart attack, but what we've been signaling and what we're always very concerned investors are definitely taking into consideration is the health of their investment portfolios. And we've been talking about the fact that risk assets have been frothy in terms of their levels and actually draw downs have been more prevalent than we've seen in the last 10 years. And ultimately what we're looking at are helping these investors find ways to diversify. The key diversification asset that you can look at at this point being gold actually helps you in all the scenarios even the one that we're talking about more prevalently now which is stagflation that you mentioned early in your introduction. When you start seeing these signs and weaknesses in the economy it's what can hold its value what can actually keep you in the purchasing power moment but also protect you in a downside market and that's what gold can do for you. Yeah Joe I mean you know the the market seems to be pricing in that stagflationary outcome. I mean this year gold is up past 40%. Co copper which is often called that you know Dr. copper for its ability to diagnose the economy's health. It's only up about 15%. I mean from the World Gold Council's perspective what does this massive divergence tell you? I mean is the market sending a clear signal that it's preparing for a period of economic stagnation combined with this persistent inflation? I think so. So I think the other thing that it's telling us is that copper is actually diagnosing certain markets but gold's actually giving you a clear picture on investment sentiment and actually questions around dollar strength, dollar weakness, dollar assets and dollar performance, dollar asset performance on a global scale. So this market for gold gives you a reflection of what people are thinking about not only on the US economy but on global economies and the impact of fiscal policy and political policy on what these economies can look like going forward. Trade relations are all up in the air still and we're still trying to make sense of exactly what everything from new trade agreements to tariffs to the question of tariffs to the negotiations around all these agreements. There's so much up in the air at this point. But what is definitely clear is risk assets have reached all-time levels in terms of their highs and that's frothy and that's risky right now. So when I mention draw downs and like gap downs in risk in the markets, people need to be well aware of that. It just takes one moment for something to actually trigger your portfolio and that's when you want to make sure that you've got what you need in terms of liquidity and access to an asset. Yeah. And you know, talk to me about who's buying, you know, who's doing the buying that's kind of driving this. I mean, your data tracks ETF flows as we know. Is this hot money from hedge funds piling into ETFs for a quick trade? Are you seeing signs of a significant move into, you know, physical bars and coins from family offices and institutions? So, the first thing I'd say before we even go specifically into the investor community is that the central banks still are active and buying, but the pace with which they're buying is slowing somewhat. But when you think about where the investment demand is coming, it's definitely this resurgence of the western investor. Now again, it's very prevalent and you can see that through transparent flows in the ETF market. The US has seen significant inflows over the last 8 weeks in terms of the actual AUM that's coming into the ETFs and actually Europe's picked up and actually on par with the Asian flows which actually led us in the beginning of the year. So you're looking at about10 to 12 billion in both Asia and the European Marina and more than double that in the US market in terms of overall flow. So over 40 billion coming into the ETF market. So it's actually very transparent there in the ETF space, but it's also speaking more volumes around the ETF market and the OTC market where we're actually getting a sense that Western investors are active there as well. That would be in the larger scale market, not necessarily bar and coin, which has actually still been a market that's been slow to develop. But we definitely see the western investor back to the table. And with the rate environment now, not only this rate cycle, but the next two rate cycles, it looks very much like the market's pricing in 100% certainty of a cut. Yeah. Yeah. I know they certainly are. And according to CME Fed Watch tool this morning, I mean, there's the chance of the 50 basis point cut, too. I mean, last time we spoke, we also discussed that weakness in consumer jewelry demand due to these high prices. I mean, gold is now obviously a couple of hundred dollars higher. I mean your own Q2 data showed that very trend is continuing especially in price sensitive markets like India. Is it fair to say that this rally is now completely disconnected from the real world consumer and is resting almost entirely on the shoulders of the financial investments in official sector buying. It is actually really resting on investment in that form of reserves with central banks and with investors for sure globally. So while the market for jewelry is often looked at as a China jewelry and India jewelry market, this global investment market is actually picking up a lot of momentum and steam and actually those markets are seeing growth in those areas. The investment side of in of of gold in in Asia and China and India. But your point around jewelry, you're right. Second quarter data, first half data continued for 2024 data, which is definitely a slowdown. I guess what we're looking to see if there's going to be a shift in is we're entering an auspicious period of time during um for India and actually what we're looking to see is if