Cavatoni: The Real Shock Wasn't the Correction, It Was the 'Unsettling' 30% Melt-Up in January
Summary
Policy Shift: Project Vault signals a government-backed focus on critical minerals and supply stability, reframing strategic assets as national security priorities.
Gold Dynamics: Persistent central bank buying (including unreported OTC accumulation) underpins prices despite sharp, margin-driven volatility and data-reporting lags.
Silver’s Role: Silver outperformed on its critical-mineral designation; industrial demand dominates, with smaller market size driving higher volatility and limited reserve-asset appeal.
Sector Rotation: Capital is rotating out of Information Technology—with software pressured by AI-related deflation fears—into hard assets for diversification and risk hedging.
ETF Flows: Gold ETF interest is strong globally, notably in Asia, with North America choppy but resilient and Europe lagging due to competing equity strength and currency factors.
Custody & Liquidity: Discussion highlights repatriation and new hubs (e.g., Hong Kong/Singapore), while London remains the most flexible for lending and financing against gold holdings.
Outlook & Risks: Expect a methodical gold uptrend with violent pullbacks; watch Fed policy, debt levels, tariffs, and geopolitics as key drivers of demand and volatility.
Transcript
Welcome back. I'm Jeremy Saffron. The market is repricing risk today based on a collision between government policy and asset reality. Now, for years, that all-weather trade was technology. And today, it looks like the trade is starting to unwind a little bit. The NASDAQ has broken its 100 day moving average. The software sector is being hit on fears that AI is no longer just a growth engine, but a deflationary disruption. Now, capital is rotating out of the paper economy and into the managed economy. In Washington, meanwhile, the administration has confirmed Project Vault. Now, it's an initiative to coordinate pricing mechanisms and support supply stability for critical minerals. Vice President JD Vance was explicit about this shift earlier today at the State Department. Take a listen. For those of you who join, we offer you a necessary foundation for private financing and secure access to the critical mineral supplies your nation would require in an emergency or some other contingency. By regulating imports to preserve free and fair competition within the preferential trading zone, we will elevate our nation's miners and refiners, our investors and our producers alike. We are all on the same team and we need to create the economic incentives that reward people for investing and building in our countries. Membership will be vital for developing economies sinking to expand mining capacity. And it'll be just as important for the advanced economies that rely on these materials to sustain their advanced industries to sustain their growth and security. >> All right, you heard it there. secure access emergency contingency. That's a government telling you that the just in time global economy is broken and they're building a floor under strategic assets. Now, the market's response was immediate. Gold tested $5,92 earlier today before rejecting that level and trading around 4,900 and silver was testing about $85 as we tape this. It was outperforming gold on a percentage basis earlier, likely reacting to the critical mineral designation in Project Vault. All right, lots to get to as always. is joining us to bridge the gap between the official data and the market reality of course is Joe Cabaton from the World Gold Council. Joining us from DC, thanks for making the time today. >> Great to be here Jeremy and loads to talk about. >> Yeah, loads to talk about. Uh obviously you're in the capital and uh a lot of discussions today on strategic minerals, but I want to start first on you know these discrepancies kind of in the numbers. I mean we'll show that reported net buying from the world gold council. We reported about 326 tons of net central bank buying for 2025 via the IMF and public sources. It's a little bit of a decrease from 2024. However, you know, prices have surged sharply over the past year. The official numbers kind of suggest a slowdown, but the price tells us that demand is aggressive. So, Joe, I mean, does this reported figure still reflect the true pace of official buying or is it the accumulation kind of migrating to the OTC market where it avoids immediate visibility of the IMF? I think there's a there's a lot to talk to in terms of what the numbers are telling us for for 2025, the full year for 2025 and the sentiment that we're seeing and hearing around central banks adding to their reserve portfolios. And the first thing I'd say is the three years leading up to 2025, prior to 2025, were exceptional in terms of either record setting or near record setting with a,000 tons or more. Now coming in at about 680 for the year reported through the IMF channels and with the work that we do with Metals Focus to tally up the unreported numbers is still a very very strong year. >> But I think it's it's it's signaling one thing that we've talked about previously and that is when prices get a little bit higher, central bank allocation percentages may bump up against their policy limits and they also may slow down the pace with which they accumulate. And I think actually what we've been seeing over the last 24- 48 hours as the market has corrected away from some of these very high record levels for gold that there's support and I think that it's fair to say that part of that support can be coming in from sovereign entities. >> Okay, that's an interesting one and I want to break it open. I do want to ask you though before just kind of spec specific on the mechanism for our audience. I mean when gold moves through OTC channels, how does that flow ultimately get captured and and with what lag? I mean what should investors understand about the plumbing of central bank reporting that explains why the price moves months before the data does? >> Sure. So they only have to report at a central bank according to the scheduling of the IMF and their actual capability of getting that done. So it's not something that's instantaneous and daily like you would see in either the open positions and futures or what you would see in terms of a daily tally with exchangeraded funds. What you're dealing with is a an organization that has a framework with which they accumulate gold and they buy it in the physical sense often and most likely but sometimes they talk about using instruments like ETFs >> and then that settles into their accounts. So they're owning it immediately and they're actually reporting that when they are scheduled and required to do so through the IMF. Again, when it's an official reserve amount and when the central bank is