October 17, 2025 • 16 mins
Gold always shines during uncertain times, but escalating tensions between the US and China and signals from the Federal Reserve that the US could see at least one more rate cut this year have propelled gold – and silver – to record highs.
This week on the Big Take, Bloomberg precious metals reporter Jack Ryan and host Sarah Holder talk about what’s pushing up gold’s value — and what history can teach us about how this gold rush could end.
Read more: Gold (XAUUSD) Trades Near Record on Fed Rate-Cut Sign, US-China Tensions - Bloomberg
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
How high can Gold Go? Gold has been on a
record setting run lately.
Speaker 3 (00:15):
Look at that gold up mine, tens of percent.
Speaker 1 (00:17):
The games keep coming for gold. If I check right now,
gold is at a record four two hundred and two
dollars an ounce.
Speaker 2 (00:24):
The commodity broke forty two hundred dollars an ounce on Wednesday,
the latest high in a gold rush of historic proportions.
Speaker 1 (00:31):
This has been an incredible year for gold.
Speaker 2 (00:33):
That's Jack Ryan, Bloomberg's Commodities and Precious Metals Reporter.
Speaker 1 (00:38):
If we were to end the year now, it would
be the best year since nineteen seventy nine. It's about
fifty five percent this year.
Speaker 2 (00:44):
This incredible year for gold has also been an incredible
year for some other shiny commodities.
Speaker 1 (00:52):
Gold is actually, in one sense, the weakest performer of
the platinums, up by about eighty percent, silver by about
seventy five. All of the precious medals are moving higher
this year, and there's a lot of reasons behind that.
Speaker 2 (01:04):
Jack says, all this interest in precious metals is a
sign of our uncertain times.
Speaker 1 (01:10):
Gold thing often operates as a barometer for geopolitical tension
or what's happening in the global financial system, so that
watching the gold price can actually be quite a useful too,
to kind of take the pulse of what's happening in
the world at that particular moment.
Speaker 2 (01:25):
People have long rushed to buy gold when the economy
seems weak or unstable, but the scale and the speed
of this gold rally is different. Just when the pace
of growth looked to be slowing down last week, it
started up again amid escalating US China tensions over tariffs
and a signal from US Federal Reserve Chair Jerome Powell
(01:46):
that at least one more rate cut could be coming
this year. And while some high profile voices in the
financial world are sympathetic to the turn towards gold, like
JP Morgan Chase CEO Jamie Diamond Future times.
Speaker 3 (02:00):
In my life I said, semi rational to have some
of your portfolio.
Speaker 2 (02:03):
It's also raising alarm bells for some investors, like Ken Griffin,
CEO of the global investment firm Citadel.
Speaker 3 (02:10):
The world you see central banks around the world, as
you see individual investors around the world go, you know what.
I now view gold as a safe harbor asset in
a way that the dollar used to be viewed. That's
what's really concerning to me.
Speaker 2 (02:25):
Jack says that the gold rush and the debate around
it reflects something deeper about the way investors are thinking
about the economy and the world right now.
Speaker 1 (02:35):
Holding the currencies, even not even just the debt of
a foreign country, is an implicit expression of trust in
those countries. And when you maybe trust them less, an
asset that doesn't have any counterparty might become more appealing.
And that really, I think, if you boil it down,
has been the thing that's really supported gold.
Speaker 2 (02:57):
I'm Sarah Holder, and this is the Big from Bloomberg
News Today on the show, what's behind gold and Silver's
record smashing runs and what can history teach us about
how this gold rush could end. If there's one thing
(03:18):
you should know about gold, it's that it thrives in
a crisis.
Speaker 1 (03:24):
Gold broke one thousand dollars as Bear Stearns was kind
of collapsing in two thousand and eight and two thousand,
a few months after the start of the pandemic.
Speaker 2 (03:32):
That's Jack Ryan, who covers precious medals for.