we can see those trends and those signals and we're hearing from the ground that there are some positive messaging coming out of the the consumer side of things but let's see if it's material if it sticks if it actually does turn the tables and come back to a growth kind of story. But at this point with high levels like this, our expectation on an annual basis is that jewelry will definitely be showing a negative trend in terms of the overall consumption. Okay. Interesting. Yeah. Okay. Well, let's pivot to the official sector. I mean, obviously our audience is very familiar with ddollarization narrative. We talk about it here a lot, but the strategy does seem to be accelerating. I mean there's credible reports based on US Treasury data that India's central bank was cutting its US Treasury holdings before the recent tariff disputes and is aggressively increased gold share of its reserve to over 13%. Now I know you can't speak for the RBI but does this pattern which predates the trade conflict align with the broader trend that the world gold council is kind of seeing of central banks making that proactive strategic policy to derisk from the US dollar? Yeah, I think there's two real key points to make in this whole discussion about central banks. First, it's a 15-year now trend that we've been seeing in terms of central banks being net buyers. The last three have gotten a significant amount of attention simply because of the levels of flows at a,000 tons, which is about a quarter of the tonnage, the tonnage going into the ecosystem every year. A thousand tons going into central banks around the globe, mainly the emerging market central banks. So, this trend continues. This trend has been like I said 15 years in the making and we expect it to continue for sure. The second key point that I'd make is in our annual survey work that we do with central banks. We've asked them about their reliance on the dollar, their reliance on the euro. And actually in both instances over the next 5 years, the 70 plus central banks that we talked to are talking about being less reliant on it. And I think that's the key. It's not dropping it, it's being less reliant on it. So expect the trend to continue. The key question is whether they're price sensitive or how long it takes for them to get used to these quick movements up in the gold price from 3,200 to 3600 and where are they when they are actually actively looking to add to their reserves. Yeah. I mean I love the the way that the world banks talk about it. You know they they use these words. I mean is the word diversification still the right word or based on the scale and persistence of the buying that you're seeing is is it now deliberate strategic ddollarization? I don't know if I'd say it's deliberate darization. What I would say is it's appropriate diversification. And actually, when you think about a vehicle that can be used or an asset that can be used not only internationally or globally, but domestically, I think we've got good examples for example Turkey where they needed to use their gold onshore in their economy and in their environment. And it actually is a good working case where they stabilize their own currency by selling gold into the economy buying back the lera. This is the kind of benefits you get not only globally and being less reliant on a foreign entity in terms foreign currencies but also preserving your asset purchasing power and actually being able to preserve your homegrown issues that you might need to tackle as a central bank. Interesting. Uh you and I just spoke briefly about this a couple of times in the past. I mean about China and their official numbers and you know we're seeing this new credible analysis of China's own customs data that it suggests it's true gold imports are potentially about 10 times larger than what it's officially reporting through direct trade from countries like Canada because it's being masked by these massive purchases through London and Switzerland. I I know you can only speak to the official data Joe and but I have to ask you I mean does the official narrative on central bank buying which the World Gold Council reports on tell the whole story? I mean, is it possible that a colossal kind of under the radar buying campaign is the real unreported story in this market? Well, I think the real story is that China is a very substantive, very developed and very transparent gold market. Now, the import data information very complicated, very challenging to unpack it all and put it in one or two places. But what I would say is that you've got transparent information about what the central bank is choosing to report on through the IMF channels. You've got that number on a on a regular basis being tred up when they feel it's appropriate. But you've also got physical markets that are established and well taken up by domestic investors. You know, we've also talked a little bit about the fact that the insurance sector, which is getting active, is given that pilot program to actually get involved in the gold market. So, it makes a lot of sense to me that the numbers that are getting imported into China are large and substantive because they're supporting a large and substantive market for gold. Not all of it ends up with the central bank. It might end up in sovereign entities or quasi sovereign entities, but also in the hands of corporations or or other entities that might just be looking to consume gold. So the numbers being large kind of are consistent with what we see in terms of the demand profiles of what we see in the market on shore in China. Yeah. I want to get some clarity on on the administration's tariff policy because the market seems to be you know getting conflicting signals here. I mean, on one hand, the Trump administration has brought tariffs on key allies like Switzerland, which