The Canadian Investor - Gold, Interest Rates, and the Macro Outlook with Bipen Rai

Episode Date: December 22, 2025

In this episode, we’re joined by Bipen Rai, Managing Director and Head of ETF and Alternatives Strategy at BMO Global Asset Management. We discuss the current macro environment, the outlook for interest rates, and how investors should think about portfolio construction as markets move further away from the post-GFC playbook. Bipen shares his perspective on gold and why it continues to play an important role in portfolios, how macro risks are evolving, and what signals investors should be paying attention to as we move forward. We also touch on the broader investing landscape, risk management, and how investors can think more deliberately about diversification in an increasingly uncertain environment. BMO ETFs is a sponsor of The Canadian Investor Podcast. This episode is for informational purposes only and does not constitute investment advice. Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Do you keep hearing about these all-in-one ETFs lately? Well, I have some exciting news. BMO ETFs just cut the fees on their flagship all-in-one ETFs to 0.15%, making them one of the lowest cost options in Canada. That's right, more value, same smart diversification, all in a single ETF. Whether you're just starting out or simplifying your portfolio, BMO all-in-one ETFs make it easy to invest with confidence. Just ZED it and forget it.

Considering ETFs like ZEQT, BMO's All Equity ETF, or ZGRO, BMO's growth ETF. Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own sicklyly, Don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors.

This has to be one of the biggest quarters I've seen from this company in quite some time. In today's episode, you'll listen to a great conversation I had with Bipin Rye, who is the managing director and head of ETF and Alternative Strategy at BMO Global Asset Management. The conversation was recorded on December 11, so please keep that in mind. It was the day after the Bank of Canada and the U.S. Fed Monetary Policy announcements. In the interview, we go deep on the macro backdrop shaping markets today. We discuss gold and why it continues to play an important role in portfolios, how interest rates and monetary policy are evolving, and how the investing environment could be different than the one we've been used to over the past

several decades. Before we move over to the conversation, this is a reminder that BMOETFs is a sponsor of the Canadian Investor Podcasts. As always, this conversation is for informational purposes only and reflects a broad discussion on markets and investing themes. With that said, let's go to the conversation I had with Bipin Rye. Welcome back to the Canadian Investor Podcast. I'm back today with a special guest, and Rye from Head of ETF and Alternative Strategy, so the managing director there at BMO. Welcome to the podcast, Bippin.

Very happy to have you on the podcast. I've listened to a lot of your interviews. I read some of your work. Definitely great macro background. So welcome to the Canadian investor. Thank you very much for having me out, Cibo. This is a treat for me as well. Yeah, I know.

Excited to talk. We'll be covering a whole bunch of different topics. But before that, can you give our listeners that would not be familiar with you. Just a quick overview of your background, where you came from, and how you became managing director of ETFs at BMO. Yeah, sure thing. I mean, so I've been at BMO for just over a year now as the head of ETF and alternative strategy. And basically, I mean, the role in its function is very similar to what I was doing over the past 15 years at my old job, which was running a global team of foreign exchange and rates strategists, basically using macroeconomic trends and distilling

those into actionable takeaways for our clients, a majority of whom were investors. So I've been in this space for quite some time now, functioning as a macro strategist. Before that, believe it or not, I used to be an aerospace engineer. So I do tend to use a lot more of the quantitative modeling aspect of it, relying on the math that I learned in that space towards what I do. Okay, no, that's great. Thanks for giving us the background. It's actually quite common. I found an investing space. I know quite a few people with an engineering background. I'm not very surprised, but let's start off here. You mentioned your background, obviously. And yesterday, we saw the spread of Canada and the U.S. for the Bank of Canada, but also the U.S. Fed, actually narrowing with the Bank of Canada holding the rate steady and the Fed cutting. Obviously, there was also some talk about quantitative easing from the Fed. there are any specific things that caught your attention or stood out in the language of either Macklin and Powell yesterday. It's also not every Wednesday that we get both meetings back to back, right? Yeah. I mean, I kind of joke that it's the central bank eclipse. So we have both

the major near North American central banks, of course, with all due respect to the Bahico and Mexico as well. But, you know, we've seen that quite a bit this year. And so that's kept people like me busy on select Wednesdays throughout the year. So let's start off with the Bank of Canada. I mean, not really much there to say. I mean, the bank kept rates on hold. And the messaging was by large, fairly consistent with what they said in October. I mean, the key point there is that, you know, policy settings are about right during this phase of structural readjustment. Now, what is meant by that? Well, obviously, there's an evolving trade relationship now between the United States and Canada. And I guess the loose interpretation here is that given the fact that the bank has