Speaker 1 (03:35):
Bloomberg three thousand earlier this year. You could say it
was the kind of trade war that was expanding. Liberation
Day was just coming up. And so now you look
at when it crossed the threshold of four thousand, what's
been happening in the world.
Speaker 2 (03:49):
Geopolitical tensions, trade wars, high inflation. It's been crisis after crisis,
and all the bad news has been good news for gold.
Speaker 1 (04:00):
Talked to investors and people in the market, a key
turning point for the gold market seems to have been
when Russia's assets foreign exchange assets were frozen.
Speaker 2 (04:10):
That was in twenty twenty two, at the beginning of
Russia's invasion of Ukraine, and.
Speaker 1 (04:14):
Those were treasuries, those were assets denominated in dollars, in
pounds and yen G seven currencies, and that I think
was a key moment for central banks around the world
because they looked at that and they realized that if
they came into conflict with the West at some point
in the future, they could potentially lose access to the reserves,
(04:35):
presumably at the time when they would actually need it
the most. Gold. On the other hand, as long as
you start within your own borders, it can't be frozen,
it can't be taken from you. And so from that
point on, buying of gold by central banks roughly doubled
from about five hundred tons a year before that to
about one thousand tons a year now.
Speaker 2 (04:56):
Jack says, the central banks that have been building up
their gold reserves most aggressively have a few things in common.
Speaker 1 (05:03):
China have been a really important buyer, probably the most
important buyer. India has also been adding to its reserves,
and Eastern Europe as well, so Poland, Serbia, the Czech Republic.
They've all been buying quite a lot of gold. It's
countries who are not part of the post Second World
War Breton Woods system, a global monetary order under pin
(05:24):
by gold. These are countries that didn't take part in that,
but are now large economies, and they're building gold reserves
that are beginning to be commensurate with the massive holes
that were built up by the United States, France, Switzerland, Italy,
other countries like that.
Speaker 2 (05:44):
But it's not just central banks that are seeing the
appeal of gold right now. Other investors are flocking to
gold as the Trump administration ratchets up pressure on the
US Federal Reserve.
Speaker 1 (05:56):
One important one has been some of the attacks on
the independence independence of the Federal Reserve. The efforts to
fire one of the governors, Lisa Cook, that I think
has been a really key kind of source of support
for gold, because if you had applied to Federal Reserve,
it sets up this kind of possible goldilock situation.
Speaker 2 (06:19):
Lisa Cook is fighting Trump's attempt to remove her, and
the Supreme Court will hear the case early next year.
In the meantime, FED Chair Jerome Powell has been firmed
that the Federal Reserve retains its independence, but a weakening
labor market has pushed the Fed to start cutting interest rates.
In September, it lowered them by a quarter percentage point,
(06:39):
and this week Powell suggested another rate cut could be
coming at the end of October, and that means gold
could start looking a lot better for investors who might
otherwise want to earn interest on their cash or on bonds.
Speaker 1 (06:53):
Your cash in the bank becomes less appealing, and treasuries
become ress appealing, and non yielding gold becomes more attractive.
Speaker 2 (07:00):
So it's a goldilock situation for gold. No pun intended,
as you said, possibly, yeah. Meanwhile, these factors and some
others have also been driving up the price of gold's
notoriously volatile cousin silver.
Speaker 1 (07:14):
Often if gold moves one way, silver will move twice
as far the same direction, and I mean it's done
something similar to that this year. And for silver, there's
kind of diverse use cases. I mean, gold is used
either in jewelry or it's used essentially just as an
investment asset, where silver has quite a sizeable chunk of
annual silver supply goes into industrial applications photovoltaic solar cells.
(07:39):
That's a growing source of demand. And so for the
last couple of years the market has been in deficit.
There is a lot of silver in vaults around the world.
