Gold Price Will Rise Again In 2026?

The reason that China has been divesting US treasuries and buying gold is mostly because they are getting ready for a potential war. >> Right now we are at about the 4,000 level. And then if the our target [music] price is to hit $6,000 by the end of the year, >> it's a 50%. Everyone was buying the Magnificent 7 because they were the cash co. Now they have committed a lot to a lot of capeex to develop their AI. All the magnificent seven have started to issue debt. >> If you look at the sheer P ratio, it's like more than 40 times. So what do you think about the market valuation? [music] >> The valuation per se doesn't really matter. What matter is >> welcome back to another episode of Arriato deep dive. And guess who we have again a very familiar face who has appeared in my channel multiple times because he has given so many very insightful and golden insights. I'm inviting Lauren to come back again. He's a portfolio fund manager who actually advised a lot of high net worth clients how to manage their multi-million dollar portfolio. And I think recently the situation of the market has been very tricky. So, thank you for coming here all the way. >> Hi, Chloe. It's always a pleasure to be back with you in this fantastic studio. >> It is a fantastic place. Since we did the interview a few months ago, the market has been very volatile, right? Everything has been coming down. Gold itself has come down like 20% from its peak. What is your take on the general broad market? Why do you think that this correction is happening and is it concerning for investors? >> Well, I would say that uh people will have to get used of volatility. M >> I think that over the past few years there were a lot of complacency and everyone was >> uh used to to see markets moving in one way. >> If we remember I mean outside the covid crash of 2020 it was almost a one way. I mean last year we had some tariff tren around April but at the end of the day the the volatility was very low compared to history and I think that this year in fact we are just back in a more normal year where markets are moving up and down and we are back in a volatility trend and I would say that there's nothing to worry about >> gold neither that good quality stock I think that nothing has really changed since we last The the difference is that some investor have been getting more nervous because of the war in the Middle East, the extension of the war in the Eastern Europe, the tension in Asia as well. So I think all this create a lot of volatility and investor must I would say play with it and it's in fact offers a lot of opportunity for those who can read the chart and who can bear the volatility and also use this pullback to invest more. M so you personally see that it's like a form of pullback rather than like uh beginning of market crash because you know there's so many uh I think news out there talking about AI bubble uh it's very overvalued right now if you look at the sheila p ratio it's like more than 40 times so what do you think about the market valuation >> I think the last time we met we discussed uh the issue of asset in public institution and in private institution ution and at the end of the day it's always a tradeoff between investing between the three major asset class which are bonds, stocks and gold >> in this kind of geopolitical environment and in an environment where all governments in the world are increasing their debt level. I mean the only way to preserve your wealth because at the end of the day we are also in a world of structural inflation is to own good quality stocks and to own commodities and precious metal. Uh capital will have to be reallocated out of the the bond market or the fixed income market into other asset classes and at the end of the day there are only precious metal and equities that are investable. I mean there are also other kind of asset like real estate and so on but I would say for many investor the the investment the investment horizon is limited to to stocks and gold >> and so it's not that I think that we the valuation per se doesn't really matter >> what matter is to select to invest in companies which are sound >> and which are able to generate cash flow flow and which will go through the business cycle safely because they have a proven business model >> like I know central banks you know for the past few years they have been buying gold has there been any like like decrease in purchasing of gold lately or actually they added more do you have insights on >> before we continue I have to share with you this imagine waking up every morning in the next 9 days and long gives you a free piece of top US stocks one day could be Nvidia the next Apple, then Microsoft, Google, Meta, and more. Basically, you'll receive about $610 worth of great company stocks every single day. 