has led to reports of the Swiss uh the Swiss proposing to to build their own gold refinery in the US just to ease the pressure. And then, of course, on the other hand, the administration just signed that executive order specifically exempting investment trade gold bars from import duties. I mean, how should investors interpret this? Is this a targeted policy to encourage physical boolean inflows into the US while penalizing other goods or is it a sign of this you know less predictable trade strategy? So the news about the Swiss looking at growing their refining activity in the US is actually very interesting but also very recent in terms of the the the reporting that we're getting on that backing up and looking at tariffs. The administration's been clear this is about relationships with different countries and trade with different countries. is about gold. So, from the outset, the administration's been clear that gold wasn't on its list of problems that they needed to deal with that maybe you could say critical minerals or assets that are on that list might be a problem. It might be something of special focus. Gold's actually been treated without tariff prior to the order that clarifi clarified everything. When the Customs Bureau issued their letter and ultimately put into the market the confusion as of the last month and a half to two months, we ended up needing further clarification which we got from the administration just recently saying gold's exempt. gold in the investment context, large bar format, 400 ounce, 100 ounce bars, uh the kilo bars and even the ounce bars are all clearly eligible to come in irrespective of origin without tariff and actually that's what's key particularly Switzerland and I think um it cleared that up. I think what is the noise that we're hearing now in terms of the market and the information we're seeing in the media now is that Switzerland is saying, "Hey, look, there may be some opportunity for us to make the investment and bring refining on shore." That's consistent with what the administration's looking to do, which is growing its own US capability of supporting critical minerals, but also other precious metals and all of these different activities. So, refining activities are on the list of critical activities that it would be supportive of. So it's it's it's actually really kind of exciting for us to hear that this kind of potential growth in the US is on the table. Yeah. Yeah. And I mean, you know, if we assume that this is a this is a deliberate probullion policy, I mean, does this signal that the administration views the accumulation of physical gold within US borders as a matter of national economic security? I mean, is this a quiet move in the global currency game where the US itself is signaling it wants more hard assets held domestically? I think the biggest thing that it signals two things. Number one, gold's not a problem when it comes to tariffs. And actually, the market's telling us that, the market's showing us that, and the administration's told us that, but separately, they understand the strategic significance and importance of it. So, they see it as a key element of investment. They see it as a key element of global currencies and trade. So, they're actually well receptive to the idea that gold becomes a part of the ecosystem, and they're not threatened by it. But I also think that more than anything else, what it does tell us is that this is a a discussion on tariffs that relates to country trade relationships as opposed to any specific asset. And that's where we've been from the outset with gold. And for us, it's a good signal because simply saying this in in terms of growth of the ecosystem around growing gold, but more importantly, um, production, I should say, and but also just putting it back in play to say, look, have at it. gold can be a part of your portfolio and be a part of your life. Yeah. I mean the the historic shift of physical gold from west to east has has I mean it must have real world consequences. We see that data in India. It's repatriating its gold again this week that we learned these reports about Switzerland how they've proposed this building of a gold refinery as a plan to kind of you know reduce these trade shares. Are we seeing the beginning of a of of a fragmentation of the global gold market? to move away from the single price set in London and New York towards a multi-polar system where physical concession and supply chains control everything. Well, we already have an existing environment where you could see premiums and discounts for those onshore markets for both India and China. Mhm. So what I would say is that we're not seeing any major shift away from London and its key role that it plays in terms of the OTC market particularly for the western markets and for central banks themselves. But you are seeing people who are looking to bring gold back to the home front and I think that the example that you cite with India is a good one. But what it does do is it removes it from some of the key elements that the capital markets in London have to offer. You can't lend that gold if it's sitting back home in India into the ecosystem and get yield on it when it needs to be, you know, when it's when the market's heating up and there's an interest in borrowing the market. I think we're still very comfortably looking at the London market that X AU price on the screen knowing it is the benchmark for us to look to and seeing markets like China and India having their own onshore markets where there's premiums and discounts and a lot of that's related to trade border activities. But most important than all, I I think we're actually looking at a very liquid market that continues to perform effectively even with some of this tariff noise in the US and premiums on the futures and the need for