The world isn't going to imminently run out of silver,
but you have that deficit situation. And then on top
of that, investors are looking at the volume of debt
that's held by some Western European countries the United States,
(08:00):
wondering about how that can be resolved, and so they're
looking at the risk of currency debasement and how they
can hedge against that, and they think maybe cryptocurrencies, maybe
precious metals, maybe real estate, maybe these are kind of
assets that we can hedge against this risk.
Speaker 2 (08:16):
With all of this rush to buy gold, it's worth
noting buying a commodity like gold or silver looks pretty
different from buying a US Treasury bond or a share
of a stock on the SMP.
Speaker 1 (08:28):
There's many ways to do it, and you can kind
of scale it based on maybe how paranoid you are
about whether or not you'll be able to get access
to your investment. And you can buy a small bar
or a coin from a bullion dealer. There's probably a
visceral appeal of just to having gold coins under your
bed or something like.
Speaker 2 (08:44):
That for investors who don't need to stash their doablloons
under their mattress. Jack says. Another route is trading gold
futures or buying gold back stable coins. Other investors are
buying precious metals through exchange traded funds. The gold or
silver back to ETFs give an investor a share of
(09:04):
the commodities they hold.
Speaker 1 (09:06):
That's an easy, straightforward, relatively low cost way to get
exposure to gold and silver, and it's very popular.
Speaker 2 (09:13):
Okay, so there's both tangible and intangible ways to invest.
I'm wondering are there examples of how this run on
the metals market is creating logistical craziness in the physical world.
Speaker 1 (09:25):
It's funny. At the start of the year, investors were
concerned about the possibility that gold, silver, these various other
precious metals would be tariffed, and because of that, prices
in the US started creeping higher as people exited their shorts,
and that led to this great arbitrage situation where you
could buy gold in London for cheaper and sell out
(09:45):
in New York for more, And in order to do
that you had to fly the stuff over. So typically
with gold, you'll store it in the hold of a
passenger flight. So probably if you fly in New York London,
it's quite possible that underneath your seat you won't be
aware of it for security reasons. But there is gold.
Speaker 2 (10:02):
As of September, President Trump has said that gold at
least was not going to be subject to tariffs. But
because of the massive outflow of precious metals during that
uneasy period, London is still short on silver.
Speaker 1 (10:17):
Now we're seeing a big premium actually for silver in London,
and some of that metal that traders went a massive
effort to get to New York, they're now flying it
back to London because the arbitrage now works the other way.
You can buy it for less in New York and
sell it for more in London. Wow.
Speaker 2 (10:32):
So they're basically saying, turn this flight around. We got
to get the silver back to London.
Speaker 1 (10:36):
Absolutely after the break.
Speaker 2 (10:41):
What we can learn from the last time the value
of gold spiked by historic proportions, and what bears and
bulls are saying about where precious metal prices go from here.
(11:02):
Gold is officially more valuable than ever. But Bloomberg Precious
Metals reporter Jack Ryan says, it's not the first time
a gold rush made history.
Speaker 1 (11:12):
So these are good times for gold. But the best
times for gold was the nineteen seventies.
Speaker 2 (11:17):
Up until then, anyone who held US dollars could in
theory trade them in for gold. But at the start
of the seventies, President Richard Nixon ended the gold standard.
Dollar prices floated freely and the price of gold started
to rise.
Speaker 1 (11:33):
Throughout the nineteen seventies, and a lot of Western economies,
particularly in the US, you had stagflation. You had weak
growth and high inflation, and gold ripped through that period,
particularly as you got to the latter stage of that decade,
and you at the oil crisis, really sky high inflation Vietnam.
That's a government borrowing in order to pay for that.