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So make sure to click on the link in the description box below to get started right away. >> I think it depends of which symptoms bank we are talking about. If you look at China, China keeps buying gold every month. >> In fact over the past the last three months when the gold price was down the PBOC has increased the pace of buying gold. So clearly the trend for Chinese the Chinese central bank has not changed. But if you look at other central banks and here we see the impact of the wars on different country. We I mean we have seen that central bank like the central bank of Turkey was forced to sell gold to defend the Turkish lera during the first phase of the war. We all know that in the Middle East many investor was were kind of forced seller of gold because they have to pay for the repair of the war. So this has clearly pressure the price of gold downward. But I would say that if you look at central bank of China, it keeps buying and I think that in fact smart investor keeps accumulating gold over the past few weeks and months because they know that at the end of the day gold will be much higher in 12 or 24 months. >> M so what is your target for gold in the next 12 to 24 months? Well, last time we met, I think that I I give you the $6,000 target by the end of the I haven't changed really >> by the end of the year, right? By the end of >> before the end of the year. I think that in fact over the past few weeks since the end of June, we have seen all the dips below 4,000 being bought >> uh and it's not only by central bank but also by other investors. So I think that the flow is here for gold price and it's just a matter of time that we have a trigger for the gold price to break uh the 4,400 level which for those who look at the chart is the first resistance and on this 4,400 level is broken on the upside. In fact, we resume the uptrend that we were since the start of the year. And then the next stop is the 52- week high at 5,500 and 6,000 by the end of the year. Probably before Christmas hopefully, [laughter] >> man. It will be a very rich and prosperous Christmas at this current level. Like um why do you think that it's hard for the gold price to go down further from here? Well, as I just said, I mean the force seller, what I call the for seller like the Turkish central bank or uh the investor in the Middle East have probably sold their position. So they are not pushing gold prices lower anymore. On the other hand, I would think that you have seen many investor and opportunistic investor have started to >> accumulate >> accumulate at the 4,000 level because it's clearly a psychological level. I don't really know what would be the trigger over the next few weeks. But I would think that the escalation of the conflict in Eastern Europe and in the Middle East will probably push a lot of investor to realize that in times of war, they need to accumulate more gold. And at the end of the day uh if you look at the the gold price relative to other asset class in fact it was relatively expensive in the short term in February and March but now it's really cheap compared to let's say the dual jones or even other asset classes. In in February, we had kind of overreaction on the upside >> which made that gold was relatively expensive at the time compared to the door. After the correction, I would say that now in fact we have an overreaction on the downside. >> It means that now in fact in terms of relative value I would think that gold is more attractive than the do. I would also think that investor must understand that in a bull market. In fact, uh it's not going only one way. There's always pullback and retracement. And I think that we are in this kind of phase of the gold bull market where we have the slingshot on the downside. But we can expect another slingshot on the upside over the next few months and until the end of the year. >> So right now we are at about the 4,000 level. And then if the our target price is to hit $6,000 by the end of the year, that's another like uh almost like a >> it's a 50% [laughter] 50% upside from here. I would think that also we will see a much more much more many tension in North Asia. I mean there are a lot of tension around Taiwan there also a lot of tension around Korea. So this will probably also push more Asian investor to increase their gold allocation over the next few weeks and months. >> Uh for you like right now we also know that the US market is also coming down right like um some of the you know magnificent 7 stocks they also have dropped like over 20%. So during this discounted period like if investors have limited funds where would you think it's a better place to place would they be buying the manington 7 for example or actually allocate into gold? >> Well I would say that it depends of your time horizon. I think that if you have a two three year time horizon in fact gold is still the best investment to do today. Of course, I wouldn't recommend to do a 100% allocation to gold, but I also I'm become a bit more cautious about the Magnificent 7 because the story around the Magnificent 7 has changed over the past few months. Everyone was buying the Magnificent 7 because they were the cash co. They were delivering a lot of cash flow every quarter. >> Now they have committed a to a lot of capeex to develop their AI capabilities. And in fact, all the Magnificent 7 have started to issue debt. And so they move from cash to uh raising their debt level. And I'm I'm quite a bit worried about this because usually it means that down the road they will do they will have to repay this debt. They will have to give some get some money allocated to that uh interest payment. So I would think that investor must understand that it's no more the cash core situation that we were let's say 12 months ago for these stocks >> and I think that if they look at US equities in general I would think that in fact there are better opportunities in other sector in the US equity market