been cutting rates since June of 2024, and they've cut by quite a bit, you know, that policy rates at this point feel like they're just about right, given the information we have on hand, and they're probably done easing at least for this cycle. Now, of course, that could change if we do get some degree of divergence between what we have in terms of the USMCA versus, you know, potentially what could come down the line. Of course, there is the renegotiation, or at least a negotiation process that kicks off next year. So that is going to be an important input in terms of what the bank Canada does from here. But given what we know at this point, it really does feel like the bank of Canada is done.

Now, south of the border, the Federal Reserve, again, by large, as expected, the Fed did ease by 25 basis points. And again, that was more or less a hat tip towards the fact that, you know, there is a cooling labor market in the United States. You know, of course, the growth in labor supply has been slowing. And that has manifested itself in lower non-farmes prints. But I think the key there is that the rise in the unemployment rate, although the overall level is still quite modest relative to prior slowdowns, it is enough to at least warrant additional policy cuts from the Federal Reserve. But that being said, there were some indications that the Fed is probably going to go a

little bit slower than what the market is expecting. And one of the most prominent among these is when Chair Powell said that the administered or policy rates were within the plausible estimates of where neutral sits. So we took that as a signal that maybe the Fed is going to slow down a little bit, probably not cut again in January. And, you know, the other angle as well, you mentioned earlier that the Fed is going to start buying T bills and treasury securities, potential with maturities up to three years. Again, this is very much just sort of smoothing out the, you know, the fact that there has been some degree of chop in the repo market. And of course, that is attributed to the fact that, you know, the level of banking,

of reserves can decline a little bit below what is needed to satisfy the demand for them. And so it's very technical, but one thing I do want to hammer home here is that it's not quantitative easing. That is a totally different process that we've seen in prior years. This is the Federal Reserve really just managing its liabilities to smooth out policy transmission. And we do see the Bank of Canada do this from time to time as well. In fact, they are also taking a similar approach now. So I'd get away from the narrative that this is QE related. more or less that this is sort of just technical adjustments to make sure that the plumbing of the

system is working properly. Okay. And looking at the Fed, because obviously the Fed is the central bank. We look at the Bank of Canada here, but of course the Fed has a whole lot of importance worldwide and on us as well. What's your view in the potential shift with the Fed with, of course, Powell, Chair Powell's term coming to an end. I think it was the spring of next year, if I remember correctly.

And then I was looking at, I think, on Paul. market. Kevin Hassett's currently the odds on favorite, about three quarters, I guess 75% roughly. You obviously, you know, take this with a grain of salt. But I've been looking into him and he's definitely a bit more on the doveish side in terms of being more aggressive with rate cuts, thinking that inflation shouldn't be an issue, mainly because productivity improvements that we'd see with technology. So is this kind of the base case you're looking at or you're looking at different potential options depending on who's chosen there? I mean, we have to factor that into our thinking.

I mean, it's really hard to project who Trump will like or select for that Fed chair role. But it does feel like, you know, if the betting markets are correct, that it is going to be Kevin Hassett. And, you know, then we have to pay closer attention to what he's saying in the media. And, you know, it's very much, you know, what you said, Simo. He's really of the mind that, you know, the U.S. economy can grow without producing or generating additional inflation. And that is, you know, something that people like me look at and say, well, okay, That's he's attributing to the rise in AI CAPX and what it means for the economy to mean that potential growth will increase. And, you know, that let's let's cut them some slack.

I mean, we did see Chair Powell also sort of nod towards that direction as well. You could see it in the dot plots who they did revise their expectations of how much the U.S. economy is going to grow next year. We didn't see the corresponding increase in inflation forecast as well. So, I mean, it's a very similar message to what, you know, chair, or, well, Potential chair, let's call him. Kevin Hassett has also been saying as well. But to answer your question, Seymol, yes, it does matter for somebody like me, but it'll also be realistic and understand, you know, what the role means.