actually going about doing the reporting is subject to a lot of different administrative tasks. That could be a week, a month, or maybe even a couple of months. And they might even aggregate and report at one go simply because of administrative reasons. And there might even be other entities that are owning gold under a sovereign umbrella, maybe a sovereign or a quasi sovereign entity that might not constitute a central bank reserve, but might be in the interest of the sovereign to own. So that could be something that you have in another country, which has no requirement under IMF conditions to report. So yeah, there's there's just a very important thing to see there and that is that when you look at an alternative to dollar and dollar reserves, you're seeing gold become continually important in that in that universe. Yeah. Yeah. And uh the White House definitely speaking more and more about it. Uh you know, Joe, I mean, I got to ask you. We saw those sharp air pockets. I mean, gold even today tagged 5,92 and then dropped nearly 200 an hours. We saw that higher volatility during last week's leverage flush. To what extent is, you know, this driven by market structure, futures leverage, margin adjustments, or even force selling rather than a change in, you know, underlying physical demand? I guess the question is is you know a bull market is it being periodically reset by paper positioning? >> Well, let me tell you this. We have had an exceptional run in the price of gold. >> Yeah. >> Actually, the air pocket that actually caught our attention more than the correction back was the pocket up. A 30% January, 12 record setting prices in a month of 20 trading days. That's fast. That's fast for a real asset like gold. that's fast for a commodity of any kind. And that tells us a couple of things are playing out. And I actually think they're very interesting because it's bringing a lot of capital markets participants to the game. That means more volatility. That means speculation, momentum, and price moves that might be a little unsettling for those who have been in the gold market for 20 years. But going up 30% coming back off that level, that's not a problem for us because fundamentally the structural shift that we're seeing and the interest in adding gold in reserves, adding gold in investments that stays intact and that's why you're seeing these floors and then you see these floors support the buying behavior that brings us back close to a 5,000 level today. These are actually good and exciting things. Now, margin changes, more volatility. Again, get through the short-term nature of all of that and understand the structural like changes that are taking place with gold and you can see why it should fit when you look at your portfolio in there as a ballast for the concerns that you might have against risk assets that are a lot more volatile. And remember, volatility is up for gold, volatility is up for silver, volatility is up for all assets at this point. There was a little talk about obviously you know comx margins the paper driven wash out is what people were calling and I guess we can ask it to you this way Joe I mean do do central banks tend to step in as buyers of that liquidity or or are they largely kind of price agnostic and operating on their own schedule as you mentioned before because even some of these numbers I mean there's been incredible buying >> there has been incredible buying there may be central banks that are stepping in we'll see when they do their reporting there's also other opportunities for other investors to step in you know we've been getting a lot of this question of have I missed the run? Am I jumping in FOMO? And actually with this correction, you know, it's been pretty comforting to tell someone, hey, look, here's a price correction up, you know, down from from where we were at record setting levels to a level that's a lot more palatable and in line with what we would be expecting to see over the course of the year, looking at how we've laid out the outlook for 2026. So, you can definitely see not only the potential for central banks, but investors stepping in. And again, this is actually what's really exciting is it's global. You know, the ETF closes in January are looking super strong in Asia. That's a really cool signal right now. And it's looking great in the US, a little bit less in Europe, but you can see why. Euro strong. There's still a very big equity trade taking place in the European community. So, it's really kind of a good capital market. It's a good healthy market for gold. And I think it actually tells us this is a robust market that's actually having a lot of exciting things take place and we're in the mix even though we're not a critical mineral and we might not be in the in the vaulting exercise that the US is talking about. We're on their mind. >> You know that's actually great. Let's let's talk a little bit about that and pivot to the policy news because project vault obviously focuses on critical minerals. We know silver's on that list and it and it was kind of outperforming today. I mean, Joe, silver's holding up a little bit better than gold, but with the government validating the strategic asset thesis for industrial metals, does that change the institutional conversations? I mean, are investors starting to view silver as a national security asset rather than just a high beta trade? >> Well, by its very nature, by being on that critical minerals list, you fall into the categories that that has been designed to capture. >> Whether it's strategic importance, military importance, it's critical and silver's in that bucket. And actually that's really interesting. Now we get pulled up with that momentum when we talk about gold. But we also could be pulled down around that. And actually what's very important to understand is that the industrial use of silver still is the dominant use case for silver and that's why it is a critical mineral. And I think that momentum and trading around the asset are also very important to keep an eye on. but they're a smaller component and they have a smaller market they're dealing in which means that the price moves and the volatility will be a little bit more extreme. So I think if you're looking at a monetary metal and wanting to understand how you can look at broad economic conditions, broad conditions for financial concerns that you want to hed hedge against, you move to the gold market. And if you're looking at the critical minerals trade, even if you're looking at it from an economic development perspective, silver is a good asset to take a look at understanding size and scope of the market and volatility that comes with it. >> Yeah. Yeah. And I guess, you know, we could be realistic here. I mean, do central banks actually care about silver at all? I mean