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The HC Commodities Podcast
De-Dollarization, Debasement & Diversification: Precious Metals with Nicky Shiels
00:47:31
Today we discuss gold, silver and the platinum group metals. What drove the huge run-up in prices for all of them in 2025 and into 2026, and was the US-Iran war just a setback to those prices or the end of a bull market? Our guest is Nicky Shiels, Head of Research and Strategy for MKS Pamp, a global trading house and refiner for precious metals serving a diverse and global customer base.
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Foreign.
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Welcome to the HC Commodities Podcast, a podcast dedicated to the commodities sector and the people within it. I'm your host, Paul Chapman. This podcast is produced by HC Group, a global search firm dedicated to the commodities sector. Today we're talking gold, silver and the platinum grip metals. What drove the huge run up in prices for all of them in 2025 and into 2026? And was the US Iran war just a setback to those prices or the end of a bull market? Our guest is Nikki Shields, head of research and strategy for MKS pamp, a global trading house and refiner for precious metals serving a global customer base. As always, you can really support the show by leaving us a positive review on the platform you're listening on and I hope you enjoy this episode. Nikki, welcome to the show.
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Thank you, Paul. It's great to be on here.
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Yeah. So I'm looking forward to this discussion. It's topical and timely and a big narrative that's been building over really the last year and that is really, we're talking precious metals, we're talking gold and silver in particular, and trying to understand what's been going on in the market, whether it's just the cycles or there's something more structural going on and the big run up in gold and tying that into obviously current events as well. And who better to do that but you? So let's start, I guess, kind of let's start with gold, obviously, as that being sort of the major story. And you and I, we were talking earlier, we talk about on this podcast, the 3Ds kind of define the commodities world. Digitization, decarbonization and deglobalization. You have been Talking similarly about 3Ds in the gold world, but different to ours. Can you just. I guess I'd love to deep dive into those 3Ds, what are they? And then unpack them as related to the story.
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Yeah, absolutely. Look, I think, you know, we Talk about the 3DS being one that the large de dollarization trade that is occurring at the same time there is a debasement trade happening and then the diversification trade. And they sort of come together from different angles, more structural forces, which is helping just to propel gold into the limelight. We had a massive rerating from 2000 to over 5000 over the past two and a half years. And I think, as you say, trying to unpack what just was going on behind those secular forces really helps us understand why we're getting such strong rerating in gold. And then white metals just sort of silver, platinum, also other commodities. And I think it's just really gold is just telling us that we're putting real assets, commodities in the forefront for the remainder of this decade as the sort of primary hedge against inflation and debasement. So the first one talks about the dollarization trade really is a hedge against reordering the world order. You know, we know globalization has peaked. What really accelerated that was essentially when western world sanctioned and froze Russian assets in 2022. That really broke the regime for gold. Gold was basically a real sort of a hedge to the dollar and real interest rates. That model just completely broke because it, it drove a acceleration of central bank buying. And we can talk more about that. The second one is the debasement trade which is more. I look at it more from a sort of macroeconomic or policy angle. We've got higher for longer inflation. You've got a world that you know, we talk about sort of resource scarcity and regionalization. Fiscal dominance is, is a major. I sort of play in that. And you know, if you Google trends actually we saw the basement basically hit all time high in terms of Google Trend searches in Q1 this this year which obviously is no not coincidental that the precious metals also hit all time highs at that at the same time. And then lastly you've got the diversification trade. And I look at that through mostly a markets lens. So at again just increased headline risk, unpredictable data, unpredictable volatility, investors looking for ways to diversify whether it's the concentration in stocks or in tech or just looking to diversify away from sort of extremely or increasingly more volatile sort of markets regime. So those three, you know, coming at gold and gold will be the one that embraces it first and foremost. And then I think you do get that the second iteration across silver, pgm, copper, sort of other other asset classes that, that can embrace some of these more structural trends.
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Okay, perfect. So, so the big picture is that gold's banging around to the $2,000 an ounce mark for a decade.
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Right.