than the magnificent 7 because a lot of companies if I take the oil and gas sector for example I mean uh everyone can have its opinion on the oil price but I would think that we will all agree that the oil price will be sustainably higher for longer because of all this war in fact a lot of oil companies are now trading at discount cash flow which are very attractive and I mean for us oil and gas company there's not no geopolitical risk >> and the higher the oil price the higher their cash flow and in fact contrary to the magnificent seven in fact this oil and Gas companies have very limited capeex plan in the coming quarters and years meaning that they are going to print >> uh dollars with the rise in the oil price and I'm I'm following the Warren Buffett approach. I'm I'm looking at which companies are generating cash flow >> and where this cash are mispriced and I would say that as of today the oil and gas company the big oil and gas companies in the US are clearly mispriced in terms of price cash flow and that's why I mean if we look at at the example of Warren Buffett I mean it's well known that he has he has built a very big stake in accidental petroleum he own a very big stake in Chevron so I guess is also convinced that these companies I would say mispriced in terms of cash generation for the next one two years. M so that's why we must look deeper in the below the surface like in terms of really looking at the numbers the cash flow uh before you buy any individual stocks in this case rather than just buy based on oh because the the company is famous right like you really want to drill down so I'm also very curious about your point of view on silver because silver is down even more than gold right I think it's like what 30 to even 40 30 plus% down right what is causing the silver crash >> silver move with in pair with gold is just that it's there's higher leverage in terms of performance. So when gold goes up, silver goes much much faster up and when gold goes down, silver correct also much faster than gold. I don't think there's anything in particular in silver. In fact uh if there are many if there are signs is there these are bullish signs because over the past few months China which is one of the major silver producer in the world has started to place some export restriction >> and in fact the chi the the Chinese government is even buying silver on the international market meaning that China being one of the largest silver producer in the world is even increasing is silver stake at this current price by buying internationally. I mean also silver people must understand that it's used for aerospace defense. So it has a geopolitical connotation and if there is a conflict one day between the US and China I mean silver will be weaponized. So the price of silver will be impacted positively because let's say if China completely restrict uh silver export to the rest of the world clearly there will be a shortage of silver. >> Do you think that's their strategy that they are buying from somewhere else and then at the same time they restrict their export so that to uh use it as a [laughter] weapon? Well, I I I I don't know, but I think that my opinion is that we are closer than have a to a confrontation between the US and China. It seems inevitable. I mean, if you listen to the recent news in the US, it looks like President Trump is ready to do the midterm election campaign on the on anti-China. So I'm not really sure how China will react to this. But clearly China will take action and >> uh unfortunately for the rest of the world and for the US, China is a big producer of silver, is a big producer of rare earth, it's a big producer of many commodities. So even that China has been buying and building a strategic reserve of commodities over the past few years, I think that they will probably use this also as a weapon against the western world. >> So that is why in uncertainty times like this that's where actually gold especially also has its power because when people are afraid they generally like to go back to gold as the safe asset heaven, right? >> Yes. And also I think that it's important to understand that in a times of war you don't own the debt of your adversary. And that's why China has been structurally divesting in US treasuries and replacing US treasuries by buying gold >> because China knows and China has seen what happened to Russian asset which were frozen after the start of the of the war with Ukraine. So I think that China doesn't want to be in the same situation. Would a war happen with the US or would a war happen in North Asia where China will be like a proxy war against China. So I think that China is I mean we all know that China is always prepared many years ahead of the the events. >> Sure. So I guess that uh the the reason that China has been divesting US treasuries and buying gold is mostly because they are getting ready for a potential war with the US. >> Interesting. And I really like how I think the way that you invest in like like you know commodities or even precious metals they you really look at the very big picture of you know geopolitical risk and all this and which makes it I think very insightful for our listeners here because these are something that we seldom really think about. So what is your take like for people who are watching right now? What do you think will be a reasonable allocation for gold or potentially silver? I know you