you just talked about that kind of industrial phenomenon purely almost an investor type driven market. I mean when we look at reserve sheets silver is basically a rounding error compared to gold. Any talk about that? >> No not not particularly. I think you got to look at the global liquidity that is a critical element of qualifying as a reserve asset which gold does. Uh I don't believe silver does qualify as a reserve asset in a formal capacity. But I think more important is there's a key element of liquidity. the size of the market and that's where I think gold outstandingly performs against other critical minerals or other precious metals in particular silver. It's just so much bigger and so much more liquid for a central bank to know that they're not going to have that material an impact on the price when they need to sell. >> Yeah. So I mean that that price in sensitivity too. I mean let's go back to the central bank behavior in your report specifically the buyers who are reporting because I was surprised. I mean bought 10 tons in December alone. they they bought that metal nearrecord highs. I mean that's the definition of price ins insensitivity as you know. Uh talk to me just a little bit more about this. You touched on it before, but I mean are central banks becoming structurally price insensitive? Are are they treating gold less like a trade that they need to, you know, time and more like this hard asset requirement that they need to fill regardless of the cost? I think the central bank decision to allocate to gold starts basically around a policy position and understanding percentages as a component of a total portfolio. I I I it's hard for me to say exactly how they go about deploying because there are so many that are active and they might have different behavioral patterns and they might have different timings of the day that they're actually active and engaging. What I think is important is that they are very well educated on the gold market and they understand that when markets are very frothy or running pretty aggressively. They are looking at those numbers and they're making sensitive decisions with the engagement of central uh bullion banks and other trading companies to find the right time to pick and choose to step in. Um this is an emerging market story that continues to take place over 2025 and into 2026. I just think that it's going to be a continual discussion that we're having over the course of this year whether we hit that thousand ton level or not. I you know I think what people need to understand is that it's a very viable choice for a reserve asset versus dollar only or dollar-based assets and and I'm not suggesting dollars and dollar based assets are going away but what I'm saying is that this is fitting you know 25% roughly according to vis of the total reserves held by central banks worldwide. It's a big number and it's actually an increasingly important asset. And again, when numbers come down and prices come down, I think that it's probably safe to say there's some people who are smart enough to know this is when I want to put in position a little bit more of my gold allocation. >> Now, this is where I'm going to dig in and I know you probably can't, you know, speak to too much of it, but I got to ask you because there's another layer to this reserve requirement mindset. I mean as as the reserve strategy hardens are are you hearing more you know discussion about custody and repatriation and where gold is you know physically stored even if gold itself remains a free floating market asset >> I think there are some very interesting things that are taking place now there's stories and and and and and discussions around some of the developed markets bringing their gold out of the US or or looking to monetize it in the case of Italy I think those are interesting stories but what I think is actually more interesting is when you look at how a central bank is accumulating its gold. India reported that it brought some of its gold home and I think also if you look at like Hong Kong for example stepping in and simply saying we want to be like Singapore a hub for gold and storing of precious metals in particular gold and I think that those are the actual things to keep close watch on which is can you see another major hub for a central bank to actually bring its gold and then make use of it like they would if they leave it in London. If you leave your gold in London with the Bank of England, you give yourself the most flexibility around exercising value of your gold in the capital markets. You can use the aggressive lending programs that take place. You can actually find the ways to get financed on it and and it's actually the most flexible of arenas. So, I say keep a close watch on arenas and parts of the co globe that are actually suggesting they might be looking to attract those types of assets versus just the repatriation hub. Yeah, India has been just a wild driver of this run too. I mean what they're doing over there. Uh I got to ask you a little bit. We'll zoom out kind of to the macro driver today. I mean let's this rotation out of tech and you and I have talked about this a little bit before. The NASDAQ is breaking down a little bit in that all-weather trade seems to be cracking and it's I guess it's more about inflows. Joe I mean um is gold finally getting back those western flows because of this tech trade. Have you seen anything about allocators selling software to buy hard assets? >> The the the conversation we're having is about I'm appreciating in the context of a of an allocator the risk that's in front of me and I'm appreciating the challenges of running these risk assets and looking to find the right kind of asset to give the hedge to it. And I think that's where gold stepping in and filling the need in the real asset buckets in the offset right kind of diversification buckets. So that's where the conversation's taking place. Whether there's a decision to sell or buy less or more tech stocks, we're looking to say where is your portfolio looking and where do you think your risk appetite is going to be over the next 12 months with disruptive US policies with you know movements in the market and I've said before that the volatility levels are up across the board with risk assets and I think that that's where gold's taking hold that people are understanding I need a diversifier that works for us. Now, taking out the month of January where you had a 30% run and then a pullback. We had that in November of last year as well. So, step back and look at the long-term trajectory of gold and it's going to look very good when you start thinking about an allocation in your portfolio. >> Yeah. And you know, you you brought this up briefly, ETF flows just before. I just want to verify because are you seeing this