gold to move in. You still had a very orderly market. You still had liquidity being very high and people who want access to the market paying what they are comfortable paying to get access to the market. Yeah. And volume I mean 36 35 I mean the spot price continues to surprise everyone. I mean, I got to ask you, what does a world, you know, what is what is a world with a major gold refinery in the US alongside the traditional Swiss hubs and the Shanghai gold exchange actually look like for price discovery? Does it does it make the market more or less stable? Well, it would look to be a market that could be supporting a lot of what takes place with the comx market. That would be the first thing that could be a development for sure. Um, but you're also looking at just more capacity, more production, and actually it could be very exciting. Now, don't underestimate the fact that there are existing refiners that do exist in the US and and and gold does get refined in in parts of it. It's a question of whether or not it needs to be exclusively done outside or if there's capacity to grow and it would need to grow in a way where that actually could be absorbed by the demand. Now, the US could actually be even more of an exporter of gold if the demand on shore isn't great enough to meet it. But look, these are all hypotheticals right now. I think right now what it's signaling to us is that on the long list of business opportunities that the administration is taking for granted and actually highlighting as successes, it looks like they're going to probably add one for gold. Yeah. I mean when you put it all together I mean you know the west stagflation fears the undeniable strategic communic accumulation in the east I mean which your data confirms I mean the reshoring of this physical supply chain has role has gold really changed here in the role of the global financial system fundamentally I mean has it been redefined? Well, look, I think it's crystal clear for us that in the reserve context at central banks, it's definitely have a it has a new and clear definition of its role in those portfolios. I think the western markets finally waking up to the fact that it's time to take it seriously and not just look at it from a tactical perspective, but think about it strategically as a component of your portfolio. That's why we're hearing more people talk about alternatives that include gold than ever before. And so, I think that's where we're actually that's where we're getting a lot more a lot more attention these days. I know you're not going to give me a price outlook, my friend, before I let you go, but I but I am curious. You know, at these levels, $3,600 US on the spot side. I mean, is there ever a moment where you get worried about the price action? Maybe it's going a little too high, too fast. Is there any of that anxiety? So look, there's definitely some speculation. There's definitely some tactical trading that's actually pushing the price a little momentum in the price, but we have a hard time finding an environment where we're going to see people who are looking to unwind large holdings of gold across the board. And with jewelry slowing down like it is and investment continuing to be very prevalent in western and eastern markets and that moving back and forth between the two, we see a very good tailwind for gold at this pace. And right now uh some of those prices that you hear from the analysts in the market seem very achievable. Yeah. Yeah. Well said. And we've covered a lot of ground today, my friend, but as we wrap up, I mean, what is the single most important trend that you believe investors should be watching in this gold market over the next 6 months? I think they should be watching the the the purchasing power of the dollar. They should be watching what the Fed does in the next couple of weeks. I think that's going to be real telling in terms of how risk assets will perform and what people will be doing to preserve their purchasing power in the next 6 to 12 months. Yeah. Yeah. Fed meeting uh next week where markets calling for something here. Okay. An essential perspective. Joe Cavaton of the World Gold Council joining us today. Thanks for this, Joe. Appreciate it as always. Thank you. Thank you. All right. What's clear from our discussion is that the old rules for gold are being challenged. The market is caught between two powerful realities. An economic dilemma in the West, forcing investors to seek safety and a strategic long-term accumulation of gold in the east. Now, the question remains, what happens as these two forces continue to collide? Now, we want to know what you think is the primary driver. Let us know in the comments. I'm Jeremy Sanford. Thanks for tuning in. We'll see you next time. [Music] Heat. Heat. [Music]
Is China’s Gold Buying 10x Higher Than Official Reports? World Gold Council Responds
Summary
Transcript
[Music] Welcome back. I'm Jeremy Saver. Well, we're at a fascinating and volatile inflection point for the global economy. Spot gold is trading at record levels above $3,600 an ounce. And it's driven by two powerful conflicting forces. Now, this morning, we saw US jobless claims surge to a 4-year high, a clear sign of economic weakness and a problem in the labor market. Yet, at the same time, inflation is running at its hottest level this year, according to the latest CPI print. This dangerous mix of a slowing economy and rising cost is what economists call stagflation. And it's a scenario that prompted legendary hedge fund manager Ray Dallio to recently warn that the US markets are at risk of a quote heart attack. Now, while the West grapples with the crisis, a massive strategic pivot has been underway in the east. Now, our audience is familiar with the ddollarization trend, but that may be only the surface of the story. A new credible