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And I want to let this take those. I think diversification we all sort of get intuitively. But let's talk de dollarization and particularly the debasement side. You start to get that run up in gold in really more like 24, 25. I mean it's not sort of, it's not coincidental with the Russia's invasion of Ukraine. But I guess on that de dollarization piece how much of that is a building narrative and how much can we actually from a Research standpoint, objectively see, because yes, the dollar has, you know, has been weaponized and, and so forth but we have, it feels hard to see that we, you know, objectively that we're seeing a significant move away. If you'd like, can you just, I guess help us understand what you think is sort of a narrative built as opposed to the underlying reality?
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Yeah. So I think, you know, if you just look at some of the trends and you know, I think what, what obviously really embodies U.S. is central bank gold holdings versus the U.S. treasuries and your exposure to U.S. assets or the dollar, the dollar system. Right. And central banks pre2022 were buying on average 500 tons a year and have basically more than double that since in 22, 23 and 24. This year we can talk about, it's been more of a two way trade but for three years following the sanctioning of Russian assets which again it just, just drives a emerging market, Eastern sort of Eastern Europe into, into sort of dollar assets as, as hedges. So you know, that, that I think embodies the, the dollarization trade really well. I think a lot you, we, we don't see a clear sign or, or like a very notable trend or rotation out of U.S. treasuries. It's just a slowing pace of U.S. treasury accumulation. And the hedge of that, the hedge to U.S. treasuries or the hedge to dollars, that pace is just ramping up which is basically telling you. Yes, sovereign risk. Yeah. Israel.
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B
And is that just to unpick that a bit further, is that a consequence of concerns over the U.S. willingness to, you know, to interrupt your dollar holdings or is it, is the, is it a broader story of concern over the, the size of the debt and the fiscal responsibility of the U.S. yeah, so
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I think it's a bit of both. Obviously. I think what really sort of triggered the reawakening was just these, the move by the west to sanction and freeze sort of Russian assets. And then I think there's just been a sort of a revaluation of that and given the fiscal and deficit trajectories of mostly it's not even G7 or G10 or G20, it's globally. There's a realization that one, we've got niggling high inflation. You've got problems in developed market worlds which high for longer inflation and basically putting central banks into a corner and we cannot print out of this. And sort of the only way out is to really devalue fiat currencies and think that that you know, whether that's a realization from investors, a realization of policymakers, a realization from consumers who are actively buying gold as a simple hedge to seeing on a daily basis the value of their currency depreciates is certainly just coming through in the gold price and through just different participants.
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Yeah, that's the debate side. That's the sort of the hedge to inflation and as you say sort of unless we see concerted fiscal efforts, it just seems the plan is to inflate away the debts as much as possible. Are there any countries that stand out in policy wise that have moved away from dollar from Treasuries or toward gold in particular thinking China, Japan, I mean and the brics. Can we see any of that or is it just across the board?
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You certainly see certain trends certainly China a lot of your sort of Eastern Europe, Poland, Hungary have been active gold buyers. And you see like I said like the pace of central bank or of sort of Asian some African and Eastern European central bank gold accumulation. That pace is far stripping the pace of. Of any UST or US treasury accumulation. Some of your G7 countries, you know it's they Russia for once for. For as one example obviously over the past year sort of you know two decades has. Has been. Has been actively selling U.S. treasuries and buying gold. What what's. What's interesting and what where the narrative is being pressure tested this year especially has been the fact that central bank gold buying has mostly been one directional for three years. And this year following the US Iran war with oil spiking above $100 well above $100 you've got some of these central banks. So some of your Middle Eastern central banks, some of your Asian central banks, Turkey, Russia were the known sellers. And so you've got central banks now turning. It's turning more two way and they've been monetizing gold basically as a. As a way to either fund war efforts. Right. Or if. If energy revenues are faded multiplug fiscal gaps. So that has been a one of the sort of biggest or the sort of the new developments in the. In the gold market this year is the sort of the fact that central banks have become two ways participants in the space. The b. The bears sort of argue that you've now you've now that's a complete sentiment 180 and you know now the fact that they're no longer one way buyers go to reprice back to fundamental flaws which if you go back to pre2022 if you just look at gold Through a real rate and dollar model it should be something like $2,800. The Bulls on the other hand argue that gold is doing exactly what it should do. It's showing up as a liquidity asset in times of need and it can be monetized. And so it's basically a great selling point for the brand, for the metal that is doing exactly what it should do during sort of war eras. So it's early days I think and I think the summer and how cold plays out for the remainder of this, this year will be interesting. But that's, that's certainly the, the two that two way sort of direction in cent of central bank flows has been the, the new development this year.
