Citing geopolitical instability, the rise of the BRICs nations, and continued appetite, bullion fund manager argues for the yellow metal
Gold outperformed the S&P 500 last year. In a year where the S&P 500 offered over 23 per cent returns, the price of gold appreciated by over 26 per cent, a rare occasion where the traditional ‘safe haven’ of gold outperformed risk assets while appetite for risk assets was strong. Yvonne Blaszczyk, President & CEO of BMG Group Inc., attributes much of that outperformance to a global story, underpinned by growing economies in direct competition with the West.
Blaszczyk, who is admittedly a gold bull and whose firm manages bullion mutual funds, explained why she remains constructive on the yellow metal. With a worldview largely focused on the rise of the BRICS economies and continued geopolitical instability, she predicts continued significant price returns for gold, though admits there may be some price fluctuations along the way.
“I think the real impact on the gold price is a geopolitical situation with an economic and financial system moving from west to east, with the rise of the BRICS countries,” Blaszczyk says. “I believe that the stellar performance of gold will continue in 2025, and my prediction is $3,000 an ounce. I don’t know when, but soon.”
Blaszczyk admits that there will be “ups and downs” on her predicted journey to $3,000 (USD). She argues, though, that the trends towards global instability and economic resurgence among the BRICS economies should continue to drive demand for gold from central banks and individual investors.
The group of BRICS countries has grown significantly, in membership, GDP, and global power, since the first BRICS summit in 2009. The bloc now comprises the five founding members of Brazil, Russia, India, China, and South Africa as well as Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates. Functioning as a global counterweight to the G7 developed economies, the group represents 46 per cent of global population and 35.6 per cent of global GDP. In its summits and the actions of its member states, the bloc has shown a distinct preference for gold.
Blaszcyk explains that these economies are in various stages of development, and often have more fraught relationships with the West and specifically the United States. Given the role of the US dollar as the global reserve currency, many of these countries are looking to de-dollarize their central bank reserves. As they do so they’re seeking to replace it with an asset that can function as a medium of exchange and has a long history of storing value. These countries’ central banks are buying a huge amount of gold. Blaszczyk even notes that there is speculations around the creation of a BRICS currency, which would be backed by gold and could turn the global demand for gold up a notch.
The incoming administration of Donald Trump in the United States adds fuel to this fire, in Blaszcyk’s view. Bellicose language about higher tariffs and putting “America First” will push many of the BRICS economies to look for alternative markets and a means of trade that bypasses the United States and the US Dollar. Gold, again, becomes a useful medium of that exchange.
We remain, as well, in a state of global uncertainty with conflicts continuing to rage in the Middle East and Eastern Europe. While those conflicts have made less noise in the media lately, they are far from frozen and remain sources of instability, pushing some investors towards gold as a traditional safe haven. Moreover, Blaszczyk believes ordinary people around the world will use gold in one of its historic roles: a safe asset that can be kept safely ‘under the mattress’ during unstable times.
That is not to say Blaszczyk doesn’t see risks for gold, and she admits the likelihood of price fluctuations. She thinks that market optimism around the Trump administration may pull some Western investors out of gold and into risk assets again. However as geopolitics rears its ugly head again, she argues that the demand for gold is likely to spike.
For Canadian advisors staring at her outlook and an uncertain world, the question may not be if they want to access gold for their clients but how they want to access it. Blaszczyk is relatively vehicle-agnostic, noting that the high price of gold now may be an impediment to access via the purchasing of bullion directly. She cites her own company’s mutual funds, as well as other vehicles like gold ETFs, as possible tools. She argues that in an uncertain world advisors may want to look to gold as a way to keep clients protected.
“I think its important for financial advisors to look carefully at the retention of their clients,” Blaszczyk says. “I think that its very important for them to understand some of the non-traditional aspects of investing in gold and the difference it can make in their portfolios. Gold will have a major role in the future financial system and I think prices are reasonable right now in comparison to what it will be a few years from now.”
