Gold is an important asset class to have in a portfolio and even the central banking community sees it so, World Gold Council chief executive officer (CEO) David Tait said on March 7 at Moneycontrol's Global Wealth Summit 2025.
Gold prices are up more than 12 percent year-to-date and continue to hit record highs. On March 6, gold and silver traded steadily ahead of the US job reports; ECB rate cuts and weakness in the dollar index supported prices.
“The global long-term sovereign debt has reached about $76 trillion and is going to be added to by a further $13 trillion. Tariffs and inflationary push are going to steepen yield curves, which is going to make the reality of financing that debt very, very relevant to people. One asset class that always steps into that gap is gold. I don’t see an alternative to (gold prices) going higher," Tait said.
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The next push to gold prices
Tait believes that there is an enormous opportunity, not just in India but in China and Japan, which will help the gold ETF (exchange-traded fund) market to grow. “There are many institutions, asset managers, mutual funds, pools of capital out there that have hitherto not looked at gold.”
The older generation in Japan passing on their wealth to a younger generation, who are financially literate, might also help people moving into gold, he believes.
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“In China, the insurance industry has just opened up their insurance industry to the possibility to invest in gold. It's just 1 percent now, but it's a $4.8 trillion market. If they invested just 5 percent, they're more likely to invest 10 to 15% in gold. Any one of you can do the mathematics now,” Tait said.
In India, the push is going to come from continued central bank buying.
"In India, you have an enormous younger generation. But the added push is going to come from two things: one, continued central bank buying, predominantly central banks who are developing central banks who still have a relatively lower exposure to gold (in the backdrop of economic and geopolitical uncertainty). And, they manage their reserves very much like you do yourself. So I think they will continue to accumulate," he said.
Alternative to sovereign gold bonds
Earlier this year, the Indian central government decided to discontinue the Sovereign Gold Bond (SGB) scheme, citing a high cost of borrowing associated with the instrument.
The SGB scheme was introduced in November 2015 as an alternative to physical gold, allowing retail investors to invest in paper gold.
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Tait thinks that SBGs were very successful for investors, perhaps less so for the government. “I think that the instrument that will take the place of sovereign gold bonds is going to be gold ETFs. They are gold-backed, 100 percent. They're listed. They're regulated. They are a very safe way of investing in gold,” he said.
Fort Knox issue
In the recent past, a controversy has arisen about the US government not having conducted a full, independent audit of the gold reserves at Fort Knox in the US since 1953. This has fueled speculation that some or all of the gold might be missing or secretly leased out.
When asked if Fort Knox had the stated gold reserves, Tait said, "I would say 100 percent yes. It's absurd to suggest it's not. Interestingly enough, even though the World Gold Council owns GLD and GLDM, the two largest gold ETFs, we still have people, questioning me that we don't have the gold. I assure you. I've seen it, I've touched it with my own hands. Every single gram of it is there. It is quite an impressive sight."
Bitcoin vs gold
There has been a push in recent years for using bitcoin as an alternative to both the US dollar and gold.
“It is somewhat amazing to me that people will commit their personal wealth to a string of digital code with no explanation whatsoever,” Tait said.
“We all know deep down inside that it's possible for it (bitcoin) to go to zero. I'm not going to be one of these people that say that it's bound to collapse. It might perpetuate, but I do look upon it as a speculative tool only. It would not be a store of value for me. Gold is something that you hold for a lifetime. It should always form part of the portfolio. The World Gold Council's official view is 7-8 percent, but I would say 10 to 15 percent of one’s portfolio,” he added.
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Advice to investors
According to Tait, if individuals do have gold as part of their portfolio, they are likely to fall foul of the geopolitical and geo-economic issues that we're seeing at the moment.
"In fact, even the central banking community views gold as part of their overall portfolio as importantly as individual investors should," he said.
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