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So building this narrative of this you know, huge rise in price of gold over the last few. We'll come back to kind of the whether it was a bursting of a bubble or whether it was just a, a pullback and we're still in a bull market in a minute. But just so that that's the de dollarization piece, just staying on that debasement piece. Can we, you mentioned that 2,800 bucks if we tracked if it was actually inflation adjusted to the 2010 prices. Is that what you said there? And can you just help us understand kind of how gold has tracked what has been quite an inflationary period and how it's kept up and has it performed in that narrative? If you'd like.
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Yeah. So I mean if you're talking, if you just look at gold through more of a debasement lens and sort of talk many inflation adjusted highs, we'll talk nominal pricing. I think it's helpful to look at real pricing. And golden hit 850 in 1980 and its inflation adjusted highs in $2025 terms is something like $3600. So gold has exceeded its inflation adjusted highs by 2000. It's again I think very, very indicative of, of how it does sort of act as a hedge. You know, it's many things at once. It can act as a risk asset. It can access inflation hedge as geopolitical hedge. It's but you know, sort of during inflationary times. It does, it is a, you know, quote unquote wealth preservation asset class or asset and, and does really well sort of when, especially when real rates are sort of low, low positive or especially very or negative as we've seen sort of since like 2010.
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Yeah. Okay, so that brings nicely onto that diversify piece, the third D. I think we will get it in the context of modern portfolio Theory I'm interested in as this narrative is shaped up, are we seeing an increase in the percentage that your sort of financial advisor is recommending that you have in these precious metals? Has that changed at all?
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Yeah, there's certainly been a broader discussion whether it's from sort of industry bodies or from sort of the institutional investor space of you know, what is an appropriate amount of gold to hold in the portfolio Generally low single digits to you know, sub 5%. Your Walga console I think has has plus 5%. Look, it's. While gold is sort of on par with copper in terms of how deep liquid. Deep liquid and large the the asset class is relative to equities and fixed income, it's still a. A relatively small asset class. So there has been yes a sort of discussion around whether. Because current holdings. If you just look on the US current holdings within a portfolio is sub 1%. So US is pretty the institutional best on the US as is very much underweight gold versus the broader 6040 portfolio are merely doubling that to 2% is bit of a game changer in the space in terms of potential inflows and what they would do for price action. You know that's easily a 10 20% sort of upside in bold. If I think US institutional doubles the rest of the world, you know, China, China and India. It's certainly. It's just. It's a completely different sort of cultural space where gold is within the DNA. There's always a need to diversify that they generally sit on higher sort of percentage holdings in gold within the portfolio versus the US or sort of more Western portfolios. So I think that will, that will continue. But it's certainly a you know, when. When the, when the 6040 portfolio is under question and you're looking at alternatives purchased metals and commodities as well obviously coming to the fore in terms of how they can actively be used to manage that risk and exposure to sovereigns to sort of really shaky volatile fixed income markets and to equities or sort of overflow the equities.
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Okay. Yeah, fascinating. So I guess yeah different cultures. It'll be interesting to see what would trigger the US to go to more like a 2% holdings and one would imagine a not. Not stocks doing an annualized 12% return and all the rest of it. Right. Which might be. We'll see how this year shakes out. Just on the supply side, is there any sense that you know, is there is this. I don't know how to ask. This may sound really dumb but is there is you know, supply is purely a function of price and there's all, you know, no one's, there's no, there's no peak supply. There's enough gold out there, we have enough money to go find it. Right. I mean I know I'm, it's not a very clever way of asking it, but is there, is there, there's no constraints on the supply side other than just the cost of mining it.