And throughout that period, historians and scholars will tell you
(11:57):
that Nixon was putting pressure on the Fed. He was
putting pressure on the chair Arthur Burns to keep interest
rates lower than perhaps they should have been. And I mean,
you could argue that, you know, there are some echoes
of that today. And then you had a peak in
January nineteen eighty and just prior to that, President Jimmy
Carter had frozen some Iranian assets at a similar moment
(12:21):
to G seven countries freezing Russian assets. And that there
was many oil producing countries that had built up vast
fortunes of dollars from selling oil at incredibly high prices
throughout the nineteen seventies because of the oil crisis, realized
that those dollars were vulnerable and that actually maybe they
should start buying more gold and increase their allocation to gold.
Speaker 2 (12:43):
And what stopped the price from climbing more? When did
things start to reverse? Course?
Speaker 1 (12:48):
People who trade it, who were trading at that time,
they describe it as this, you know, remarkable day. Gold
peaked at about eight hundred dollars announce in January nineteen eighty,
so eight hundred dollars in nineteen eighties money about thirty
six hundred dollars. I mean, it never returned there for
the rest of the twentieth century. It quickly tumbled in
the years following that as interest rates came up and
(13:11):
precious metals started to face into lots of different headwinds.
And so I guess maybe there is a cautionary tale
in that it's skyrocketed to a peak and then lost
ground and went through many years of kind of pretty
mediocre to poor performance.
Speaker 2 (13:27):
Well, Jack, we've talked about some of the reasons why
people are flocking to gold and silver right now, but
not everyone is always so bullish on gold. I know
Warren Buffett is famously critical of the asset, saying it's
essentially a way to quote go long on fear gold
really doesn't have utility. I would bet I'm good producing businesses.
Speaker 3 (13:46):
To outperform something that doesn't do anything.
Speaker 2 (13:50):
What are the downsides of investing in gold right now
or ever?
Speaker 1 (13:55):
Yeh, I mean there is absolutely valid criticisms of one
of the most basic and fundamental ones that is not
very useful. I guess any investor would and probably should
be nervous if they're buying into a market where they
look at the price chart and it's almost been a
straight line upwards for two three years. There's some sentiment
(14:16):
in the market that you might feel, is you know,
it feels a bit toppy, maybe that there's some spectative fervor.
Retail hasn't been a big part of the rally thus far,
but I suspect that might be changing. You can find
images online of gold buyers queuing outside refiners. One trader
sent that to me and he said, that's a bad sign.
But it's a bit like they say, you know, if
(14:37):
your dad calls you and said should I invest in this?
They are the last person who've heard about that.
Speaker 2 (14:42):
It's already too late.
Speaker 1 (14:43):
That is a word excited to get out.
Speaker 2 (14:46):
Where do analysts expect these precious metals values to go
from here?
Speaker 1 (14:52):
But it's remarkable how much gold has soared past almost
any analysts expectations at both this year and last year.
Looking into the next year, most banks most analysts are
pretty bullish. Bank for America sees five thousand dollars announced
by the end of next year. Most of the other banks,
(15:13):
according to the most recent reports see it going higher. Still,
it's a notoriously hard metal to predict and to price
because it doesn't generate an income. The value of any
financial security is a function of its income ultimately, and
the possibility of that changing. With gold, you don't have that,
And it's so sentiment driven that I really I do
(15:35):
feel sorry for anyone whose job it is is to
predict where it's going to go.
Speaker 2 (15:38):
What could actually happen to seriously jolt the price back down.
Speaker 1 (15:43):
It's a very important question to ask. It's a very
good question to ask. That could be kind of significant
easing of tensions in the Middle East or in Russia
and Ukraine.
Speaker 2 (15:52):
More peace in the world.
Speaker 1 (15:54):
Yeah, more good things and less bad things. If you're
willing to take that bet. Yeah, if geopolitics will to
turn that direction, then gold might find itself in a
more and more marginal role. There's not been many people
who've been willing to take that side of the bet,
to bet on kind of peace and trust and the
kind of rebuilding of multilateral institutions, and that is part
(16:14):
of the reason why gold has doubled in the last
two years.