kind of show up in the ETF tape yet or is it still futures in Asia doing the heavy lifting? I mean, until we see the Western ETFs turn green, isn't this rotation just a headline? No, I think I think you're seeing it in the North American market. It's been a little bit choppy in terms of the flows over the last 48 hours. Yeah. But you're definitely seeing a very significant interest. It was a big driver in the Q3 Q4 uh 2025 numbers. And I think it it's actually we're seeing what we expect to see a little bit of choppiness in terms of flows in and flows out as some people have been using ETFs for hedging purposes. But the Asian story is there. And remember, this is not about whether it's right or wrong for ETFs. It's about Asia strong. Europe's interesting in kind of lagging the two regions uh but North America is actually choppy and strong. So I think it's a key area to keep an eye. It's the first and easiest signal for you to see around where investor sentiment is going to give you a flavor and particularly if you dig below the surface and look more specifically at the lowerc cost products which are a bit more sticky. Those tend to be buy and hold type products versus some of the products that are more liquid that could be used for speculation trading as well as buying and holding. So, got to keep a close watch and unpack it. Check out our monthly report on ETF flows. It's all there for everyone to take a look at. And we unpack it for you every month in terms of giving you a flavor of what's taking place. >> Yeah. Yeah. Hey, final question, Joe. I mean, I'm I'm looking at the ticker now. 4,900 on the spot side, US at the time of taping this, and it seems like we're consolidating around these levels. We we had that little brief rejection, but one more on positioning. I mean, do do you think we're entering a phase where gold can trend higher but with much more violent margin-driven pullbacks along the way? >> Yes. I think the answer to that question has to be qualified though. We need to get good data out of the US, good data from other countries around economic conditions. Governments partial shutdowns don't help us. Slow information coming through. All these factors weigh into people's ability to understand economic conditions which are going to drive the behavior of the Fed. We haven't really talked about the Fed appointment. But this is actually interesting to keep a close watch on. This is someone who is you know disposed predisposed to be looking at lower rates. War is a very interesting pick. But uh you know you've got a number of other items that are still on the horizon that we need to talk about and take take close watch of. You've got what we've got announced today around critical minerals moving commodities and also all all different other types of assets. But you've got tariffs decisions still on the way which could have an impact on commodities, critical minerals, not gold because we're not subject to it. we might just need to keep an eye on how it pulls the whole category down. And then you've got a year full of uh other exciting no news headlines that could play out. A meeting between President Trump and and and Premier Xi taking place potentially in April. And you've got midterms on the way. So, you got a lot of fun choppy things that could come up and cause volatility in the markets and uncertainty. And I think that you're going to see gold move a little bit more methodically. Not that 30% we saw in January, but methodically up over the course of the year. >> Yeah. What do we got here? We're at 21. Okay. You brought up Worsh. I got I got I got to ask you. I mean, you know, the big question for gold investors investors is obviously credibility. Do central banks view that potential Worshled Fed is is is restoring monetary discipline or does it not change the structural bid for gold given the debt load and the policy direction that we're seeing out of Washington? >> I think it bodess well for gold because I think his position will likely be one of managing as best he can rates more than anything. And I think ultimately this will be a good environment for gold. Full stop. All right, you heard it here. Uh, we appreciate you making the time. You gave me a little bit of an overview for 2026, but I know you're in DC and I just want to ask you, I mean, looking forward, what matters the most for the, you know, the next leg high, or is it is it is it Fed policy? Is it more geopolitics, ETF flows, or is it just central bank accumulation? >> I I like to remind people that all the noise of geopolitical flare-ups, conflicts coming and going, those are all important things to keep intact. Keep close watch on debt levels. Keep a close watch on how the US economy and other major economies look to land in 2026 in terms of their outlook. Is there strength? Is there strength that leads investors to risk assets and less hedging or are we looking at a risk environment that needs to be carefully protected? And I think that if you get that risk environment where there's maybe more appetite but also looking for hedging, you're going to have a great condition for gold and it's going to continue to look favorable. And I think that right now with all these support levels we keep reaching, >> it feels like lots of people might be settling in and understanding that I'm going to hold on to this gold position even though I see risk either ebbing and flowing favorably or dis, you know, unfavorably for us. Right. >> Right. Right. Yeah. I got to say on a personal level, it feels like your your shoulders are down. Everybody I've been talking to in this industry feels like that correction was healthy and that breather kind of gave him a little bit more of a relax moment, you know. >> Yeah. I I look again up 30 corrected back the the the shocker was the up 30 more than anything, you know. We've given back everything. Somebody mentioned to me the other day, we've given back everything that we saw in terms of an appreciation since Davos, which was slightly disruptive in terms of the announcements coming out of it. >> Amen. All right, Joe Kat Cavaton obviously uh joining us from the World Gold Council in DC. Appreciate your time as always, Joe, and look forward to talking to you again soon. >> Thank you. >> Thanks, Joe. All right, the official data says buying is slowing, but use Beckistan data says price doesn't matter. And then we got project vault policy saying hard assets are now national security. The market is moving fast from a trade based purely on growth expectation to one based on strategic asset security. When central banks buy at record levels and governments begin treating minerals as a national priority assets, investors should pay attention to what is being repriced. I'm Jeremy Saffron. This is Kitco News. Thanks for subscribing. Heat. Heat.