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Is that a first, you know, fairish? I mean I think the, the, the, the big sort of difference in gold and especially precious metals versus other commodities and in how you look at it versus supply, demand versus gold, macro implications or drivers versus sort of more sentiment positioning, technical is gold you tend to just look at the demand side where the incremental demand is going to come from given the fact that most of the gold currently sits above ground. Right. So yes, if we do get a massive rerating which we have seen and I think this is, this is where you know, sort of as mks where we do see we plugged in into the entire supply chain globally looking back and seeing gold double in prices, we would expect a much larger response globally from on the supply side in terms of recycled, whether it's jewelry or bar come back to. Come back to market. And that hasn't really been the case. Yes there has, but not to the extent we would have expected. So again I think it is indicative that holders are just holding on for higher pricing. There's a reluctance to let go of gold holdings and so the supply response, quote unquote should come from secondary or recycled or current above ground holdings, whether that's central bank, that's investment or jewelry on the primary supply. It's unlike other commodities. If I said platinum ramps up primary supply by 5% they will absolutely have an impact on price action. It's not the case in gold just given how again most of the gold is above ground in holder's hands. So primary supply has less gold sort of sensitivity or, or sort of less of an influence on the, on the price than, than secondary if that helps answer what, what your question.
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Yeah, you get this 200% increase to $6,000 roughly speaking and yeah there's some inflation adjustment there but it's, it's above all time highs as you've highlighted. And then, and then we have the US and Israel attack Iran and the, the, the price drop. Two questions. So firstly, if that hadn't happened, I know counterfactuals are very hard, you know, would all the pieces that you've described of that narrative continue to be in place and you'd think gold would potentially be even higher first after that and then I want to dig into what
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actually happened to an extent if, if Israel, if we don't have so the US Iran war gold potentially could, could be a above where it was currently trading. I think you know what, what it really has shown up is it really did drive that two way in central bank flows and also other holders or sovereign, sovereign related holders. We're letting go of gold in order to, to, to plug sort of gaps. You know, gold, gold. I, I think I, I look at it like it does well in the lead up to the fear of a wall or any sort of geopolitical escalation. But once in a war or within any geopolitical escalation it's sort of again it becomes a liquidity asset that is potentially monetized especially at all time highs. So yes for one WTI absolutely did absorb all of gold's geopolitical premium during this Middle east escalation. We went and looked at all previous Middle east escalations going back to sort of basically 1990 and gold should be somewhat flat to slightly higher. So it sort of preserves that, that sort of, you know, it preserves itself. But during, during this time I think it, given the fact that was coming off a pretty high, high high pedestal and a high price level, it was just an opportune time to absolutely monetize holdings from a range of investors to central banks.
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Yeah. And it was also important who and where this happened. Right. So firstly the Middle east which you know, whilst oil's high revenues halted and they also have been buying a lot of gold and similarly Russia at the same time having the knock on impacts as well have been selling gold. We'll come back to that in a moment. Just one, there is a divide between retail and institutionals here and in the US you couldn't move for adverts to sell you gold coins. You know in 2025 did, did, did that significant shift down as far as we can understand catch those two different communities differently.
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Yeah, there was with like I mentioned a little earlier the fact that sort of debasement really became a hot topic. It was sort of, you know, sort of mainstream headlines on CNBC and everything. I think that really sort of pulled in a ton of retail interest especially in US and, and Asia where there have been new products launched in order to capitalize on the precious metals rally. So you've had those mat you had the sort of meme like retail inflow in sort of December January across the space gold, but also silver and platinum especially. And compounded with the fact that we then got confirmation that Trump is going to confirm Walsh's Fed chair, which was seemingly the hawkish perk that was end of January and then the start of a, a war that, that is going to sort of fiscally really strain the Middle east sort of your oil producing countries who are naturally also gold importing countries. And I think that sort of the confluence of that really, really came together especially with gold at you know, $4005, $45,000 asset. It was just really mouthwatering tubes to sort of take some trips off the table and to, to either monetize it or to lock in lock in some profits. It it also it talks points a little bit to. Another theme we we chatted about was the fact that when you talk about 1 or 2%, you know, what's your allocation to gold? The market always presumes you can get to that allocation threshold or level through higher ounces or through, through, through just increasing positioning. And that's not necessarily the case obviously. Just if gold doubles you're going to hit your threshold. So I think by virtue of gold moving up 30% in such a short amount of time you had investors, whether you're ETFs or central banks or sort of your, some of your more high net worth individuals hitting up against what they would say portfolio thresholds and in essence having to downsize their holdings in order to, to maintain that. So I think we the, the market sort of looks at it through a one dimensional lens and forgets the fact what, you know, what, what, what happens to notional levels when, when you have a now talking four or $5,000 gold price and our $2,000 gold price.