Speaker 2 (16:22):
This is the big take from Bloomberg News. I'm Sarah Holder.
To get more from The Big Take and unlimited access
to all of bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast offer. If you liked this episode,
make sure to follow and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
How high can Gold Go? Gold has been on a
record setting run lately.
Speaker 3 (00:15):
Look at that gold up mine, tens of percent.
Speaker 1 (00:17):
The games keep coming for gold. If I check right now,
gold is at a record four two hundred and two
dollars an ounce.
Speaker 2 (00:24):
The commodity broke forty two hundred dollars an ounce on Wednesday,
the latest high in a gold rush of historic proportions.
Speaker 1 (00:31):
This has been an incredible year for gold.
Speaker 2 (00:33):
That's Jack Ryan, Bloomberg's Commodities and Precious Metals Reporter.
Speaker 1 (00:38):
If we were to end the year now, it would
be the best year since nineteen seventy nine. It's about
fifty five percent this year.
Speaker 2 (00:44):
This incredible year for gold has also been an incredible
year for some other shiny commodities.
Speaker 1 (00:52):
Gold is actually, in one sense, the weakest performer of
the platinums, up by about eighty percent, silver by about
seventy five. All of the precious medals are moving higher
this year, and there's a lot of reasons behind that.
Speaker 2 (01:04):
Jack says, all this interest in precious metals is a
sign of our uncertain times.
Speaker 1 (01:10):
Gold thing often operates as a barometer for geopolitical tension
or what's happening in the global financial system, so that
watching the gold price can actually be quite a useful too,
to kind of take the pulse of what's happening in
the world at that particular moment.
Speaker 2 (01:25):
People have long rushed to buy gold when the economy
seems weak or unstable, but the scale and the speed
of this gold rally is different. Just when the pace
of growth looked to be slowing down last week, it
started up again amid escalating US China tensions over tariffs
and a signal from US Federal Reserve Chair Jerome Powell
(01:46):
that at least one more rate cut could be coming
this year. And while some high profile voices in the
financial world are sympathetic to the turn towards gold, like
JP Morgan Chase CEO Jamie Diamond Future times.
Speaker 3 (02:00):
In my life I said, semi rational to have some
of your portfolio.
Speaker 2 (02:03):
It's also raising alarm bells for some investors, like Ken Griffin,
CEO of the global investment firm Citadel.
Speaker 3 (02:10):
The world you see central banks around the world, as
you see individual investors around the world go, you know what.
I now view gold as a safe harbor asset in
a way that the dollar used to be viewed. That's
what's really concerning to me.
Speaker 2 (02:25):
Jack says that the gold rush and the debate around
it reflects something deeper about the way investors are thinking
about the economy and the world right now.
Speaker 1 (02:35):
Holding the currencies, even not even just the debt of
a foreign country, is an implicit expression of trust in
those countries. And when you maybe trust them less, an
asset that doesn't have any counterparty might become more appealing.
And that really, I think, if you boil it down,
has been the thing that's really supported gold.
Speaker 2 (02:57):
I'm Sarah Holder, and this is the Big from Bloomberg
News Today on the show, what's behind gold and Silver's
record smashing runs and what can history teach us about
how this gold rush could end. If there's one thing
(03:18):
you should know about gold, it's that it thrives in
a crisis.
Speaker 1 (03:24):
Gold broke one thousand dollars as Bear Stearns was kind
of collapsing in two thousand and eight and two thousand,
a few months after the start of the pandemic.
Speaker 2 (03:32):
That's Jack Ryan, who covers precious medals for.
Speaker 1 (03:35):
Bloomberg three thousand earlier this year. You could say it
was the kind of trade war that was expanding. Liberation
Day was just coming up. And so now you look
at when it crossed the threshold of four thousand, what's
been happening in the world.
Speaker 2 (03:49):
Geopolitical tensions, trade wars, high inflation. It's been crisis after crisis,
and all the bad news has been good news for gold.