Cavatoni: The Real Shock Wasn't the Correction, It Was the 'Unsettling' 30% Melt-Up in January
Summary
Transcript
Welcome back. I'm Jeremy Saffron. The market is repricing risk today based on a collision between government policy and asset reality. Now, for years, that all-weather trade was technology. And today, it looks like the trade is starting to unwind a little bit. The NASDAQ has broken its 100 day moving average. The software sector is being hit on fears that AI is no longer just a growth engine, but a deflationary disruption. Now, capital is rotating out of the paper economy and into the managed economy. In Washington, meanwhile, the administration has confirmed Project Vault. Now, it's an initiative to coordinate pricing mechanisms and support supply stability for critical minerals. Vice President JD Vance was explicit about this shift earlier today at the State Department. Take a listen. For those of you who join, we offer you a necessary foundation for private financing and secure access to the critical mineral supplies your nation would require in an emergency or some other contingency. By regulating imports to preserve free and fair competition within the preferential trading zone, we will elevate our nation's miners and refiners, our investors and our producers alike. We are all on the same team and we need to create the economic incentives that reward people for investing and building in our countries. Membership will be vital for developing economies sinking to expand mining capacity. And it'll be just as important for the advanced economies that rely on these materials to sustain their advanced industries to sustain their growth and security. >> All right, you heard it there. secure access emergency contingency. That's a government telling you that the just in time global economy is broken and they're building a floor under strategic assets. Now, the market's response was immediate. Gold tested $5,92 earlier today before rejecting that level and trading around 4,900 and silver was testing about $85 as we tape this. It was outperforming gold on a percentage basis earlier, likely reacting to the critical mineral designation in Project Vault. All right, lots to get to as always. is joining us to bridge the gap between the official data and the market reality of course is Joe Cabaton from the World Gold Council. Joining us from DC, thanks for making the time today. >> Great to be here Jeremy and loads to talk about. >> Yeah, loads to talk about. Uh obviously you're in the capital and uh a lot of discussions today on strategic minerals, but I want to start first on you know these discrepancies kind of in the numbers. I mean we'll show that reported net buying from the world gold council. We reported about 326 tons of net central bank buying for 2025 via the IMF and public sources. It's a little bit of a decrease from 2024. However, you know, prices have surged sharply over the past year. The official numbers kind of suggest a slowdown, but the price tells us that demand is aggressive. So, Joe, I mean, does this reported figure still reflect the true pace of official buying or is it the accumulation kind of migrating to the OTC market where it avoids immediate visibility of the IMF? I think there's a there's a lot to talk to in terms of what the numbers are telling us for for 2025, the full year for 2025 and the sentiment that we're seeing and hearing around central banks adding to their reserve portfolios. And the first thing I'd say is the three years leading up to 2025, prior to 2025, were exceptional in terms of either record setting or near record setting with a,000 tons or more. Now coming in at about 680 for the year reported through the IMF channels and with the work that we do with Metals Focus to tally up the unreported numbers is still a very very strong year. >> But I think it's it's it's signaling one thing that we've talked about previously and that is when prices get a little bit higher, central bank allocation percentages may bump up against their policy limits and they also may slow down the pace with which they accumulate. And I think actually what we've been seeing over the last 24- 48 hours as the market has corrected away from some of these very high record levels for gold that there's support and I think that it's fair to say that part of that support can be coming in from sovereign entities. >> Okay, that's an interesting one and I want to break it open. I do want to ask you though before just kind of spec specific on the mechanism for our audience. I mean when gold moves through OTC channels, how does that flow ultimately get captured and and with what lag? I mean what should investors understand about the plumbing of central bank reporting that explains why the price moves months before the data does? >> Sure. So they only have to report at a central bank according to the scheduling of the IMF and their actual capability of getting that done. So it's not something that's instantaneous and daily like you would see in either the open positions and futures or what you would see in terms of a daily tally with exchangeraded funds. What you're dealing with is a an organization that has a framework with which they accumulate gold and they buy it in the physical sense often and most likely but sometimes they talk about using instruments like ETFs >> and then that settles into their accounts. So they're owning it immediately and they're actually reporting that when they are scheduled and required to do so through the IMF. Again, when it's an official reserve amount and when the central bank is actually going about doing the reporting is subject to a lot of different administrative tasks. That could be a week, a month, or maybe even a couple of months. And they might even aggregate and report at one go simply because of administrative reasons. And there might even be other entities that are owning gold under a sovereign umbrella, maybe a sovereign or a quasi sovereign entity that might not constitute a central bank reserve, but might be in the interest of the sovereign to own. So that could be something that you have in another country, which has no requirement under IMF conditions to report. So yeah, there's there's just a very important thing to see there and that is that when you look at an alternative to dollar and dollar reserves, you're seeing gold become continually important in that in that universe. Yeah. Yeah. And uh the White House definitely speaking more and more about it. Uh you know, Joe, I