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Just for my own so edification and perhaps Char and Freud, but was the sense that lots of the retail buyers have kind of got stiffed whereas the institutional guys, you know, understood that this is what gold does once the, the fear of a crisis has been actualized.
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I think yes to in a sense I think more so in, more so in, in silver. If you just look. I mean what silver did was it, it. It's basically. Basically acted like a meme stock. It felt you know, sort of rallied. It doubled from you know, $50, $60 to $120 and then it halved in five days. So I think, I think there were there, there was a lot of sort of blood on the street. I think certain late retail real momentum driven participants were probably burnt a lot on silver than they Were in, in gold. Gold tends to be sort of your buy and hold. Yes. Obviously retail that doesn't quite have that mentality. So yes, I think there's the purge, you know, sort of halving of silver and then the RE rating and sort of grind lower recently has really sort of driven out a lot of that speculative froth who are now, who are now trading other asset classes like SpaceX and tech and AI. So look, it comes and goes and I think it really is indicative of the world, especially in the U.S. but where, you know, the, this world between investing and gambling, you know you can, with Polymarket and culture you can pretty much bet on anything at the moment. So I think those walls are colliding and precious metal circuit being caught, caught, caught amidst it.
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B
Yeah, yeah. It's amazing how sort of Kalshi and Polymarket are turning the US into a nation of gamblers. And I think it's particularly good people's mental health.
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Right. No, just, I mean we just talk about gamified markets and it's, you look at traditional proxies of positioning across commodities, you know, your COT reports or whether there's, there's an ETF vehicle and they're just really not indicative of flows these days because it's been splintered and it's going through retail channels or avenues. So it's OTC and they're non physical and it's been traded on sort of CFDs or FX platforms and I think that's, that's driven a ton of price action but it's also making the markets increasingly more opaque and less transparent.
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B
Yeah, interesting. So just let's, let's come back to, I guess to our central question here which is are we, are we at the sort of the, the bust end of a bull market or are we in the foothills of a, of an, on, you know, early stages of an ongoing bull market? Can you give us, I know that's a very tough question to answer, but can you I guess give some structural reasons like the, you know, you talked about in our notes on the, the petrodollar loop breaking. Like what, what is there to say that These actually, those 3Ds are fully intact and you know we, we see this as a structural run up in gold over the long term with its ups and downs?
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Yeah, no, I, you know this, this is definitely, gold is definitely in a secular market. If we just go back to its past secular bull runs, there's been, we're in the fifth one, there's been four other secular bull runs since the 1970s. And on average those cycles and they do range. I mean the 1970s cycle gold was putting in performances of 720%. This cycle gold is only up around 170%. So if we average that and just from a sort of analytical framework it implies we still have further to go. We have another couple more months. We are earning months 40 over 50 months secular cycle on average and we're looking at gains, you know, sort of a, a, a level of almost 7,000. But again these, you know, those, that from, that's just from the technical angle I think Talking about the 3Ds again unless we get something like a Rubio 2.0 where we bringing back Doge I, I just the, the we've, you've, we've lost faith and trust in the system and in the politicians and I think that ultimately is what gold is. You know you talk about being, you want to be long gold and short politicians and I think the 3D sort of embrace that through, through different levels. I don't see that changing much. I do see what happened in so first half of this year in terms of prices over shoes. I mean you get, you get a strong rerating. So we're, to answer your question, we're not in the eighth or ninth inning of the secular cycle. I think we're probably in the sixth, sixth inning and I think I'm looking at a 38 to $5,000 range. I think we're going to be rangebound for the summer. There's a couple headwinds impacting gold. It'll find its fundamental flaw and then we're looking at you sort of a tweet away or a new war or you're looking at if fiscal concerns in the US come back to the fore. I think that, that, that will accelerate that, you know, Cell USA theme which we saw in the first half of 2025. But for now range bound and just trying to find its footing before it reasserts itself into a sort of more milder trajectory going forward.
