Podcast Summary: "Why is everyone buying gold?"

Podcast: The Indicator from Planet Money (NPR)
Date: October 1, 2025
Hosts: Adrienne Ma, Darian Woods
Guest: Campbell Harvey (Finance Professor), Ricky Mulvey (Financial Podcaster)

Overview

This episode explores the recent surge in gold prices despite cooled inflation, unpacking the multifaceted reasons behind the modern "gold rush." The hosts dissect why gold, usually seen as an inflation hedge, is breaking records now and who’s driving the demand. Featuring insights from finance professor Campbell Harvey, the episode delves into de-dollarization, central bank activity, regulatory shifts, and gold's long-term stability.

Key Discussion Points & Insights

1. Gold's Unusual Surge

• Gold as an Inflation Hedge
  • Typically, gold rises with inflation, but the current surge comes as inflation cools.
  • “It's been beating the major stock indexes and… they represent huge companies that build things and are making money versus a metal that just kind of sits there even though it looks nice.”
    — Adrienne Ma (01:17)

2. Central Banks and De-Dollarization

• De-Dollarization Explained
  • Campbell Harvey attributes much of the boom to central banks, notably Russia and China, reducing their reliance on the US dollar.
  • Geopolitical moves, like the US and allies freezing Russian assets post-Ukraine invasion, have prompted countries to diversify away from dollar reserves toward gold.
  • “So they're building reserves and this is important in terms of the gold market dynamics.”
    — Campbell Harvey (04:14)
• Weaponization of the Dollar
  • The freezing of Russia’s bank accounts illustrated the risks of holding dollar reserves.

3. New Regulatory Factors: Insurance and Commercial Banks

• China’s Insurance Companies
  • China recently allowed insurance companies to hold up to 1% of their reserves in gold, equating to a potential $27 billion influx.
  • “That represents $27 billion of buying.”
    — Campbell Harvey (04:55)
• Speculators and Basel III Rules
  • Speculative buyers are betting on potential regulatory changes (Basel III), which may let commercial banks count gold as a high-quality liquid asset, increasing demand further.
  • “If we assume a 5% allocation to gold… that would cause a demand shock that would dwarf what happened when the ETFs on gold were introduced.”
    — Campbell Harvey (07:23)
• ETF Effect
  • The advent of gold ETFs in the early 2000s transformed gold trading for everyday investors and already locked up $180 billion in physical gold.

4. Gold Supply Constraints

• Limited Physical Supply
  • The total above-ground gold could fit into about three Olympic-sized pools, making supply very finite.
  • “All the gold that's been mined throughout history can fit in about three Olympic sized swimming pools.”
    — Adrienne Ma (08:25)
• Supply Inelasticity
  • Mining production is relatively unresponsive to price hikes, limiting new supply even as prices soar.

5. Gold in the Long Run: Stability and Value

• Gold’s Value Over Centuries
  • Despite price volatility in the short- and medium-term, gold’s long-term (centuries) real value is stable.
  • Campbell Harvey illustrates with Roman centurion pay, showing 2,000 years ago they earned 38 ounces of gold annually—a sum that’s comparable in value today to a US Army major’s salary.
    • “The long-term real return of gold, as in what it's worth after stripping away inflation, is roughly zero.”
      — Adrienne Ma (09:35)
  • “So two things are true. The price of gold is relatively stable in the long term, like centuries. But gold can go up and down a lot over shorter periods of time.”
    — Darian Woods (09:55)

Notable Quotes & Memorable Moments

• On de-dollarization and central banks:
  “The world isn't relying on US Dollars as much as it used to. And there are a couple of reasons for that. U.S. treasury bonds aren't as risk free as they used to be given a ballooning deficit. But also the Russia Ukraine war.”
  — Darian Woods (03:31)
• On gold’s limited supply:
  “Enough for Scrooge McDuck to dive into, but not so much for the rest of the world.”
  — Darian Woods (08:34)
• On gold's long-term value:
  “In gold, [Roman centurions] were paid 38 ounces a year. And that translates today to the wage of a U.S. army major.”
  — Campbell Harvey (09:16)
• On speculation over regulatory change:
  “If this potential rule change turns into reality and commercial banks can buy gold to back up their deposits, Campbell thinks it would be a big deal.”
  — Darian Woods (07:12)

Timestamps for Key Segments

• [02:49] — Gold's traditional role as inflation hedge questioned
• [03:31] — De-dollarization and central banks’ gold buying explained
• [04:49] — China’s insurance companies entering the gold market
• [05:24] — Basel III rules and speculative buying
• [08:25] — Gold’s limited supply in the global market
• [09:16] — Historical perspective on gold’s value
• [09:55] — Gold’s stability over centuries vs. short-term volatility
• [10:17] — Recap: three waves of buyers and the uncertainty ahead

Closing Reflection

The episode concludes on an open note: gold’s price is at historic highs due to a “wave of new buyers,” especially foreign central banks, institutional investors, and speculators gambling on regulatory shifts. But history cautions that, while gold can spike, its real value tends toward long-term stability. Whether this gold rush will last depends on unresolved global trends like de-dollarization and potential changes in bank regulations.

For more on Basel III and its impact, see the show's linked resources.