mean, I got to ask you. We saw those sharp air pockets. I mean, gold even today tagged 5,92 and then dropped nearly 200 an hours. We saw that higher volatility during last week's leverage flush. To what extent is, you know, this driven by market structure, futures leverage, margin adjustments, or even force selling rather than a change in, you know, underlying physical demand? I guess the question is is you know a bull market is it being periodically reset by paper positioning? >> Well, let me tell you this. We have had an exceptional run in the price of gold. >> Yeah. >> Actually, the air pocket that actually caught our attention more than the correction back was the pocket up. A 30% January, 12 record setting prices in a month of 20 trading days. That's fast. That's fast for a real asset like gold. that's fast for a commodity of any kind. And that tells us a couple of things are playing out. And I actually think they're very interesting because it's bringing a lot of capital markets participants to the game. That means more volatility. That means speculation, momentum, and price moves that might be a little unsettling for those who have been in the gold market for 20 years. But going up 30% coming back off that level, that's not a problem for us because fundamentally the structural shift that we're seeing and the interest in adding gold in reserves, adding gold in investments that stays intact and that's why you're seeing these floors and then you see these floors support the buying behavior that brings us back close to a 5,000 level today. These are actually good and exciting things. Now, margin changes, more volatility. Again, get through the short-term nature of all of that and understand the structural like changes that are taking place with gold and you can see why it should fit when you look at your portfolio in there as a ballast for the concerns that you might have against risk assets that are a lot more volatile. And remember, volatility is up for gold, volatility is up for silver, volatility is up for all assets at this point. There was a little talk about obviously you know comx margins the paper driven wash out is what people were calling and I guess we can ask it to you this way Joe I mean do do central banks tend to step in as buyers of that liquidity or or are they largely kind of price agnostic and operating on their own schedule as you mentioned before because even some of these numbers I mean there's been incredible buying >> there has been incredible buying there may be central banks that are stepping in we'll see when they do their reporting there's also other opportunities for other investors to step in you know we've been getting a lot of this question of have I missed the run? Am I jumping in FOMO? And actually with this correction, you know, it's been pretty comforting to tell someone, hey, look, here's a price correction up, you know, down from from where we were at record setting levels to a level that's a lot more palatable and in line with what we would be expecting to see over the course of the year, looking at how we've laid out the outlook for 2026. So, you can definitely see not only the potential for central banks, but investors stepping in. And again, this is actually what's really exciting is it's global. You know, the ETF closes in January are looking super strong in Asia. That's a really cool signal right now. And it's looking great in the US, a little bit less in Europe, but you can see why. Euro strong. There's still a very big equity trade taking place in the European community. So, it's really kind of a good capital market. It's a good healthy market for gold. And I think it actually tells us this is a robust market that's actually having a lot of exciting things take place and we're in the mix even though we're not a critical mineral and we might not be in the in the vaulting exercise that the US is talking about. We're on their mind. >> You know that's actually great. Let's let's talk a little bit about that and pivot to the policy news because project vault obviously focuses on critical minerals. We know silver's on that list and it and it was kind of outperforming today. I mean, Joe, silver's holding up a little bit better than gold, but with the government validating the strategic asset thesis for industrial metals, does that change the institutional conversations? I mean, are investors starting to view silver as a national security asset rather than just a high beta trade? >> Well, by its very nature, by being on that critical minerals list, you fall into the categories that that has been designed to capture. >> Whether it's strategic importance, military importance, it's critical and silver's in that bucket. And actually that's really interesting. Now we get pulled up with that momentum when we talk about gold. But we also could be pulled down around that. And actually what's very important to understand is that the industrial use of silver still is the dominant use case for silver and that's why it is a critical mineral. And I think that momentum and trading around the asset are also very important to keep an eye on. but they're a smaller component and they have a smaller market they're dealing in which means that the price moves and the volatility will be a little bit more extreme. So I think if you're looking at a monetary metal and wanting to understand how you can look at broad economic conditions, broad conditions for financial concerns that you want to hed hedge against, you move to the gold market. And if you're looking at the critical minerals trade, even if you're looking at it from an economic development perspective, silver is a good asset to take a look at understanding size and scope of the market and volatility that comes with it. >> Yeah. Yeah. And I guess, you know, we could be realistic here. I mean, do central banks actually care about silver at all? I mean you just talked about that kind of industrial phenomenon purely almost an investor type driven market. I mean when we look at reserve sheets silver is basically a rounding error compared to gold. Any talk about that? >> No not not particularly. I think you got to look at the global liquidity that is a critical element of qualifying as a reserve asset which gold does. Uh I don't believe silver does qualify as a reserve asset in a formal capacity. But I think more important is there's a key element of liquidity. the size of the market and that's where I think gold outstandingly performs against other critical