Sam Dickie: Fisher Funds expert on the case for investing in gold in 2025

The price of gold continues to hit new highs, and speculators are wondering whether they should invest.

Gold has seen the strongest year since the 1970s, largely thanks to volatile markets and economic uncertainty. 

Fisher Funds expert Sam Dickie explained further.

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Episode Transcript

Speaker 1 (00:00):
Gold is having its strongest years since the nineteen seventies.
What a statement. A up sixty percent so far? This
yere Now what's driven this incredible rise is the question,
and of course should you invest in it? Sam Dickey
from Fisher Funds is with us. Hallo, Sam, you know
what is the investment case here for gold?

Speaker 2 (00:17):
It is on fire, up one hundred and fifteen percent
of the pass eighteen months or so. So there's three
primary investment cases. The first and foremost one is it's
a safe haven head, so it's got a near perfect
hit rate of not only holding its value, but often
appreciating value in stock market correction, so the eighty seven crash,
the GFC crash, the European financial crisis crash, and various

(00:41):
other corrections, gold would almost always go higher. And that's
because simplistically, it carries no credit risk, it can't default,
it holds its value and that becomes almost self fulfilling.
So investors pile into gold in times of uncertainty. So
that's the first one. The second one is it is
considered an inflation hedge or b its track record there

(01:01):
is a bit more patchy, so the assumption goes unlike
fiat currency, central banks can't print any more gold, and
while inflation erodes the purchasing power of fiat currency, gold
is a stable store of value and the third one
is a little bit more bearish. So central banks and
investors buy gold to diversify away from the US dollar,

(01:21):
And twenty twenty five has been one of the weakest
years for the US dollar in the past couple of decades.

Speaker 1 (01:27):
Now, how does the current period then compare to the
nineteen seventies.

Speaker 2 (01:32):
Yeah, it cast in the mindbacker but definitely similar some similarity.
So like now, investors had lost a bit of confidence
in the US dollar. Back then it was because of
persistently high inflation. They couldn't get a handle on inflation,
unsustainable US government spending, and then of course throwing an
oil shock there for good measure too. Today inflation is

(01:53):
a little bit stubbornly high, but it's not anything like
that was the problem back then. Today, they've lost a
bit of confidence in the US dollar because of high
US government debt levels, which you and I have spoken
about before, and volatile policy decision making. So investors are
piling into gold is a more stable alternative. And back then,
if you think about the circuit breaker. It was Paul

(02:13):
Volka hiking interest rates to twenty percent to break the
back of inflation, which restored confidence in the US dollar
and pop the gold bubble. The circuit breaker today could
be a bit of Austeria in the US, some really
sensible and prudent management of the government balance sheet. But
the problem is, and again you and I have talked
about this, no democratically elected government wants to be the

(02:34):
one to remove the punch bowl from the party. They
don't want to crack down on government spending.

Speaker 1 (02:38):
Yeah, so what does all of this mean for investors?

Speaker 2 (02:40):
Then? I think it can be a really helpful hedge
in a diversified portfolio, particularly as a safe haven hedge.
But this time it's had a really powerful run already.
And the tricky thing is it's really hard to value,
so it doesn't yield anything. It doesn't produce any income,
unlike a share or bond or property. And as Warren
Buffett said, the best gold gets dug out of the round.

(03:00):
We melt it down, dig another hole, bury it again,
and pay someone to stand around guarding it. So it
has no utility in anyone watching from Mars would be
scratching their head.

Speaker 1 (03:10):
Yeah, all right, thank you very much, Sam appreciate it.
Sam Dickie Official funds. It's twenty one away from seven.

Speaker 2 (03:16):
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