did mention about it before but in case some of them are completely new, right? Um yeah, what's your ad advice for that? >> Going back to the basics is uh the equal weight portfolio >> of AR Brown where you have 25 25. So if you if you think like I think that uh government bonds are in uninvestable because they are in fact the most riskiest part of the portfolio. In fact, you should replace the 25% allocation of government bonds by commodity by commodities and mostly gold because gold is at the end of the day the easiest commodities to store for many investor and is also I would say the less volatile of the commodities in general. So >> I wouldn't say that you have to own 50% of your portfolio in precious metal but I would say that at least 30 to 40% is advisable in the Q environment. >> Wow. So out of the 30 to 40% right how many how many percentage for gold and how many percentage for let's say silver? >> It depends of your risk uh profile. If you if you are a risk lover, in fact, you should overweight silver compared to gold because as I just said, >> silver has a higher volatility, so has higher potential higher return. >> But I would say that for a normal investor, I would I would I would put like 30% in gold and 10% in silver. one to three allocation would be I would say adequate because at the end of the day the silver volatility compared to the the gold volatility is around 1 to3 as well. So what is the previously you did mention this ratio called silver to gold or gold to silver ratio right how how does this chart look like right now >> bullish for silver >> okay >> given that silver has corrected more than than gold >> but as I just said it all depends of your ability to take the volatility in this environment and also your time horizon in terms of investment because as we just saw I mean gold can have a 20% % pullback. Silver can have a 30% pullback. But if you are, I would say an investor who are able to hold and to accumulate in this pullback. In fact, it's it's an opportunity. But if you need cash for personal reason, I would think that you need to have a bigger allocation to gold rather than silver because that's always a risk that uh we are we have we experience a correction. I would say >> I'm very curious because I know like you are always like uh like uh uh supporting buying physical gold or even like physical silver and because uh when it comes to ETF that is the counterparty risk right so uh but when we buy silver for example like I felt like uh you have to buy 1 kg to be [laughter] to be something that it's like substantial but even if let's say I decided to buy a 1 kg bar of silver. Is it liquid to even decide to sell eventually? >> It's more difficult to sell than gold. I mean, because of course there's no I mean the spread that the bullion trader will will quote you at the at the sale will be higher because there's less demand. That's why that's why to be honest for most investor I would just recommend to buy physical gold. M >> I think that silver if someone wants they can invest but that's a bulky it's a bulky investment because as you just said you need you need to buy by the kg >> at least and I would say that also the liquidity of this 1 kg silver bar is relatively low and is difficult to to sell but it al all depends of what type of investor you are also so but I would say For a common retail investor, uh, buying a se buying gold coins is is the best way. >> I see. That's very interesting. Like if the investor has very long-term horizon, then liquidity become less of an issue because eventually when the asset price increases uh even though the spread is higher, the person will still be profitable if buying like a 1 kg silver bar. >> Yeah, that's right. I mean I on silver I think that on a three five year time horizon we we can look at a return of four times your your money from here. >> Wow. >> I wouldn't be surprised that in four times in four years time horizon we have a silver price at $200 per >> right now it's 50. >> It's around 55 56. >> That's very interesting. Uh but again uh it depends of your ability to to hold your position for that long period of time. I would say >> uh right now we are also seeing something quite interesting happening to the US equity market where the S&P 500 didn't move much but there are quite a lot of tech companies have come down a lot. What is causing this mismatch in the the the drop? Well, I would say that I mean I will take the same example of the washing machine inside the S&P 500. So in fact, if you look at the performance by sector year to date, the oil and gas se the energy sector is the best sector, the best performance sector and I think that not many people would have expect this at the start of the year because the consensus was still to buy the tech. uh regarding the tech I mean as I just explained many tech companies have moved from uh cash core into companies issuing debt. So this has changed I would say the outlook for for many investor for these companies. >> I think there were a lot of hype also in May and June around the semiconductor sector. M >> I mean I'm quite relatively I'm relatively constru constructive on semiconductor stocks >> but I would think that they still need to correct at least by five to 10 or 15% before we can get an attractive entry point on these semiconductor stocks. >> I mean you had the SKI listing of the ADI in New York. Mhm. >> I think all this was kind of a lot