Speaker 1 (04:00):
Talked to investors and people in the market, a key
turning point for the gold market seems to have been
when Russia's assets foreign exchange assets were frozen.
Speaker 2 (04:10):
That was in twenty twenty two, at the beginning of
Russia's invasion of Ukraine, and.
Speaker 1 (04:14):
Those were treasuries, those were assets denominated in dollars, in
pounds and yen G seven currencies, and that I think
was a key moment for central banks around the world
because they looked at that and they realized that if
they came into conflict with the West at some point
in the future, they could potentially lose access to the reserves,
(04:35):
presumably at the time when they would actually need it
the most. Gold. On the other hand, as long as
you start within your own borders, it can't be frozen,
it can't be taken from you. And so from that
point on, buying of gold by central banks roughly doubled
from about five hundred tons a year before that to
about one thousand tons a year now.
Speaker 2 (04:56):
Jack says, the central banks that have been building up
their gold reserves most aggressively have a few things in common.
Speaker 1 (05:03):
China have been a really important buyer, probably the most
important buyer. India has also been adding to its reserves,
and Eastern Europe as well, so Poland, Serbia, the Czech Republic.
They've all been buying quite a lot of gold. It's
countries who are not part of the post Second World
War Breton Woods system, a global monetary order under pin
(05:24):
by gold. These are countries that didn't take part in that,
but are now large economies, and they're building gold reserves
that are beginning to be commensurate with the massive holes
that were built up by the United States, France, Switzerland, Italy,
other countries like that.
Speaker 2 (05:44):
But it's not just central banks that are seeing the
appeal of gold right now. Other investors are flocking to
gold as the Trump administration ratchets up pressure on the
US Federal Reserve.
Speaker 1 (05:56):
One important one has been some of the attacks on
the independence independence of the Federal Reserve. The efforts to
fire one of the governors, Lisa Cook, that I think
has been a really key kind of source of support
for gold, because if you had applied to Federal Reserve,
it sets up this kind of possible goldilock situation.
Speaker 2 (06:19):
Lisa Cook is fighting Trump's attempt to remove her, and
the Supreme Court will hear the case early next year.
In the meantime, FED Chair Jerome Powell has been firmed
that the Federal Reserve retains its independence, but a weakening
labor market has pushed the Fed to start cutting interest rates.
In September, it lowered them by a quarter percentage point,
(06:39):
and this week Powell suggested another rate cut could be
coming at the end of October, and that means gold
could start looking a lot better for investors who might
otherwise want to earn interest on their cash or on bonds.
Speaker 1 (06:53):
Your cash in the bank becomes less appealing, and treasuries
become ress appealing, and non yielding gold becomes more attractive.
Speaker 2 (07:00):
So it's a goldilock situation for gold. No pun intended,
as you said, possibly, yeah. Meanwhile, these factors and some
others have also been driving up the price of gold's
notoriously volatile cousin silver.
Speaker 1 (07:14):
Often if gold moves one way, silver will move twice
as far the same direction, and I mean it's done
something similar to that this year. And for silver, there's
kind of diverse use cases. I mean, gold is used
either in jewelry or it's used essentially just as an
investment asset, where silver has quite a sizeable chunk of
annual silver supply goes into industrial applications photovoltaic solar cells.
(07:39):
That's a growing source of demand. And so for the
last couple of years the market has been in deficit.
There is a lot of silver in vaults around the world.
The world isn't going to imminently run out of silver,
but you have that deficit situation. And then on top
of that, investors are looking at the volume of debt
that's held by some Western European countries the United States,
(08:00):
wondering about how that can be resolved, and so they're
looking at the risk of currency debasement and how they
can hedge against that, and they think maybe cryptocurrencies, maybe
precious metals, maybe real estate, maybe these are kind of
assets that we can hedge against this risk.