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B
Yeah, yeah. So we can confidently say sort of 3,000 just because of inflation, you know, adjustment. It's sort of over and above that. What, what happens in. So you, There is a, there is a. And I don't, you know, maybe I'm, I'm just sort of getting the sort of summer blues or something. But I keep thinking at the moment that the, the stock market hitting all time highs, you know, just seems a bit 202008 to me. You know, given some of the other issues that are going on. If we were to have kind of this crisis of confidence moment that led to a credit contraction and you know what, you know, et cetera, et cetera. And a lot of the world is. A lot of that stock market is based on money churning around in AI you. If you have that. And maybe we can use the sort of the financial crisis as a. As a template here. Does gold like, you know, also lose all of its value or. Because it would be so. So driven by concerns about the US Underlying realities that the scale of the. Of the deficit and the debt that is built up. Could you see gold actually increase in value? Like how does that all pan out, do you think?
- [31:12]
A
Yeah, that's a good question and one we get asked a lot about. Really. It depends on your time frame. But in essence, unfortunately, gold you're not. We live in markets that are, you know, extremely correlated and you know, gold cannot stand alone as a safe haven when quote unquote, you know, there's a sh. Sh. Shoot, Shoot everything, ask questions later sort of mentality and a major de. Risking episode in. In risk and across the board. So yes, I think ultimately, if we talking what happened in. In 2008, gold will. Gold will sell off and gold will get dragged down with a lot along with every other asset class. Obviously silver and PGMs and sort of your higher beta industrial metals will sell off even further. But that's ultimately the bottom to buy. And we saw that exactly. You know, sort of. It bottomed about. Was about two months after Lehman, sort of October, November. Then you get the financial. Not the financial. Sorry, the. The monetary response, but. And perhaps even fiscal response. And I think. And then that's the sort of start of a new cycle. So if, you know, if we saying we're in the sixth inning of this gold cycle, which is aligned with it with an eighth inning of a sort of a financial market cycle where we think yeah, it's just. There's a lot of late cycle sort of like you described, sort of late, late cycle anecdotes. I think, you know, we're looking at a 20, 30% drawdown further in gold, depending on how steep the correction is in risk or in tech or in US Stocks before it relaunches into a new cycle.
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B
The additional element to this would be actually that if you were to have that scale of crisis, you would imagine that at this very heart would be confidence in. It would be that de Dollarization piece.
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A
Right.
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B
The confidence in US Treasuries at this scale of debt and whether that would be the trigger for US investors themselves as well as the rest of the world to sort of up the, the, the, the gold in their portfolio if you'd like. So actually gold might sort of, you know, have a, have a steeper incline than historically just because of the peculiar nature of the lack of confidence in the U.S. debt and treasury and so forth.
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A
Yeah, no, I mean, absolutely. If it's a, if it's quote unquote a crisis or confidence or a very specific USA US crisis that absolutely will ignite your typical quote unquote cell USA theme. And you're deleveraging everything from bonds to equities and obviously rotating into classic USA hedges such as gold. But investors also like cash and we saw that in 2010. Sometimes you just exit into cash and you're on the sidelines.
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B
Yeah, yeah. But still might be worthwhile going to Costco and buying your ounce of gold. Anyway, let's go into silver, which you described and the other pattern metals you already mentioned. Silver was even kind of more of a meme stock or meme trade. Why was that? Was that just because it's easier to access? It's smaller numbers like what was going on in silver compared to gold?
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A
Yeah, so silver we look at slightly different. Obviously it all will incorporate some of the major structural met macro gold themes. 50% of silver is investments and the rest sort of more industrial. But what has been happening in silver is that it's gone through sort of several years of deficits since about 2021 it was recording, you know, sort of supply demand deficits. A lot of that been driven by sort of rising industrial use for base electric electrification. Despite the fact that we, we've seen some sort of softening in PV demand. So you got, you had the confluence of deficit market plus let's say the debasement carryover trade from, from gold. And again, you know, silver is a fractional size of gold. So PGMS in terms of market size and, and liquidity and it's, I look at it and $50 was its sort of double top. It matched, matched that in 2011 and in 1980 and in a world that is debasing so quickly when gold is showing you the way, it's, you know, $50 is basically equivalent to $2,000 gold and you know, essentially was ceiling and now it's the new floor. So solar just had a very violent rerating in December, Jan. The narrative was there but yes, you needed the flows. And again retail's been leading this. I know sort of your comment earlier, you know, retail Generally is the sign of market maturation and sort of the end cycle, et cetera. It's not a really great sign. But retail's been leading everything from US stocks to gold to silver. And the institutional has actually been the laggard participants in, in a lot of these asset classes.