minerals or other precious metals in particular silver. It's just so much bigger and so much more liquid for a central bank to know that they're not going to have that material an impact on the price when they need to sell. >> Yeah. So I mean that that price in sensitivity too. I mean let's go back to the central bank behavior in your report specifically the buyers who are reporting because I was surprised. I mean bought 10 tons in December alone. they they bought that metal nearrecord highs. I mean that's the definition of price ins insensitivity as you know. Uh talk to me just a little bit more about this. You touched on it before, but I mean are central banks becoming structurally price insensitive? Are are they treating gold less like a trade that they need to, you know, time and more like this hard asset requirement that they need to fill regardless of the cost? I think the central bank decision to allocate to gold starts basically around a policy position and understanding percentages as a component of a total portfolio. I I I it's hard for me to say exactly how they go about deploying because there are so many that are active and they might have different behavioral patterns and they might have different timings of the day that they're actually active and engaging. What I think is important is that they are very well educated on the gold market and they understand that when markets are very frothy or running pretty aggressively. They are looking at those numbers and they're making sensitive decisions with the engagement of central uh bullion banks and other trading companies to find the right time to pick and choose to step in. Um this is an emerging market story that continues to take place over 2025 and into 2026. I just think that it's going to be a continual discussion that we're having over the course of this year whether we hit that thousand ton level or not. I you know I think what people need to understand is that it's a very viable choice for a reserve asset versus dollar only or dollar-based assets and and I'm not suggesting dollars and dollar based assets are going away but what I'm saying is that this is fitting you know 25% roughly according to vis of the total reserves held by central banks worldwide. It's a big number and it's actually an increasingly important asset. And again, when numbers come down and prices come down, I think that it's probably safe to say there's some people who are smart enough to know this is when I want to put in position a little bit more of my gold allocation. >> Now, this is where I'm going to dig in and I know you probably can't, you know, speak to too much of it, but I got to ask you because there's another layer to this reserve requirement mindset. I mean as as the reserve strategy hardens are are you hearing more you know discussion about custody and repatriation and where gold is you know physically stored even if gold itself remains a free floating market asset >> I think there are some very interesting things that are taking place now there's stories and and and and and discussions around some of the developed markets bringing their gold out of the US or or looking to monetize it in the case of Italy I think those are interesting stories but what I think is actually more interesting is when you look at how a central bank is accumulating its gold. India reported that it brought some of its gold home and I think also if you look at like Hong Kong for example stepping in and simply saying we want to be like Singapore a hub for gold and storing of precious metals in particular gold and I think that those are the actual things to keep close watch on which is can you see another major hub for a central bank to actually bring its gold and then make use of it like they would if they leave it in London. If you leave your gold in London with the Bank of England, you give yourself the most flexibility around exercising value of your gold in the capital markets. You can use the aggressive lending programs that take place. You can actually find the ways to get financed on it and and it's actually the most flexible of arenas. So, I say keep a close watch on arenas and parts of the co globe that are actually suggesting they might be looking to attract those types of assets versus just the repatriation hub. Yeah, India has been just a wild driver of this run too. I mean what they're doing over there. Uh I got to ask you a little bit. We'll zoom out kind of to the macro driver today. I mean let's this rotation out of tech and you and I have talked about this a little bit before. The NASDAQ is breaking down a little bit in that all-weather trade seems to be cracking and it's I guess it's more about inflows. Joe I mean um is gold finally getting back those western flows because of this tech trade. Have you seen anything about allocators selling software to buy hard assets? >> The the the conversation we're having is about I'm appreciating in the context of a of an allocator the risk that's in front of me and I'm appreciating the challenges of running these risk assets and looking to find the right kind of asset to give the hedge to it. And I think that's where gold stepping in and filling the need in the real asset buckets in the offset right kind of diversification buckets. So that's where the conversation's taking place. Whether there's a decision to sell or buy less or more tech stocks, we're looking to say where is your portfolio looking and where do you think your risk appetite is going to be over the next 12 months with disruptive US policies with you know movements in the market and I've said before that the volatility levels are up across the board with risk assets and I think that that's where gold's taking hold that people are understanding I need a diversifier that works for us. Now, taking out the month of January where you had a 30% run and then a pullback. We had that in November of last year as well. So, step back and look at the long-term trajectory of gold and it's going to look very good when you start thinking about an allocation in your portfolio. >> Yeah. And you know, you you brought this up briefly, ETF flows just before. I just want to verify because are you seeing this kind of show up in the ETF tape yet or is it still futures in Asia doing the heavy lifting? I mean, until we see the Western ETFs turn green, isn't this rotation just a headline? No, I think I think you're seeing it in the North American market. It's been a little bit choppy in terms of the flows over the