of signs that the there was kind of I would say hype the hype was very high around the semiconductor while I would say the short-term fundamentals were not changing any much >> I would say. So, we are going back in into the long-term uptrend and for I would say to go back to this long-term trend, we still need to see let's let's say a 5 to 15% pullback from today's level. M >> I think that many companies of the in the semiconductor sector are quite attractive in terms of long-term investment but I would say that we need to wait for the IP to come down and in fact we are not very far from this because we start to read everywhere in the news that this is the end of the the semiconductor bull market. This is the the burst of the AI bubble. I mean it means that the hype is slowly disappearing. So I would I would just wait for a bit more of a correction and select the good stock. But I think that what people must be very careful they must look at cash flow generation because at the end of the day it's very important. >> I think that also during time of wars what people may not understand is that interest rates are going up. Long-term bond yields are going always up. M >> so for those companies where we have which have debt >> which need to issue new debt they will have to pay more in terms of interest payment. So I think that over the next one two years you will see much many more focus on these companies which are the real cash >> and I think it's going to is going to be a much more stock picking market rather than buy a sector or buy an index than it has been over the past three years. >> Wow that's very interesting. So in a way that we need to be more selective in terms of our especially you want to do individual stocks you really want to look at the balance sheet the financial statements the cash flow statement to ensure that you really pick quality business that are not in trouble like in too much debt right and but at the same time for people who are generally more uh not very into stock picks do you still think that ETF will be a better options? Well, I think they can do ETF, but I would think that they should diversify across ETF. They should look at other sector because as I just said, there are many sectors which are mispriced where the cash flow generation is mispriced. There are many sectors in fact also that are going to benefit from the reindustrialization of the US. uh is something that has gone a bit under the radar over the past few months but uh since the tariff are still here at the end of the day the the US will need to to be reindustrialized so there are a lot of manufacturing companies or industrial companies which have very good balance sheet because these companies >> I mean had to manage their balance sheet very drastically during the past crisis and in fact they have not taken into into debt and they are very profitable and they generate very big free cash flow. So I think it's going to be a very stock picking market. I guess that is it's a good market for bay away because usually that's where they are able to deliver a good performance at least compare to to the crowd because they have the capabilities to select these kind of companies. M so um talking about the cash holding right so Berkshire is holding about 30% cash so for yourself in this situation like how um how what is your cash percentage >> I would think that uh in the Q environment because stocks have pulled back gold has pulled back is the time to deploy the cash >> I mean I don't know if it's today tomorrow or next week but I would think that it's time to reduce the cash allocation because I think that People also must understand we are in a structurally inflationary environment >> and what you can buy with $100 today you will not be able to buy with $100 in six months time. >> So it's better to buy to invest this $100 in a good business that can generate cash flow that will grow faster than inflation than keep your $100 on the sideline. M >> so I would think that in general I would say that 15 20% is a is a prudent cash allocation but since we are in a setup of a pullback in >> both stocks and gold I would think that people would would have to put cash at work >> in the next few days and weeks. >> Yeah. So if you are watching right now in this timely environment, you are really in for in a good trait because uh I personally have also be buying during the recent pullback because it's so rare for us to be able to uh get some good discount and right now the good discount is happening. So if you haven't started taking action yet, maybe you should really look into the watch list and uh if you don't know what to invest then uh consider go and learn first so that you know exactly what are the good picks to get started in this journey as well. Right. So then I'm also very curious like um for yourself what do you think is the biggest catalyst for the market in the next uh six to 12 months? I would say that uh as I just said people will will investor will realize that cash is not uh really a way to preserve their wealth in an inflationary environment. Bonds are toxic and at the end of the day the only way uh to preserve your wealth is to buy good quality company. And I want to add something on what you just said. In fact uh one of my first uh boss when I started working is a long time ago. He always told me that everyone likes to go shopping and buy the Yugo Boss suit at 25% discount when there