analysis of China's own customs data, for instance, suggests its true gold imports are potentially 10 times larger than what's officially reported from some of the Western nations. Now, this is masked by massive purchases routed through global hubs like London and Switzerland. And of course, we got to get the understanding and what's really happening behind the headlines. And to welcome back Joe Cavaton, of course, market strategist for North America, the World Gold Council. Nice to see you, Joe. Welcome back. Thanks for having me, Jeremy. It's always a pleasure. Now we we we'll get into India. We'll get into China. We got lots to get into today, but let's start with that warning from Ray Dalio. I mean, you know, you talked to a lot of people in this industry. Are you seeing signs of that potential market heart attack in the way that real money is moving right now? Well, I'll tell you, it's very easy for us to have conversations with clients and actually echo what Ray Dalio is saying. I'm not necessarily sure I'd call what's on the horizon a heart attack, but what we've been signaling and what we're always very concerned investors are definitely taking into consideration is the health of their investment portfolios. And we've been talking about the fact that risk assets have been frothy in terms of their levels and actually draw downs have been more prevalent than we've seen in the last 10 years. And ultimately what we're looking at are helping these investors find ways to diversify. The key diversification asset that you can look at at this point being gold actually helps you in all the scenarios even the one that we're talking about more prevalently now which is stagflation that you mentioned early in your introduction. When you start seeing these signs and weaknesses in the economy it's what can hold its value what can actually keep you in the purchasing power moment but also protect you in a downside market and that's what gold can do for you. Yeah Joe I mean you know the the market seems to be pricing in that stagflationary outcome. I mean this year gold is up past 40%. Co copper which is often called that you know Dr. copper for its ability to diagnose the economy's health. It's only up about 15%. I mean from the World Gold Council's perspective what does this massive divergence tell you? I mean is the market sending a clear signal that it's preparing for a period of economic stagnation combined with this persistent inflation? I think so. So I think the other thing that it's telling us is that copper is actually diagnosing certain markets but gold's actually giving you a clear picture on investment sentiment and actually questions around dollar strength, dollar weakness, dollar assets and dollar performance, dollar asset performance on a global scale. So this market for gold gives you a reflection of what people are thinking about not only on the US economy but on global economies and the impact of fiscal policy and political policy on what these economies can look like going forward. Trade relations are all up in the air still and we're still trying to make sense of exactly what everything from new trade agreements to tariffs to the question of tariffs to the negotiations around all these agreements. There's so much up in the air at this point. But what is definitely clear is risk assets have reached all-time levels in terms of their highs and that's frothy and that's risky right now. So when I mention draw downs and like gap downs in risk in the markets, people need to be well aware of that. It just takes one moment for something to actually trigger your portfolio and that's when you want to make sure that you've got what you need in terms of liquidity and access to an asset. Yeah. And you know, talk to me about who's buying, you know, who's doing the buying that's kind of driving this. I mean, your data tracks ETF flows as we know. Is this hot money from hedge funds piling into ETFs for a quick trade? Are you seeing signs of a significant move into, you know, physical bars and coins from family offices and institutions? So, the first thing I'd say before we even go specifically into the investor community is that the central banks still are active and buying, but the pace with which they're buying is slowing somewhat. But when you think about where the investment demand is coming, it's definitely this resurgence of the western investor. Now again, it's very prevalent and you can see that through transparent flows in the ETF market. The US has seen significant inflows over the last 8 weeks in terms of the actual AUM that's coming into the ETFs and actually Europe's picked up and actually on par with the Asian flows which actually led us in the beginning of the year. So you're looking at about10 to 12 billion in both Asia and the European Marina and more than double that in the US market in terms of overall flow. So over 40 billion coming into the ETF market. So it's actually very transparent there in the ETF space, but it's also speaking more volumes around the ETF market and the OTC market where we're actually getting a sense that Western investors are active there as well. That would be in the larger scale market, not necessarily bar and coin, which has actually still been a market that's been slow to develop. But we definitely see the western investor back to the table. And with the rate environment now, not only this rate cycle, but the next two rate cycles, it looks very much like the market's pricing in 100% certainty of a cut. Yeah. Yeah. I know they certainly are. And according to CME Fed Watch tool this morning, I mean, there's the chance of the 50 basis point cut, too. I mean, last time we spoke, we also discussed that weakness in consumer jewelry demand due to these high prices. I mean, gold is now obviously a couple of hundred dollars higher. I