last 48 hours. Yeah. But you're definitely seeing a very significant interest. It was a big driver in the Q3 Q4 uh 2025 numbers. And I think it it's actually we're seeing what we expect to see a little bit of choppiness in terms of flows in and flows out as some people have been using ETFs for hedging purposes. But the Asian story is there. And remember, this is not about whether it's right or wrong for ETFs. It's about Asia strong. Europe's interesting in kind of lagging the two regions uh but North America is actually choppy and strong. So I think it's a key area to keep an eye. It's the first and easiest signal for you to see around where investor sentiment is going to give you a flavor and particularly if you dig below the surface and look more specifically at the lowerc cost products which are a bit more sticky. Those tend to be buy and hold type products versus some of the products that are more liquid that could be used for speculation trading as well as buying and holding. So, got to keep a close watch and unpack it. Check out our monthly report on ETF flows. It's all there for everyone to take a look at. And we unpack it for you every month in terms of giving you a flavor of what's taking place. >> Yeah. Yeah. Hey, final question, Joe. I mean, I'm I'm looking at the ticker now. 4,900 on the spot side, US at the time of taping this, and it seems like we're consolidating around these levels. We we had that little brief rejection, but one more on positioning. I mean, do do you think we're entering a phase where gold can trend higher but with much more violent margin-driven pullbacks along the way? >> Yes. I think the answer to that question has to be qualified though. We need to get good data out of the US, good data from other countries around economic conditions. Governments partial shutdowns don't help us. Slow information coming through. All these factors weigh into people's ability to understand economic conditions which are going to drive the behavior of the Fed. We haven't really talked about the Fed appointment. But this is actually interesting to keep a close watch on. This is someone who is you know disposed predisposed to be looking at lower rates. War is a very interesting pick. But uh you know you've got a number of other items that are still on the horizon that we need to talk about and take take close watch of. You've got what we've got announced today around critical minerals moving commodities and also all all different other types of assets. But you've got tariffs decisions still on the way which could have an impact on commodities, critical minerals, not gold because we're not subject to it. we might just need to keep an eye on how it pulls the whole category down. And then you've got a year full of uh other exciting no news headlines that could play out. A meeting between President Trump and and and Premier Xi taking place potentially in April. And you've got midterms on the way. So, you got a lot of fun choppy things that could come up and cause volatility in the markets and uncertainty. And I think that you're going to see gold move a little bit more methodically. Not that 30% we saw in January, but methodically up over the course of the year. >> Yeah. What do we got here? We're at 21. Okay. You brought up Worsh. I got I got I got to ask you. I mean, you know, the big question for gold investors investors is obviously credibility. Do central banks view that potential Worshled Fed is is is restoring monetary discipline or does it not change the structural bid for gold given the debt load and the policy direction that we're seeing out of Washington? >> I think it bodess well for gold because I think his position will likely be one of managing as best he can rates more than anything. And I think ultimately this will be a good environment for gold. Full stop. All right, you heard it here. Uh, we appreciate you making the time. You gave me a little bit of an overview for 2026, but I know you're in DC and I just want to ask you, I mean, looking forward, what matters the most for the, you know, the next leg high, or is it is it is it Fed policy? Is it more geopolitics, ETF flows, or is it just central bank accumulation? >> I I like to remind people that all the noise of geopolitical flare-ups, conflicts coming and going, those are all important things to keep intact. Keep close watch on debt levels. Keep a close watch on how the US economy and other major economies look to land in 2026 in terms of their outlook. Is there strength? Is there strength that leads investors to risk assets and less hedging or are we looking at a risk environment that needs to be carefully protected? And I think that if you get that risk environment where there's maybe more appetite but also looking for hedging, you're going to have a great condition for gold and it's going to continue to look favorable. And I think that right now with all these support levels we keep reaching, >> it feels like lots of people might be settling in and understanding that I'm going to hold on to this gold position even though I see risk either ebbing and flowing favorably or dis, you know, unfavorably for us. Right. >> Right. Right. Yeah. I got to say on a personal level, it feels like your your shoulders are down. Everybody I've been talking to in this industry feels like that correction was healthy and that breather kind of gave him a little bit more of a relax moment, you know. >> Yeah. I I look again up 30 corrected back the the the shocker was the up 30 more than anything, you know. We've given back everything. Somebody mentioned to me the other day, we've given back everything that we saw in terms of an appreciation since Davos, which was slightly disruptive in terms of the announcements coming out of it. >> Amen. All right, Joe Kat Cavaton obviously uh joining us from the World Gold Council in DC. Appreciate your time as always, Joe, and look forward to talking to you again soon. >> Thank you. >> Thanks, Joe. All right, the official data says buying is slowing, but use Beckistan data says price doesn't matter. And then we got project vault policy saying hard assets are now national security. The market is moving fast from a trade based purely on growth expectation to one based on strategic asset security. When central banks buy at record levels and governments begin treating minerals as a national priority assets, investors should pay attention to what is being repriced. I'm Jeremy Saffron. This is Kitco News. Thanks for subscribing. Heat. Heat.