Gold Stands Tall as Safe Haven, Experts Say at VRIC

Security concerns highlight gold's safe-haven status

Throughout the two day event, host Jay Martin, who is president and CEO of Cambridge House International, spoke about the trend of de-dollarization, emphasizing that it's now key for savvy resource investors to build positions outside the US dollar.

The concept of de-dollarization is centered around significant global changes, which are seen knocking the US dollar down from its current position of financial power.

Grant Williams told the audience the de-dollarization trend will take time to establish itself, but shouldn’t be dismissed. Williams is the author of the “Things That Make You Go Hmmm…” newsletter, as well as a senior advisor to Matterhorn Asset Management and a portfolio and strategy advisor to Vulpes Investment Management in Singapore.

“This is not a switch that gets flipped overnight, this is an alternative to a system that’s been put in place,” he said.

The expert stressed to attendees that they need to have access to US dollar alternatives. “I think that to everybody in this room (that’s) investing … the idea of having a Plan B right now in 2023 has never been more important in the last 50 years,” Williams said.

For a wide array of experts at VRIC, a Plan B starts with gold. Russell Gray, co-host and resident financial strategist for the Real Estate Guys Radio Show, said gold offers versatility for investors and provides options in the face of market chaos.

Williams added that recently while he was discussing strategies with a colleague, the idea of using gold to avoid taking risks elsewhere came up as a significant plus for the precious metal.

“The reason we like gold is the risks we don’t take while owning it right now … you’re not hostage to bad management, you’re not hostage to crazy incentive schemes,” Williams said he was told by his colleague. “There are so many things that you don’t have to worry about when you own gold as a liquidity reserve.”

Multiple VRIC panelists also pointed to gold's movement outside North America, where prices have been on the rise.

However, some cautioned that any investor thinking the power of the US dollar is about to be undermined entirely should not get too ahead of themselves. As one expert explained it, the world economy still rotates around the US dollar as a currency.

“Ultimately the US dollar is the most liquid and the most owned currency, and the bulk of all global economies, I think but three, trade in US dollars. So right now it still has the dominant position,” said Danielle Park, counsel and president at Venable Park.

Miners need to ramp up exploration efforts

During a gold forecast panel at VRIC, David Garofalo, chairman and CEO of Gold Royalty (NYSEAMERICAN:GROY), said there’s a serious need for revamped gold exploration from miners.

When asked if he’s seen a change in investor sentiment from “speculative growth” operations to value-holding assets, Garofalo said he hasn’t really noticed that happening.

“I think that’s because miners have effectively undermined themselves over the last 10 years or so,” he said. “They haven’t explored for any new gold, reserves are down 40 percent from their peak in 2012 … We have effectively shrunk ourselves as an industry.”

He said M&A has played a role in replacing new mining operations, which he slammed as a “zero-sum game” for the industry.

“The industry is not replacing what it’s depleting, and so obviously we’re not seeing a rotation of generalists into the space, because we haven’t reinvested back in ourselves and made a compelling value proposition for investors,” Garofalo told the audience.

The executive implored miners to use their assets and open up exploration, because otherwise no generalist investor will want to get near the industry “regardless of what (price) the commodity hits.”

Investor takeaway

When it comes to how to best face the challenges of a volatile market, gold took a marquee position among experts at VRIC.

As speculation rises about a world where the US dollar is no longer the backbone of the global economy, many believe gold is still one of the strongest safety nets for investors to rely on.