And I think there's a disconnect between what the media reports to what the markets actually understand. So remember, the Federal Reserve Act, you know, dictates that the FMC, you know, comes to a decision by majority vote, right? So the Fed chair, it's a powerful role and they do guide discussion, but it's all. Ultimately one vote at every FMC meeting, I think that's less, or at least not as well appreciated by the market and something that, you know, we need to be honest about it and remind ourselves, if we are concerned about who Trump puts in that chair for next year, that, again, there's other potential votes out there that he will need to corral in theory in order to get monetary policy aligned with this thinking. And that's not easy to do for him. No, no, that's totally agree with that. I think people do forget. I think in the past there was a big deal made whenever there was a single dissent vote, just because it would show that the Fed chair would not have necessarily the unanimous support.

And now we're seeing that happen more and more often. Obviously, I think there's a lot of political pressure too on them. I think it's pretty safe to say from the outside. But kind of pivoting a little bit here to something that I'm sure what the Fed is doing will have an impact on. It's clearly how gold has performed over the last year. And I know you're well versed in the subject. It's been the number one performing asset class in 2025. Yeah.

Significantly beating out Canadian equities, which I've also done quite well because of the mining stocks and U.S. equities as well as Bitcoin, if you're starting to look at alternative assets. What's been the primary driver of demand? And have we finally seen retail investors start to change? change the trade? Or is it just central banks? Like I've seen a lot of narratives out there, but I know you're more into the data.

So I'd be really interested in seeing what you think is driving that demand. Yeah. I mean, it's certainly an important talking point when we're talking about gold because so much of, you know, the rationalizing for this year's move really comes down to narratives. But what I like to do is just sort of break it down in terms of supply and demand. And it's not as complicated to do that way. that some of our listeners might be concerned about. So, you know, in a typical year, believe it or not, central banks will account for 10 to 12

percent of overall global gold demand. And I think that's important to contextualize. 10 percent, 12 percent, it's a meaningful chunk, but it's not everything, right? And certainly if you made the case that in 2023 and 2024 that central banks were driving the bus in terms of gold price action, yes, we could see it. We knew that, that after, especially after the February 2022, you know, Russia invasion of Ukraine, we did see an acceleration of gold demand from central banks, including those countries that aren't necessarily geopolitically aligned with the United States. But, you know,

fast forward to this year. We've seen a 60% rise in the price for spot gold. And it's really hard for me to justify that and really say that the central banks have been driving the majority of that, give the fact that they typically only represent 10 to 12% of demand. So I would characterize it in two ways. So remember, at the beginning of the this year, especially once Trump took the oath of office, you know, and all of a sudden there was this concern about tariffs primarily being targeted at traditional allies like Canada and Mexico, you know, there was concern that tariffs would be levied on precious metals as well. And what that led to was a shortage of physical gold in the world's largest exchange,

which is in London. And again, that lasted for several weeks. And, you know, the contribute that the initial run-up in gold prices was due to that. But then something else interesting happened. What ended up happening towards the middle towards the end, or at least let's call it towards Q2, Q3 timeframe, we saw increased amount of participation from retail and institutional investors. So this answers your other question about whether or not retail investors are getting more involved. And typically in a given year, according to my supply demand sort of framework, that segment will represent anywhere between 30 to 40% of overall demand for gold.

And so again, you know, if we tend to see a pickup of interest in that space and we know that there was because we can track the total known ETF holdings of gold, then that will lead to a meaningful increase in gold prices. And that's exactly what we saw this year. So again, you know, there was a shortage of gold and an important physical medical exchange in London. And we think that led to this FOMO-esque rally, let's call it, when it comes to retail and institutional interest in gold. And so again, that's, to me, that is what we can chuck up this. this massive rally that we've had this year. Into next year, we need to be a bit more humble, of course. But again, I'll just pause there, I guess, and then let you ask the second question if that is the case. Yeah, well, no, I think that's really good insights. That's one thing I remember on the podcast I would mention when you reference Russia invading

Ukraine and then the U.S. freezing assets. I mean, just from a game theory perspective, if you're another country, whether you're friendly or not with the U.S., especially seeing how polarized the elections have been. and different administration have been governing in the U.S. I think you'd be reckless to not increase your goal holding as a reserve. I think that's just my perspective trying to put myself in the shoes of those other countries. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees

while paying little to no interest on the cash you need for day-to-day operations. That was our experience, too, until we switched to the new. new EQ bank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits, and 50 outgoing and 100 incoming free interackey transfers. And to sign up, quick and fully online, no branch visits because, let's be honest, no business owner has time for that. We use it for our own business and it's the first account. that actually helps our money work harder while keeping operations simple.

