Precious metals rally driven by global shifts and safe-haven demand (with Joumana Bercetche)

Gold is up 17% YTD, silver 52%. Can this momentum continue?

Joumana Bercetche

David Hale

The momentum continues. We are seeing global shifts we haven't experienced in generations, like the potential weaponization of the stockpile of Treasuries held by Europe and other nations.

Some of those trends or factors are going to be driving these precious metal prices even higher.

How owned is gold by institutional investors? Is there scope for more participants?

Joumana Bercetche

David Hale

Gold allocation in a generous portfolio is still quite low. Some portfolios hold virtually nothing, others a couple of percent. There's still an increasing appetite for gold as a safe haven.

If you think about the relative sizes of asset classes, moving away from Treasuries and the dollar as safe havens, the gold market is a lot smaller. The relevant size of those safe havens is what's driving the move in gold.

How are you screening for value in gold/silver equities?

Joumana Bercetche

David Hale

We invest mainly in the miners. Free cash flow generation at current metal prices is compelling. Companies are prioritizing shareholder returns via dividends and buybacks.

The generalist investor has only started to focus on this. Gold equities are compelling on free cash flow compared to sectors like tech.

What about base metals like copper and aluminum? Is the move structural or due to supply disruptions?

Joumana Bercetche

David Hale

Part of copper's move is fundamental (supply outage at Grasberg). But Chinese demand is down, giving a mixed picture. Aluminum is constructive due to limited supply addition and healthy demand growth.

Copper moves have also been exacerbated by factors like tariffs and defense spending/security of supply. New economy drivers like electrification are helping the cause.

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