mean your own Q2 data showed that very trend is continuing especially in price sensitive markets like India. Is it fair to say that this rally is now completely disconnected from the real world consumer and is resting almost entirely on the shoulders of the financial investments in official sector buying. It is actually really resting on investment in that form of reserves with central banks and with investors for sure globally. So while the market for jewelry is often looked at as a China jewelry and India jewelry market, this global investment market is actually picking up a lot of momentum and steam and actually those markets are seeing growth in those areas. The investment side of in of of gold in in Asia and China and India. But your point around jewelry, you're right. Second quarter data, first half data continued for 2024 data, which is definitely a slowdown. I guess what we're looking to see if there's going to be a shift in is we're entering an auspicious period of time during um for India and actually what we're looking to see is if we can see those trends and those signals and we're hearing from the ground that there are some positive messaging coming out of the the consumer side of things but let's see if it's material if it sticks if it actually does turn the tables and come back to a growth kind of story. But at this point with high levels like this, our expectation on an annual basis is that jewelry will definitely be showing a negative trend in terms of the overall consumption. Okay. Interesting. Yeah. Okay. Well, let's pivot to the official sector. I mean, obviously our audience is very familiar with ddollarization narrative. We talk about it here a lot, but the strategy does seem to be accelerating. I mean there's credible reports based on US Treasury data that India's central bank was cutting its US Treasury holdings before the recent tariff disputes and is aggressively increased gold share of its reserve to over 13%. Now I know you can't speak for the RBI but does this pattern which predates the trade conflict align with the broader trend that the world gold council is kind of seeing of central banks making that proactive strategic policy to derisk from the US dollar? Yeah, I think there's two real key points to make in this whole discussion about central banks. First, it's a 15-year now trend that we've been seeing in terms of central banks being net buyers. The last three have gotten a significant amount of attention simply because of the levels of flows at a,000 tons, which is about a quarter of the tonnage, the tonnage going into the ecosystem every year. A thousand tons going into central banks around the globe, mainly the emerging market central banks. So, this trend continues. This trend has been like I said 15 years in the making and we expect it to continue for sure. The second key point that I'd make is in our annual survey work that we do with central banks. We've asked them about their reliance on the dollar, their reliance on the euro. And actually in both instances over the next 5 years, the 70 plus central banks that we talked to are talking about being less reliant on it. And I think that's the key. It's not dropping it, it's being less reliant on it. So expect the trend to continue. The key question is whether they're price sensitive or how long it takes for them to get used to these quick movements up in the gold price from 3,200 to 3600 and where are they when they are actually actively looking to add to their reserves. Yeah. I mean I love the the way that the world banks talk about it. You know they they use these words. I mean is the word diversification still the right word or based on the scale and persistence of the buying that you're seeing is is it now deliberate strategic ddollarization? I don't know if I'd say it's deliberate darization. What I would say is it's appropriate diversification. And actually, when you think about a vehicle that can be used or an asset that can be used not only internationally or globally, but domestically, I think we've got good examples for example Turkey where they needed to use their gold onshore in their economy and in their environment. And it actually is a good working case where they stabilize their own currency by selling gold into the economy buying back the lera. This is the kind of benefits you get not only globally and being less reliant on a foreign entity in terms foreign currencies but also preserving your asset purchasing power and actually being able to preserve your homegrown issues that you might need to tackle as a central bank. Interesting. Uh you and I just spoke briefly about this a couple of times in the past. I mean about China and their official numbers and you know we're seeing this new credible analysis of China's own customs data that it suggests it's true gold imports are potentially about 10 times larger than what it's officially reporting through direct trade from countries like Canada because it's being masked by these massive purchases through London and Switzerland. I I know you can only speak to the official data Joe and but I have to ask you I mean does the official narrative on central bank buying which the World Gold Council reports on tell the whole story? I mean, is it possible that a colossal kind of under the radar buying campaign is the real unreported story in this market? Well, I think the real story is that China is a very substantive, very developed and very transparent gold market. Now, the import data information very complicated, very challenging to unpack it all and put it in one or two places. But what I would say is that you've got transparent information about what the central bank is choosing to report on through the IMF channels. You've got that number on a on a regular basis being tred up when they feel it's appropriate. But you've also