In a recent interview by David Lin, Levi Gunter, growth manager for OneGold at APMEX, provided crucial insights into the unprecedented gold market surge, specifically addressing the question posed in the interview's title. Gunter's analysis, detailed in the YouTube interview, offers a comprehensive examination of the factors propelling the precious metal's ascent, with a strong emphasis on the critical role of central bank activity.
The interview, which delves into the intricacies of the gold market, reveals a complex interplay of influences, ranging from geopolitical tensions to inflation concerns. However, Gunter firmly establishes that central bank purchases are the primary catalyst for the current rally. "There's actually more of a stronger undercurrent right now for gold which is Central Bank buying," he stated, underscoring the record-breaking acquisitions witnessed over the past three years.
Gunter explained that central banks' motivations are multifaceted, driven by a desire to diversify reserves and hedge against economic uncertainties. "A lot of central banks, a lot of governments saw that and they're like, well, I don't want that to happen to me," he said, referring to the freezing of Russian assets in 2022. He further elaborated on the key reasons behind these purchases, noting that "they tend to be buying gold and as due to inflationary risks," emphasizing the metal's role as a hedge against rising prices. He also pointed out gold's historical performance during times of crisis, making it a valuable asset for central banks, and its role as a portfolio diversifier, given that "it's sort of a negatively correlated asset to certain currency so it's kind of a portfolio diversifier for them in that case."
Gunter's analysis highlights the strategic nature of central bank gold purchases, suggesting that they are driven by long-term considerations rather than short-term market fluctuations. "I don't really think price sensitivity is playing into it," he asserted.
Beyond central bank activity, Gunter addressed crucial aspects of gold investment for retail investors. He emphasized the importance of understanding premiums, the cost above the spot price, and liquidity. "One thing that I would certainly ask or you know if I'm new to the space um tell people to evaluate is premiums," he advised. He further explained that premiums are influenced by supply and demand, as well as dealer strategies. "A lot of dealers out there like to do business on a higher margin lower volume type play where they're going to charge you higher premiums," he stated.
Gunter also tackled the common misconception that physical gold storage is expensive. He compared storage fees to ETF management fees, highlighting the transparency of OneGold's storage costs. "We actually charge a storage fee at one gold it's 12 basis points," he said, providing a clear cost breakdown. He also explained how the onegold platform allows clients to take physical delivery of their gold through APMEX.
Addressing concerns about gold's authenticity, Gunter emphasized the importance of transparency. "We're as transparent as we can be there," he stated, highlighting the audited nature of OneGold's storage and the availability of monthly storage reports. "We take a report that we get from each of our storage Partners every month and we actually just post that online," he said.
Throughout the interview, Gunter provided valuable insights into the broader gold market, offering projections and guidance for investors. He discussed the potential impact of geopolitical tensions and inflation concerns, as well as the dynamics of the silver market. He also discussed the different investment philosophies between physical gold, gold ETFs, and mining stocks.
Gunter's analysis, as presented in the David Lin interview, provides a comprehensive overview of the factors driving gold's current surge, with a particular focus on the "crazy" buying activity of central banks. His insights offer valuable guidance for investors seeking to navigate the complexities of the precious metals market.
Watch the full interview:
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