Check it out today at EQBank.ca slash business. Winters in Canada can be pretty cold, but they can also be pretty magical. We're thinking about taking a short trip from Ottawa to Quebec City for the winter carnival. My wife and I spent our honeymoon there a few years ago, so it will always have a special meaning for us. And now, with my daughter, she'll also get a chance to appreciate how good. great Quebec City is. She'll be able to practice speaking French and I can already picture her lighting up when she sees the ice sculptures or tries snow tubing for the first time. After a full day

of activities, I can imagine us heading back to our home away from home on Airbnb, making a warm dinner, maybe picking up some local pastries for dessert, and just winding down playing some board games with a nice glass of red wine. It got me thinking about hosting our own place. While we'd away our home could give another family the chance to enjoy winter loot in Ottawa as it will just be sitting empty while we are away. The nice part is we get to decide when our place is available and it lets us make a little extra to put towards our next trip instead of having our place just sit empty. Your home might be worth more than you think. Find out how much at Airbnb.ca. self-investors, blossom is an essential app for you. It has been blowing up with now more than

50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store, and I'll see you there. Going on a forward basis, you mentioned, we probably should be a bit more humble than the next year. What are you thinking a bit more like, let's say beyond next year, maybe the next five to ten years?

Do you see potentially gold even acting a little bit as a replacement for bond in investor portfolios? Because I've seen that mention quite a bit from different macro commentators. Right, right. So it's an important question to ask for sure. And we'll talk a little bit about that. But let's talk about into the next year, the next 12 to 24 months in terms of what to expect for gold insofar as price action is concerned. So I mentioned a few important sources of demand. The single biggest source of demand for gold in a given year, believe it or not, is actually demand for jewelry.

So this could be jewelry that is gifted, say, at a wedding, which is, you know, very important in several Asian cultures. In a typical year, that accounts for anywhere between 50 to 55% of overall demand. And that demand is heavily elastic to the change of gold price. So if gold prices spike by, say, 60% in a given year, typically what we tend to see is sort of jewelry demand go down, the following year. And to a degree, we do expect to see that happen. The other angle to think about as well is, of course, on the supply side.

Now, there's two main sources of supply that. like to follow. Of course, one of them is mining production. The other one is the, you know, recycled jewelry coming back into the space. And again, you know, the ladder tends to be heavily elastic to the increase in price. So if gold prices are rising by as much as they have this year, you can expect that more and more recycled jewelry is going to come back into the space. This could be, say, people that were gifted jewelry maybe five to ten years ago, all of a sudden saying that I could realize all this capital gain. So you know what? I'm going to go to my local pawn shop or whatever. and sell my gold for cash. We tend to see a lot of that behavior pick up anytime we see a massive

run-up in gold prices. So, you know, you take that, you sort of say that, you know, if you look at the equilibrium of demand and supply, you know, maybe it doesn't move to the left next year. In fact, we're not expecting a down year for gold, and I don't want that to come across. But instead of 60%, maybe it makes more sense to see it move by, say, 5 to 10%, because again, let's not forget that there is still a heavy degree of interest from other important players in the space, including central banks and, of course, retail and institutional investors. So maybe, you know, that supply demand sort of equilibrium moves a little bit to the right, not quite as far as we've seen this year. But that still tells us that, you know, the outlook for gold, you know, it should be or could be anywhere between 5 to 10%. So maybe a target of 4,500 for 2026 and then moving into, say, 5,000. And, you know, why in my so comfortable giving those targets, given the fact that, you know, we could see a retracement of demand from some of the more important, or at least the most important source of demand. Well, again, you alluded to it Simo, and I think this is a structural sort of issue that we need

to pay tribute to is the fact that if you are running a balanced portfolio and if you are looking for diversification, especially if we're heading into an environment that inflation remains more and more sticky, I find it incredibly hard to find something that can be gold in that environment. And to me, you know, we are, there's several different breadcums being left here that I can point to and say that, you know, gold as a portfolio diversifier could be a lot more more effective than, you know, the, within bonds, which have traditionally played that role. And we could talk about the inflation backdrop and that being priced in more and more so in the fixed income space. We can also talk about the fact that there are several governments out there,

