Gold: what the mining experts say

As gold trades at record highs, we talked to industry experts at the recent Mining Indaba in Cape Town, South Africa. They explained to us what moves the gold price, Trump’s impact, whether will prices keep rising and whether you should own gold in your portfolio.

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John Meyer, mining analyst, SP Angel:“The gold market’s an extraordinary place right now. You’ve got the situation where Chinese investors and the Chinese government have been buying gold, and buying physical gold and large quantities of it. We think the Saudis have been buying gold. In fact now, US funds, particularly the guys in New York, also have been buying gold. In fact, physical gold prices have been trading quite a lot higher in New York than elsewhere in the world. That demonstrates the arbitrage. And we now know that if you want to get physical gold out of storage in the Bank of England, it’s going to take you months rather than days. I’m not saying that’s a problem, but it’s certainly an issue, and it demonstrates that physical gold is suddenly in demand.

“The reason why it’s going to New York is to do with the trading of it. But it also reflects the fact that everybody’s uncertain about what Trump’s tariffs are going to do to global trade flows, and that creates a degree of uncertainty in currencies. So, gold is seen as an alternative currency. It’s a currency that is not subject to normal inflation. And in a world where Trump’s tariffs might be inflationary, gold is a good investment to hang on to from what we can see. And, of course, gold stocks are having a good time.”

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Emma Priestley, chief executive, Goldstone Resources: “With Trump coming in as president, obviously it’s going to change a lot of things in the mining and oil & gas sector, not just gold, OK? He’s got his ‘drill, baby, drill’, which is great for the oil companies, and for gold companies coming on. And gold is always very, very different to your base metals and other metals because it’s a currency as well. And what you’ve got here is you’ve got ‘let’s see what happens now with the BRICS,’ which was the gold-backed currency that obviously Brazil, Russia, China, India and South Africa was promoting.

“And we’ve obviously seen this morning as well that Trump has announced he’s looking at pulling the financial support through the African Growth and Opportunity Act (AGOA) agreement to South Africa. And he’s made it very clear that if South Africa continues to support BRICS, then why on Earth should America, which is dollar-based, support the industry here? So, if the AGOA agreement goes in South Africa, there’s going to be a major shuffle of monies. And I would see a lot more people buying even more gold.”

Q: What moves the gold price?

Harry Anagnostaras-Adams, executive chair, Kefi Gold & Copper: “The gold price – how would I put it? I’m in my 60s. When I was in my 30s, that generation of central bankers, the new broom of central bankers coming through then, were all badmouthing gold and saying things like, ‘Gold is a relic, gold is a dinosaur. It has no place in a modern economic system.’ The Australian Reserve Bank sold all its gold because of that sort of inherent belief. Back then, I thought that was a ridiculous set of values and words, given that gold had played a significant role in the world for 5,000 years. And just because a bunch of people came out of university with a whole bunch of new theories, the character of gold was not going to change.

“And I was right. And anyone else who saw that, who had my view, was right. Because gold has continued to play its crucial role in the world. And that is that anyone who’s managing vast sums of capital, whether it’s for their sovereign state or for their family office or whatever it is, would have rocks in their head if they didn’t have a bit of exposure to gold, just because of the diversification that it provides. You see it play that role time and time again. When the world goes into a major crisis, the gold price responds. When the world needs liquidity, the gold price responds, and the gold volumes reflect that. So, it always has, it always will, play the role of value of last resort. When you’re worried about everything else, one of the things you can rely on to have as a refuge is gold. It’s been doing it for 5,000 years. It’s going to do it forever. The price itself is a reflection of, really, just the dynamics of what’s going on at a particular point in time.”

Q: Will gold prices continue to rise?

Emma Priestley: “[We like to think so]. A few years ago, and it was a few years ago, there was a certain Adam Fleming. I hope he won’t mind quoting him, but he was always discussing and marketing the $5,000 gold price. So, Flemings was very hot on gold. Look, these last few years, we’ve seen obviously war, we’ve seen political shifts and everything else. So, of course, there’s been a major drive up. And obviously Russia’s been buying, and a lot of other countries have been buying. And so, of course, it’s always going to be driving that gold price up.”

Q: Should gold be in every investor’s portfolio?

Harry Anagnostaras-Adams:“I was referring to what it was like when I was in my 30s, and the populist view about gold then – well, today it’s the opposite. Reserve banks, central banks, are buying gold today, and the price reflects that. Also back then, gold was trading between $250 and $500. And we were running our mine, making a lot of money at $500 and sort of scraping to survive at $250. Now, banks are projecting not far off $2,000 gold when they do their analysis. And the market is $2,800. So, it would be a bold person to make predictions 12 months out, just because it’s risen so quickly so recently. But the days of worrying about whether gold is a relic are history now.

“And the question of how far it goes, how far up it goes, I frankly don’t care. Because we make a lot of money at half today’s gold price. And we will do very well at half today’s gold price. So, at today’s gold price, we’re going to do super well. And I think that the turbulence of the world, the propensity for wars in the world, little wars here and there all the time, that’s not going to stop. The battle for who gets to compete with the US dollar to be the main trading currency, whether it’s the BRICS or the Chinese or whatever, that’s only going to escalate over time as the US recedes in its complete domination of the economy of the world.

“So, I think the atmosphere and the setting for gold to play the role it has always played has never been stronger. And I don’t think that’s going to change in the next 5,000 years. For my lifetime, it’s, I think, a no-brainer that gold is something that one should have some exposure to. As to whether one buys a bit of metal or one buys a junior gold company, or whatever one buys, it’s up to the individual. But I think gold has a role to play in everyone’s portfolio.”