got physical markets that are established and well taken up by domestic investors. You know, we've also talked a little bit about the fact that the insurance sector, which is getting active, is given that pilot program to actually get involved in the gold market. So, it makes a lot of sense to me that the numbers that are getting imported into China are large and substantive because they're supporting a large and substantive market for gold. Not all of it ends up with the central bank. It might end up in sovereign entities or quasi sovereign entities, but also in the hands of corporations or or other entities that might just be looking to consume gold. So the numbers being large kind of are consistent with what we see in terms of the demand profiles of what we see in the market on shore in China. Yeah. I want to get some clarity on on the administration's tariff policy because the market seems to be you know getting conflicting signals here. I mean, on one hand, the Trump administration has brought tariffs on key allies like Switzerland, which has led to reports of the Swiss uh the Swiss proposing to to build their own gold refinery in the US just to ease the pressure. And then, of course, on the other hand, the administration just signed that executive order specifically exempting investment trade gold bars from import duties. I mean, how should investors interpret this? Is this a targeted policy to encourage physical boolean inflows into the US while penalizing other goods or is it a sign of this you know less predictable trade strategy? So the news about the Swiss looking at growing their refining activity in the US is actually very interesting but also very recent in terms of the the the reporting that we're getting on that backing up and looking at tariffs. The administration's been clear this is about relationships with different countries and trade with different countries. is about gold. So, from the outset, the administration's been clear that gold wasn't on its list of problems that they needed to deal with that maybe you could say critical minerals or assets that are on that list might be a problem. It might be something of special focus. Gold's actually been treated without tariff prior to the order that clarifi clarified everything. When the Customs Bureau issued their letter and ultimately put into the market the confusion as of the last month and a half to two months, we ended up needing further clarification which we got from the administration just recently saying gold's exempt. gold in the investment context, large bar format, 400 ounce, 100 ounce bars, uh the kilo bars and even the ounce bars are all clearly eligible to come in irrespective of origin without tariff and actually that's what's key particularly Switzerland and I think um it cleared that up. I think what is the noise that we're hearing now in terms of the market and the information we're seeing in the media now is that Switzerland is saying, "Hey, look, there may be some opportunity for us to make the investment and bring refining on shore." That's consistent with what the administration's looking to do, which is growing its own US capability of supporting critical minerals, but also other precious metals and all of these different activities. So, refining activities are on the list of critical activities that it would be supportive of. So it's it's it's actually really kind of exciting for us to hear that this kind of potential growth in the US is on the table. Yeah. Yeah. And I mean, you know, if we assume that this is a this is a deliberate probullion policy, I mean, does this signal that the administration views the accumulation of physical gold within US borders as a matter of national economic security? I mean, is this a quiet move in the global currency game where the US itself is signaling it wants more hard assets held domestically? I think the biggest thing that it signals two things. Number one, gold's not a problem when it comes to tariffs. And actually, the market's telling us that, the market's showing us that, and the administration's told us that, but separately, they understand the strategic significance and importance of it. So, they see it as a key element of investment. They see it as a key element of global currencies and trade. So, they're actually well receptive to the idea that gold becomes a part of the ecosystem, and they're not threatened by it. But I also think that more than anything else, what it does tell us is that this is a a discussion on tariffs that relates to country trade relationships as opposed to any specific asset. And that's where we've been from the outset with gold. And for us, it's a good signal because simply saying this in in terms of growth of the ecosystem around growing gold, but more importantly, um, production, I should say, and but also just putting it back in play to say, look, have at it. gold can be a part of your portfolio and be a part of your life. Yeah. I mean the the historic shift of physical gold from west to east has has I mean it must have real world consequences. We see that data in India. It's repatriating its gold again this week that we learned these reports about Switzerland how they've proposed this building of a gold refinery as a plan to kind of you know reduce these trade shares. Are we seeing the beginning of a of of a fragmentation of the global gold market? to move away from the single price set in London and New York towards a multi-polar system where physical concession and supply chains control everything. Well, we already have an existing environment where you could see premiums and discounts for those onshore markets for both India and China. Mhm. So what I would say is that we're not seeing any major shift away from London and its key role that it plays in terms of the OTC market particularly for the