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B
Is that because silver's sort of poor man's gold and it's just easier on the retail side? I mean, I don't know, that's a bit facile but you know, what is it about silver that means that you know, retail lent in so heavily?
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A
The volatility, it's, it's sort of sort of bitcoin of gold. Yeah, we talked about, you know, these game of heart markets. You know, gold moves a couple percentage a day. Silver, Silver really is that high beta gold. It's extremely sensitive or relatively more sensitive to the US dollar versus gold. And so it's got, it's got that bang that, that, that some of these sort of more momentum driven investors are looking for.
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B
And then what about the actual sort of the physical side of, of of silver and I guess the other you know, you know, platinum, palladium and so forth. Like can you just talk a little bit about sort of their, you know, the, the physical markets and I guess weave in as well because there is the narrative around some of these metals having key roles in GPUs and you know, and the, and the digitization D that we use.
- [37:32]
A
Yeah, no, absolutely. Look, I think that the big differentiators is certainly they trade more on a fundamental basis. So specifically for silver and platinum both have recorded sort of year on year deficits, deficit figures and then amplifying that they increasingly are on whether it's the us, China, EU critical manoes list and that just strives in a world of you know, sort of distrust in a world of de globalization in a world where sovereigns and countries are looking to, to sort of de risk from each other. It just drives strategic stockpiling and you know, so that, that whether. So you get strategic. So stockpiling you've got sort of a broad based and growing industrial use case. You got deficit markets, you got the debasement trade coming in and then you got the new applications, you know, silver to a degree. PGMs sort of just broad bait like broad use across a range of different industrial applications. Yeah, it's the classic, you know, growth is, is great and they're coming off a pretty low base. But you know, for example like yes, platinum's used. Not everyone just presumes it's jewelry and auto but it's used in glass manufacturing, it's used in sort of the AI in hard disk drives, it's used in robotics. And so these new as you know we constantly move into an AI generated world. New applications are sort of are being developed for some of these metals. Again great growth rates just bare in mind off a pretty low base. And I think that that is enough of a cocktail for sort of investors to really re engage especially when they, when they're so cheap versus gold.
- [39:25]
B
Yeah. And are we see you know actually when you sort of look at the physical piece here are we you know, on this sort of strategic stock partying are we can we actually sort of see that going on in in particular the platinum group metals versus others. And I'm sort of interested in that because suddenly you've got you know that to me sounds a much more interesting story than gold where you've got you know, both a store of value narrative but also actually that industrial application in the new, you know, in the digitized world that we're heading into.
- [39:57]
A
Yes you can I think, I mean for, for PGMs trade flows are a great source, a great sort of indicator or proxy for strategic stockpiling. If you know we already seeing China importing more platinum than what their purported usage is. You see it on sort of exchange flows. I know that was very much tariff driven but the fact that 2025 will go down as the year of Trump tariffs and the threats and implication of ensuring that US metal trades at a premium to the rest of the world ensure that the US just simply onshored a ton of metal and your sort of COMEX and IMAX exchanges, but also OTC sort of inventories swelled in response to sort of that tariff threats and they haven't really unwound even though you know, tariffs have, have sort of taken a backseat. It's metals still sitting in the, in the US in various forms. So I think between it really I think is just indicative of the sort of regionalization that's happening. It's also for me I, you know my, one of my big takeaways looking at these metals and I think it's you see it more in your more niche commodities and is that we're going to just see increasingly more regional pricing and regional dislocations. We're not going to talk about a global price. We you need to really sort of drill down and talk about okay, what is, what is the price of gold? What form where are you talking about? What is, is this London gold is It Chinese gold are we talking about, you know, is this what, what is the price of platinum? But where. And I think that is, is going to be in sort of a large feature of, of precious metals, especially these more industrial critical metals going forward into the end, into the rest of this decade.
