Industry insiders weigh in on the future of gold

We recently published a Gold Industry Report about the positive future outlook for gold. The current interest rate cycle, inflation situation, market volatility and geopolitical chaos are set to reaffirm gold’s status as a safe haven.

We recently published a Gold Industry Report about the positive future outlook for gold. The current interest rate cycle, inflation situation, market volatility and geopolitical chaos are set to reaffirm gold’s status as a safe haven.

To help investors gain insight into these matters, the report features the opinions of three fund managers, a gold miner and a research company. 

This included Terra Capital Portfolio Manager Matthew Langsford, Lowell Resources Funds Management CIO John Forwood, Triple Eight Capital Co-founder and Portfolio Manager Roscoe Widdup, Pilar Gold Inc Founder and CEO Jeremy Gray and Banyantree Investment Group Director and Investment Manager Zach Riaz.

Delving into the important factors that drive the gold price, and how the market has been reacting, some interesting statistics were discovered.

“The World Gold Council estimates gold buying by central banks at 400t in the September 2022 quarter; the highest in over 20 years. Central bank buying in the first three quarters of 2022 is estimated to be higher than any full year total since 1967” Matthew Langsford says in the report.

Uncovering valuable insights into treasury yield changes and their effects on gold, Mr Langsford continues: “Gold’s two sworn enemies are the US dollar and real yields on US treasuries. Entering 2022, the real yield on a 10 year US treasury was negative 1%. Fast forward to today (11/11/22), the real yield on that same US treasury is positive 1.4%. The commentators are calling that shift the fastest on record.”

He shares that because gold doesn’t have a yield, a change in real yields (the opportunity cost) is a serious factor. Real yields falling is a great tailwind for gold, but real yields rising to that degree is an enormous headwind.  

John Forwood comments on the rising costs in gold mining that are clearly apparent given the recent GDX figures, after they reported a 19.7% year-on-year rise in the AISC of their top 25 gold producers, averaging US$1,281/oz for Q2 CY22. 

“I don’t think cost escalation has come to an end, although anecdotally here in Australia you are hearing that things like steel and staff, the pressures on those things are starting to ease. The biggest single input is energy (through oil). We could see another spike in the oil price, and if that happens then you certainly will see further cost escalation,” says Mr Forwoord.

Jeremy Gray has a solid investment thesis when it comes to identifying opportunities in a rising gold price environment, stating: “Ultimately, if you think the market (gold price) is going to go up, you’ve got to buy every high cost producer there is, and forget about the low cost producers.”

Whereas Zach Riaz can see some weakness in the US dollar once the Fed shows signs of moderating the pace of their rate hikes, stating that:

“The US dollar is very overbought, it’s a crowded trade. I’m not sure how many times investors have to see this story. When something becomes so crowded, you only need a slight change in the underlying mechanics of the broader economy – a stabilisation of inflation or a slight pivot of tone from the Fed – and you will see that crowded trade get unwound.”

Last week, John Forwood, Roscoe Widdup and Zach Riaz joined us online for the first installment of The Insider: Investing in Gold Summit, where we discussed what has driven the recent performance of the gold price and how it is expected to perform in 2023. Click here to watch the session replay.

Join us next Wednesday, 30th November at 12pm (AEDT), for the second and final installment of The Insider: Investing in Gold Summit, where we will be joined by companies operating within the gold market, including a gold explorer and a multinational producer. Click here to register for the session. 

Past performance is not a reliable indicator of future performance.

Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets’ position. The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.

Any communication from Reach has been prepared with all reasonable care and may be based on unverified information obtained from sources believed to be reliable. However, except to the extent required by law, Reach including its representatives, employees, agents or contractors are not liable to you for any loss or damage resulting directly or indirectly from access to information and do not accept any responsibility for errors and omissions, nor make any warranty or representation as to the reliability, suitability, confidentiality, accuracy, completeness or timeliness of information as it may change without notice and so Reach has no obligation to keep the information current including Forward Looking Statements. Forward Looking Statements relate to intentions, future acts and events that are only predictions and are subject to risks, uncertainties and assumptions, which are outside the control of Reach. These may include commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied and given these uncertainties, readers are cautioned not to place reliance on Forward Looking Statements. Information and views from third parties may be produced solely for convenience and are not endorsed nor reflective of Reach’s position. Reach does not warrant or represent that any communication sent from Reach is free from viruses, errors, defects or cyber fraud interception. You must do all that is necessary (including using virus checking software) to satisfy yourself that accessing communication from Reach will not adversely affect your computer system(s). Bank account details should be verified via a telephone call to a trusted phone number. Reach or its suppliers retain copyright for any of their communication and any unauthorised use may result in legal action.


This Week’s News


8 May 2024

BHP Xplor winner coming to the ASX


16 April 2024

Gold at record highs – so why aren’t gold stocks?


22 November 2023

Rare Earths Industry Review: Part 2

General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG)

including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.