Bite: Gold. Still a safe haven?

Gold took off this year, fuelled by inflation fears, geopolitical tension, and a wave of investor enthusiasm. Jacki Neumann recently spoke to Michelle Lopez from PIE funds and asked is it grounded in fundamentals and can it keep its safe-haven status through volatility?

This bite is from our episode 'What's going on with the ASX?'

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Episode Transcript

Speaker 1 (00:01):
You're listening to a Shears These podcast. Gold has been exceptional,
and you know, the interesting thing about gold is it's
typically thought of as a safe haven and the constructive
backdrop for gold is weaker dollar, lower interest rates, and

(00:21):
uncertainty geo political uncertainty, and that's all sort of played out,
but it's gone well above and beyond. I think what
the fundamental constructive backdrop is, which may indicate a couple
of things. People are genuinely worried, and that safe haven
status continues inflation, so inflation risk. Gold is seen as

(00:43):
a hedge for inflation. So even though it's sort of
down into ranges where central banks wanted to get them
down to, there is risk obviously with all this tariff
and stimulus coming through that we're going to go through
another period of heightened inflation. I think that's a real risk.
So there's people buying on sort of fundamentals. But then

(01:08):
you've started to see a bit of euphoric activity. And
it's interesting Martin Place, just here in town. I'm sure
you've seen sort of the pictures. There's light lines out
the door. Is it a bubble? I don't think so.
Can it correct? Twenty thirty percent, I think so. So
bringing it back to the markets, the goal price itself,
I think I'll have to I'll have to check this.

(01:28):
I didn't check it before I came in, but I
think the goal price is up something like fifty percent.
Gold equities are up one hundred percent over the last year.
And what we've seen within that, and that's typical. There's leverage,
there's operating leverage, there's financial leverage. And in fact, the
ones that have done best are your poorer quality ones

(01:50):
that you know, high high cash cost to operate, which
means that the leverage that they get from a higher
goal price is more than you're good quality operators. But
you've done well owning anything gold related over this period.
Other commodities, I think I spoke about rare earths six
months ago that's had an exceptional run that's been quite

(02:14):
politically driven as well, that the price itself hasn't moved
too much. So that's a situation that we're cautious on
because again it's a critical metal. It's strategically important for
a number of these industries that are in big sort
of growth trajectory. But when the fundamental commodity price doesn't

(02:38):
move it can easily sort of whip back down, so
we're quite careful and mindful of that. Lithium is still
quite challenged. We had sort of, you know, a big
as a little sort of run up fifty percent, but
that's kind of platted out and that you have to
bring it back to supply and demand dynamics in a

(02:59):
lot of those markets. But yes, you can't avoid it,
and unfortunately being underweight that part of the market. For us,
we've done, it's proudly done quite well to be able
to hold the performance and deliver exceptional performance without owning
lots of those companies that have run a lot. Investing
involves for risk you might lose the money you start with.

(03:21):
We recommend talking to a licensed financial advisor. We also
recommend reading product disclosure documents before deciding to invest.