In a recent episode of the Money Metals podcast, host Mike Maharrey engaged in a compelling discussion with Joseph Cavatoni, a market strategist for the World Gold Council. Cavatoni, a veteran of BlackRock, shared his insights on the evolving landscape of the gold market, long-term investment strategies, central bank buying trends, and legislative efforts aimed at integrating gold into the financial system. This conversation sheds light on the significant transformation in how gold is perceived and utilized in investment portfolios today.
From Fringe to Financial Fixture: The U.S. Wakes Up to Gold
Over the past eight years, Cavatoni has witnessed a remarkable shift in American attitudes toward gold. Once regarded as a niche asset for “gold bugs,” gold has gained substantial traction, particularly among institutional investors.
“When I joined the Council eight years ago, the U.S. wasn’t very plugged into gold,” Cavatoni noted. “Now we’re seeing greater awareness and a real desire to understand gold’s role in a portfolio, not just at the consumer level but at institutions like BlackRock.”
This mainstream acceptance of gold is increasingly evident, with global firms now recommending it as a hedge against inflation and geopolitical uncertainty. The recognition of gold’s value in strategic portfolio guidance marks a significant evolution in investment philosophy.
Record Highs & Consolidation: What’s Next?
Gold reached a historic peak of $3,500 per ounce in April 2024, followed by a consolidation phase with prices fluctuating between $3,200 and $3,400. This period of stabilization comes after an impressive run of 40 record highs within the year.
Cavatoni explained that while gold’s average historical return since the end of the gold standard in 1971 is around 8% annually, recent returns have soared to 25–26% year-to-date. This surge is attributed to global uncertainty, geopolitical risks, and a flight to safe-haven assets.
“We’re likely in a consolidation phase,” he stated. “Investors, central banks, and consumers are holding, not selling. Jewelry demand is weaker due to high prices, but investment demand remains strong.”
Central Banks Are Driving Demand—And It’s Not Slowing Down
Central bank gold buying has emerged as a significant force in the market, with purchases exceeding 1,000 metric tons annually for three consecutive years, accounting for 20% of global gold demand.
In the World Gold Council’s 8th annual central bank survey, a record 73 banks participated, revealing key findings:
Nearly 50% of central banks plan to increase gold reserves in the next 12 months, up from 29% last year.
95% expect global central bank gold reserves to grow, compared to 80% the previous year.
76% are increasing gold exposure at the expense of fiat currencies like the U.S. dollar and the euro.
This trend reflects a strategic desire to diversify away from dollar-based assets, rather than eliminate them entirely. “It’s not de-dollarization,” Cavatoni clarified, “but a rebalancing of reserves toward real assets with strategic characteristics.”
Fiscal Reckoning and Gold’s Strategic Role
The discussion also touched on U.S. fiscal policy and rising national debt. Cavatoni warned that markets are beginning to price in long-term structural risks, emphasizing the importance of gold as a strategic long-term hold.
“These systemic risks are precisely why gold makes sense as a strategic long-term hold,” he asserted. “Real assets are essential when you’re dealing with this kind of sovereign risk.”
Public Policy Initiatives: Gold Access, Supply Chain Reform & State-Level Action
The World Gold Council is actively engaged in various legislative efforts aimed at enhancing gold’s role in the financial system.
Senate Bill 989 – Precious Metals Parity Act
This bipartisan bill would allow mutual funds to hold gold and other precious metals without punitive tax treatment, classifying them as “good income” assets. If passed, it could facilitate easier incorporation of gold into 401(k)s and retirement funds.
“It’s a small bill but strategically important,” Cavatoni remarked. “It allows more investors exposure to gold without tax penalties.”
Artisanal Mining & Supply Chain Legitimacy
High gold prices have attracted criminal organizations into artisanal mining operations in developing regions. The Council is collaborating with G7 and G20 nations to:
Promote legitimate, trackable supply chains.
Support local economies and miners.
Reduce child labor and mercury use.
Create trusted gold buying programs with central banks.
State-Level Sound Money Initiatives
The Council is also backing state-level initiatives in Texas, Florida, Utah, Wyoming, and Arizona, where governments are:
Eliminating sales tax on bullion.
Recognizing gold and silver as legal tender.
Creating payment systems backed by state gold depositories.
Cavatoni emphasized that while state treasurers often prefer flexibility over mandates, many are exploring how gold can stabilize their reserves and provide citizens with alternative savings and payment options.
Federal Capital Gains Reform? Not Yet.
While advocates for gold are pushing for capital gains tax reform, Cavatoni indicated that this effort is currently on hold. With the federal government seeking revenue increases, the removal of the 28% collectibles rate may not be feasible at this time.
Instead, the Council is focusing on expanding portfolio access via mutual funds, which could generate net revenue and attract broader ownership, paving the way for future tax reform.
Final Thoughts: Gold as a Long-Term Compass
In conclusion, Cavatoni encouraged investors to maintain a long-term perspective and not get caught up in the daily fluctuations of the market.
“The short-term is messy,” he acknowledged. “But the fundamentals—currency debasement, fiscal reckoning, geopolitical uncertainty—make gold a smart and necessary part of any diversified portfolio.”
For those seeking continued insights, Cavatoni recommended visiting gold.org for global policy and Council initiatives, and goldhub.com for data, trends, surveys, and market research. He also highlighted the upcoming Q2 2025 Gold Demand Trends report and a recent release outlining historical sell-offs and warning signals for gold prices. Joe Cavatoni can be found on X (formerly Twitter) via @JCavatoni_WGC.
This engaging conversation not only highlights the current state of the gold market but also emphasizes its growing importance as a strategic asset in an increasingly uncertain world.
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