western markets and for central banks themselves. But you are seeing people who are looking to bring gold back to the home front and I think that the example that you cite with India is a good one. But what it does do is it removes it from some of the key elements that the capital markets in London have to offer. You can't lend that gold if it's sitting back home in India into the ecosystem and get yield on it when it needs to be, you know, when it's when the market's heating up and there's an interest in borrowing the market. I think we're still very comfortably looking at the London market that X AU price on the screen knowing it is the benchmark for us to look to and seeing markets like China and India having their own onshore markets where there's premiums and discounts and a lot of that's related to trade border activities. But most important than all, I I think we're actually looking at a very liquid market that continues to perform effectively even with some of this tariff noise in the US and premiums on the futures and the need for gold to move in. You still had a very orderly market. You still had liquidity being very high and people who want access to the market paying what they are comfortable paying to get access to the market. Yeah. And volume I mean 36 35 I mean the spot price continues to surprise everyone. I mean, I got to ask you, what does a world, you know, what is what is a world with a major gold refinery in the US alongside the traditional Swiss hubs and the Shanghai gold exchange actually look like for price discovery? Does it does it make the market more or less stable? Well, it would look to be a market that could be supporting a lot of what takes place with the comx market. That would be the first thing that could be a development for sure. Um, but you're also looking at just more capacity, more production, and actually it could be very exciting. Now, don't underestimate the fact that there are existing refiners that do exist in the US and and and gold does get refined in in parts of it. It's a question of whether or not it needs to be exclusively done outside or if there's capacity to grow and it would need to grow in a way where that actually could be absorbed by the demand. Now, the US could actually be even more of an exporter of gold if the demand on shore isn't great enough to meet it. But look, these are all hypotheticals right now. I think right now what it's signaling to us is that on the long list of business opportunities that the administration is taking for granted and actually highlighting as successes, it looks like they're going to probably add one for gold. Yeah. I mean when you put it all together I mean you know the west stagflation fears the undeniable strategic communic accumulation in the east I mean which your data confirms I mean the reshoring of this physical supply chain has role has gold really changed here in the role of the global financial system fundamentally I mean has it been redefined? Well, look, I think it's crystal clear for us that in the reserve context at central banks, it's definitely have a it has a new and clear definition of its role in those portfolios. I think the western markets finally waking up to the fact that it's time to take it seriously and not just look at it from a tactical perspective, but think about it strategically as a component of your portfolio. That's why we're hearing more people talk about alternatives that include gold than ever before. And so, I think that's where we're actually that's where we're getting a lot more a lot more attention these days. I know you're not going to give me a price outlook, my friend, before I let you go, but I but I am curious. You know, at these levels, $3,600 US on the spot side. I mean, is there ever a moment where you get worried about the price action? Maybe it's going a little too high, too fast. Is there any of that anxiety? So look, there's definitely some speculation. There's definitely some tactical trading that's actually pushing the price a little momentum in the price, but we have a hard time finding an environment where we're going to see people who are looking to unwind large holdings of gold across the board. And with jewelry slowing down like it is and investment continuing to be very prevalent in western and eastern markets and that moving back and forth between the two, we see a very good tailwind for gold at this pace. And right now uh some of those prices that you hear from the analysts in the market seem very achievable. Yeah. Yeah. Well said. And we've covered a lot of ground today, my friend, but as we wrap up, I mean, what is the single most important trend that you believe investors should be watching in this gold market over the next 6 months? I think they should be watching the the the purchasing power of the dollar. They should be watching what the Fed does in the next couple of weeks. I think that's going to be real telling in terms of how risk assets will perform and what people will be doing to preserve their purchasing power in the next 6 to 12 months. Yeah. Yeah. Fed meeting uh next week where markets calling for something here. Okay. An essential perspective. Joe Cavaton of the World Gold Council joining us today. Thanks for this, Joe. Appreciate it as always. Thank you. Thank you. All right. What's clear from our discussion is that the old rules for gold are being challenged. The market is caught between two powerful realities. An economic dilemma in the West, forcing investors to seek safety and a strategic long-term accumulation of gold in the east. Now, the question remains, what happens as these two forces continue to collide? Now, we want to know what you think is the primary driver. Let us know in the comments. I'm Jeremy Sanford. Thanks for tuning in. We'll see you next time. [Music] Heat. Heat. [Music]