Speaker 2 (08:16):
With all of this rush to buy gold, it's worth
noting buying a commodity like gold or silver looks pretty
different from buying a US Treasury bond or a share
of a stock on the SMP.
Speaker 1 (08:28):
There's many ways to do it, and you can kind
of scale it based on maybe how paranoid you are
about whether or not you'll be able to get access
to your investment. And you can buy a small bar
or a coin from a bullion dealer. There's probably a
visceral appeal of just to having gold coins under your
bed or something like.
Speaker 2 (08:44):
That for investors who don't need to stash their doablloons
under their mattress. Jack says. Another route is trading gold
futures or buying gold back stable coins. Other investors are
buying precious metals through exchange traded funds. The gold or
silver back to ETFs give an investor a share of
(09:04):
the commodities they hold.
Speaker 1 (09:06):
That's an easy, straightforward, relatively low cost way to get
exposure to gold and silver, and it's very popular.
Speaker 2 (09:13):
Okay, so there's both tangible and intangible ways to invest.
I'm wondering are there examples of how this run on
the metals market is creating logistical craziness in the physical world.
Speaker 1 (09:25):
It's funny. At the start of the year, investors were
concerned about the possibility that gold, silver, these various other
precious metals would be tariffed, and because of that, prices
in the US started creeping higher as people exited their shorts,
and that led to this great arbitrage situation where you
could buy gold in London for cheaper and sell out
(09:45):
in New York for more, And in order to do
that you had to fly the stuff over. So typically
with gold, you'll store it in the hold of a
passenger flight. So probably if you fly in New York London,
it's quite possible that underneath your seat you won't be
aware of it for security reasons. But there is gold.
Speaker 2 (10:02):
As of September, President Trump has said that gold at
least was not going to be subject to tariffs. But
because of the massive outflow of precious metals during that
uneasy period, London is still short on silver.
Speaker 1 (10:17):
Now we're seeing a big premium actually for silver in London,
and some of that metal that traders went a massive
effort to get to New York, they're now flying it
back to London because the arbitrage now works the other way.
You can buy it for less in New York and
sell it for more in London. Wow.
Speaker 2 (10:32):
So they're basically saying, turn this flight around. We got
to get the silver back to London.
Speaker 1 (10:36):
Absolutely after the break.
Speaker 2 (10:41):
What we can learn from the last time the value
of gold spiked by historic proportions, and what bears and
bulls are saying about where precious metal prices go from here.
(11:02):
Gold is officially more valuable than ever. But Bloomberg Precious
Metals reporter Jack Ryan says, it's not the first time
a gold rush made history.
Speaker 1 (11:12):
So these are good times for gold. But the best
times for gold was the nineteen seventies.
Speaker 2 (11:17):
Up until then, anyone who held US dollars could in
theory trade them in for gold. But at the start
of the seventies, President Richard Nixon ended the gold standard.
Dollar prices floated freely and the price of gold started
to rise.
Speaker 1 (11:33):
Throughout the nineteen seventies, and a lot of Western economies,
particularly in the US, you had stagflation. You had weak
growth and high inflation, and gold ripped through that period,
particularly as you got to the latter stage of that decade,
and you at the oil crisis, really sky high inflation Vietnam.
That's a government borrowing in order to pay for that.
And throughout that period, historians and scholars will tell you
(11:57):
that Nixon was putting pressure on the Fed. He was
putting pressure on the chair Arthur Burns to keep interest
rates lower than perhaps they should have been. And I mean,
you could argue that, you know, there are some echoes
of that today. And then you had a peak in
January nineteen eighty and just prior to that, President Jimmy
Carter had frozen some Iranian assets at a similar moment
(12:21):
to G seven countries freezing Russian assets. And that there
was many oil producing countries that had built up vast
fortunes of dollars from selling oil at incredibly high prices
throughout the nineteen seventies because of the oil crisis, realized
that those dollars were vulnerable and that actually maybe they
should start buying more gold and increase their allocation to gold.