- [41:54]
B
I mean most of those metals sort of followed, roughly speaking the same sort of trajectory as gold. Palladium had that sort of huge run up in and around Covid. What was behind that if anything? Just as a sort of a counterexample.
- [42:07]
A
Yeah, palladium in a way similar to silver. It's a byproduct. So the supply response is either slow, very loud or just not there. Given that it's, it produces a byproduct to platinum and a byproduct to nickel in Russia. So it was sitting with structural deficits for you know, throughout the 2010s and again used in, in a mostly palladium demand is order demand, you know, at 80% of it. So it's structural deficits eventually took hold and that strongly rerated into Covid. The big rerating then post Covid was sort of the reopening theme, but also the fact, the fact that Russia, the Russian invaded so you had rhodium and palladium hit all time highs and we just didn't have those supply response especially from the recycling side as consumers are just holding onto cars for a lot longer and so. But of a lack of a supply response I guess on both, on both
- [43:12]
B
episodes as we sort of head into the summer, what if anything are sort of, you know, you and, and your colleagues, you know, what are the one or two things that everyone's sort of really focused on with respect to sort of, I guess primarily gold prices. But is it really sort of how the Fed's going to respond with the new new head there? And, and so, I mean, what are the one or two things that everyone is sort of waiting on or would be looking at as a signal to what gold's going to do for the rest of the year?
- [43:40]
A
Yeah, I think the Fed for me and for us is incredibly important. I mean it's the. We have a new Fed regime. We obviously it sort of was unprecedentedly very, very hawkish. We need to see what comes out from, from the task force, especially the ones that focus on inflation and on balance sheets. And that, I mean that is going to drive everything, is going to drive the narrative from everything from AR Tech risk sentiment, which will filter down the US dollar rates and it'll filter down into gold. So I think that's so from a top down perspective. Yeah. What sort of Fed's trajectory does the market buy? That this hawkish or was this just a FOMC that essentially wanted to really drive home the fact that they're independent from Trump and sort of came in and sort of overcompensated. And then from a bottom, bottom up perspective is we're looking at the reemergence of physical demand which has been pretty sluggish except for China, ex China, let's say over the past two months. So looking at, you know, does retail RE engage, what levels they're engaging at, what is the Middle East, India, Southeast Asia, China? It's incredibly important to our markets and to it to just really finding where those fundamental physical flaws are and you know, sort of assess, assessing how that and when that re engages. But it's, it's pretty soft summer for now.
- [45:16]
B
Out of interest, and I should have asked this earlier on how opaque is China in terms of buying, selling gold? Like how, how good is the data we get out of that?
- [45:26]
A
Like anything with probably every other commodity it's, there's data but you know, you, you've got to swear it with some of your own proprietary information. It's not great, but it's something. But yes, we look at everything from trade flows to your volumes. There's actually I'm going off, I'm off to China in next week or two weeks time that they're hosting Shanghai Platinum Week. So I think yes, in a world where you sort of geopolitically, the world has broken up for itself. I think, I think it's an opportune time for sure for, for you know, things like these industry events or conferences for people to get together to really just get a sense of what's happening on the ground and, and it's just physically being there and seeing what's happening in China I think is super helpful.
- [46:18]
B
That brings me nicely on to just ask about MK's Pamp and I guess you know, highlighting what you guys do and, and I guess when, when should listeners of the podcast think about reaching out to you?
- [46:28]
A
Yes, well, we have, we have a website, mpspant.com you can access us through there. But again we're plugged into the entire supply chain. We serve a range and diverse range of clients globally and obviously if you, if you need precious metals, needs hedging, needs access to physical markets, you know, we certainly are here to help. So happy to, to connect on, on any level.
- [46:55]
B
Great. Well I'll put, I'll put links to to you in the show notes and well, Nikki, it's been a real pleasure having you on and hopefully we can have you on again next year and see where the markets are at and what has panned out of the various forces and trends you'll be discussing.
- [47:10]
A
Great. Thanks Paul. I really appreciate it.
- [47:16]
B
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