is a sale. And the opposite is in the stock market. When there is a 25% discount on a on a good quality company, nobody wants to buy it. And I think that I always remember that this should be your philosophy. If you if you see a good quality company that is a 25% discount is the time to buy. I don't know if I'm not I'm not good in picking the bottom but I would say that usually when there's a good discount on good quality company it's a good opportunity for investor. >> Yeah. And most importantly is you you don't want to show hand everything all at once. you might always want to have some cash reserve so that you know whenever it come down more you have more cash ready to buy more when it's cheap and I think that will help you to stay um peaceful during uncertain time because you know that you always have something at the back to support you to buy more so uh I think cash allocation and portfolio allocation is so crucial what's your take >> yes I agree as I said I never buy in one shot one position I think it's it's a it's a couldn't wait to accumulate and to I mean to read the chart and know at what time you would like to buy more and to be patient. At the end of the day I think that investment is like a marathon. It's a long run and you need to be prepared for the long run for the 42 kilometers. It doesn't matter. It's not important to do well the first 100 meters. What is important is to run the whole 42 kilometers and investing is a 42 years journey. If you start early, it's a 42 year journey. So don't put all your eggs in the basket at one time. Just go slowly, accumulate and I would say uh pace your investment style by by benefiting from this kind of pullback that we are experiencing now. >> Wow. I I'm like having some goosebump when you are saying this like literally because I felt it's so true. Uh and I think Buffett also talked about it, right? It's really about being able to survive right throughout this period rather than you want to make big but then a lot of people also lose big and end up they have to stop because they don't have any more uh reserve left right so you don't want to get yourself in the situation where you leverage you get margin call and that's why only invest with the cash that you have and take this chance to see how can you better deploy your cash but don't because you think that the market seems to be very cheap then you leverage uh and who knows maybe the market might drop more and then you will be forced to sell off your dearest position during the worst time ever. So always make sure you you invest safely and and survive. I think that is so true. >> It's a survival game and I think that in fact people should see this also as a long-term life planning uh journey and as you just say is it doesn't matter to do well over the first week of your investment journey. What you need to do is do well all along all this your life journey of investment and avoid to be a for seller >> because the worst is to be a for seller. When you need to be a for seller, it means that you need to sell things that you don't you wouldn't like to sell. And usually it's a lot. This is the kind of mistake that many retail investor uh do because in fact uh they they are not carefully planning for their investment and when there's a lot of volatility like now in fact they are on the for seller side and they regret because they sell at the low and they will have to buy again at the high. >> That is so so true. Wow. What will be like as we are coming to the end of this episode? What would be the one final advice that you would love all our listeners to take away? >> I think that they need to see investment as a a life journey >> and uh I would I would advise uh people avoid to listen to the noise. stick to your investment style and look at the fundamentals because buying good quality stock will always be rewarded and uh so I think that you need to do a bit of homework in terms of the balance sheet the income statement the cash flow statement it's not necessarily what the that hot pick that you hear on CNBC that will make you rich in fact most of the time this will be a source of problem for your portfolio >> and if people would love to follow you and your work. Where can they learn more from you? >> Uh they can look for me at the microbutler.com. In fact, I I launched a financial academy online in January >> where I explain all this in short videos. So look at the macrobutler.com >> and I'm very sure you're going to learn a lot because from this very short discussion, Lauren already gave so many insights. Imagine right now you go to his website, his blog where he really have very indepth research updates very often and right now he also have these modules that break down the complex jargon for you. So make sure uh check out the links in the description box. I will make sure I leave all the details there. And thank you so much Lauren once again for being here. It was such a wonderful discussion. >> Thank you Chloe. It's always a pleasure to be in this fantastic studio. >> Yes. And uh we will definitely keep you guys updated in the next episode should anything happen again to the market. Who knows? And Lauren will always be our all-time favorite guest. Okay, so make sure to subscribe so that you won't miss up the future updates as well. And follow us in all our socials. I will leave it down below as well. And we will see you in the next episode. Hikato. Alato. >> [music]