Speaker 2 (12:43):
And what stopped the price from climbing more? When did
things start to reverse? Course?
Speaker 1 (12:48):
People who trade it, who were trading at that time,
they describe it as this, you know, remarkable day. Gold
peaked at about eight hundred dollars announce in January nineteen eighty,
so eight hundred dollars in nineteen eighties money about thirty
six hundred dollars. I mean, it never returned there for
the rest of the twentieth century. It quickly tumbled in
the years following that as interest rates came up and
(13:11):
precious metals started to face into lots of different headwinds.
And so I guess maybe there is a cautionary tale
in that it's skyrocketed to a peak and then lost
ground and went through many years of kind of pretty
mediocre to poor performance.
Speaker 2 (13:27):
Well, Jack, we've talked about some of the reasons why
people are flocking to gold and silver right now, but
not everyone is always so bullish on gold. I know
Warren Buffett is famously critical of the asset, saying it's
essentially a way to quote go long on fear gold
really doesn't have utility. I would bet I'm good producing businesses.
Speaker 3 (13:46):
To outperform something that doesn't do anything.
Speaker 2 (13:50):
What are the downsides of investing in gold right now
or ever?
Speaker 1 (13:55):
Yeh, I mean there is absolutely valid criticisms of one
of the most basic and fundamental ones that is not
very useful. I guess any investor would and probably should
be nervous if they're buying into a market where they
look at the price chart and it's almost been a
straight line upwards for two three years. There's some sentiment
(14:16):
in the market that you might feel, is you know,
it feels a bit toppy, maybe that there's some spectative fervor.
Retail hasn't been a big part of the rally thus far,
but I suspect that might be changing. You can find
images online of gold buyers queuing outside refiners. One trader
sent that to me and he said, that's a bad sign.
But it's a bit like they say, you know, if
(14:37):
your dad calls you and said should I invest in this?
They are the last person who've heard about that.
Speaker 2 (14:42):
It's already too late.
Speaker 1 (14:43):
That is a word excited to get out.
Speaker 2 (14:46):
Where do analysts expect these precious metals values to go
from here?
Speaker 1 (14:52):
But it's remarkable how much gold has soared past almost
any analysts expectations at both this year and last year.
Looking into the next year, most banks most analysts are
pretty bullish. Bank for America sees five thousand dollars announced
by the end of next year. Most of the other banks,
(15:13):
according to the most recent reports see it going higher. Still,
it's a notoriously hard metal to predict and to price
because it doesn't generate an income. The value of any
financial security is a function of its income ultimately, and
the possibility of that changing. With gold, you don't have that,
And it's so sentiment driven that I really I do
(15:35):
feel sorry for anyone whose job it is is to
predict where it's going to go.
Speaker 2 (15:38):
What could actually happen to seriously jolt the price back down.
Speaker 1 (15:43):
It's a very important question to ask. It's a very
good question to ask. That could be kind of significant
easing of tensions in the Middle East or in Russia
and Ukraine.
Speaker 2 (15:52):
More peace in the world.
Speaker 1 (15:54):
Yeah, more good things and less bad things. If you're
willing to take that bet. Yeah, if geopolitics will to
turn that direction, then gold might find itself in a
more and more marginal role. There's not been many people
who've been willing to take that side of the bet,
to bet on kind of peace and trust and the
kind of rebuilding of multilateral institutions, and that is part
(16:14):
of the reason why gold has doubled in the last
two years.
Speaker 2 (16:22):
This is the big take from Bloomberg News. I'm Sarah Holder.
To get more from The Big Take and unlimited access
to all of bloomberg dot com, subscribe today at Bloomberg
dot com slash podcast offer. If you liked this episode,
make sure to follow and review The Big Take wherever
you listen to podcasts. It helps people find the show.
Thanks for listening. We'll be back tomorrow
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