including in Japan potentially that are expanding physically and the migration of the term premium should hit other curves, including here in North America. All of these, to me, are risks to take into account if I'm looking at the fixed income space going forward. And in that backdrop, I think maintaining some exposure to alternative assets, especially gold, still makes a lot of sense. Do you see any way to look at the medium to long term where bonds, longer duration bonds actually provide a real rate of return because I try to think of all the different scenarios and I struggle

coming with the scenario that will mean real rate of returns for bonds. Maybe I'm, maybe I'm wrong, maybe I'm biased, but I'm just curious to see your opinion on that. You mean a real rate of return, say, after inflation. After inflation. Yeah. Yeah. I mean, look, we're in this environment where bonds are offering less or negative real returns, then in theory, you know, the market should move to a spot where, you know, demand for them will pick up and that will meet a cheapening in duration. Do I see that happening at some point? Given the issuance trends that we're seeing, given the fact that a lot of central banks are pausing their easing cycles and potentially even looking at hiking rates as soon as later next year, yeah, we could come to a point

where that is the case. But, you know, before we get there, that doesn't preclude a pronounced period of pain. And for a lot of investors out there that do rely on fixed income to provide that diversification, I think that is something that is important to take into account as we move into the coming years. Okay. No, I appreciate that perspective because it is something I think about. It's a great question.

Yeah. Yeah, I manage my parents' portfolio that retired. So it's something that I do try to give them some exposure to fixed income, but been mostly staying in treasury bills. for some obvious reasons. And so it is something I do try to think about for them. But shifting to well-performing asset classes, so another precious metal, silver.

I'm sure you're hearing more and more about it, especially with the crazy run-up it's seen in the last month and a half, two months. It's more than doubled, I think, this year. So it's really outperform gold. And the gold-to-silver ratio, I think, is hovering around 70, probably a bit lower because it's still been doing quite well since I looked at it a couple of days ago, but fundamentals seem to be aligning for perfect storm. And feel free to disagree with me, but I just think, you know, you have the U.S. that just officially added silver

to its critical mineral list. Right. We are also entering a fifth year of production deficits, meaning that the demand overall is just higher than what's being produced by the overall market, whether it's miners or people recycling old jewelry, like you mentioned for gold. So, and the supply is largely in elastic because of the demand in like EVs, for example. I know there's a tiny bit amount. Yeah, industrial demand, tiny bit amounts in cell phones and things like that. So what's your view on silver and potentially like is, do you expect that deficit to continue going forward?

It seems to me that it's highly likely because it's usually a byproduct of other mining operations or very few silver, pure silver mining company plays out there. Yeah. Again, another important question. And to be honest with you, Simone, my conviction on silver on a go forward basis is not as strong as it is for gold. So I do want to be upfront and honest about that. But there's a couple of things that I think are important to flag here. You're right. Absolutely. We've had several years of deficits when it comes to silver production. And based on some of the research that I consume from some of the shops that are a lot smarter than me in the silver space, you know, they've had to write down, believe it or not, their expected deficits for 2025. or at least revise of lower. And I think that speaks to the fact that, yes, we've had this run up in silver, but that, you remember, whenever you get a pronounced rally in an asset, that also, of course, can lead to a destruction in demand. Again, there is a heavy degree of elasticity when it comes to commodity prices, and especially

if we're talking about the industrial space. If it does lead to a rise in impact prices, then that will matter for anybody who's trying to source them. And, you know, one of the reasons, that's, that's, let's park that. I think because that is important. But, you know, one of the other important things to flag with respect to silver is that I remember what I said about the earlier this year, there was this sort of shortage with respect to gold in the London metals market. We did see something similar in October for silver. All right. So again, there was a, let's, let's say a shortage of silver available in the London market. But those inventories have in fact very quickly repleted. In fact, there's several people out there now talking about a glut of silver in the London market. Now, you might ask, then, why isn't that being reflected in the prices? Well, you mentioned it, right? There is this important element of the U.S. adding silver to its critical minerals list as part of its, you know, investigation insofar as Section 232 is concerned.

And why did they add silver to that list? Well, it's because, you know, around 65% of U.S. silver is important. It imported, I should say. And, you know, we are awaiting an announcement from the U.S. president on the critical minerals list and what will be the action is taken. And we anticipate that that decision is going to come as soon as January. But if it is determined by the U.S. president that imports, you know, silver imports, you know, are a national security threat. Then, you know, there could be a proclamation issued imposing tariffs or other restrictions. And we've seen that, obviously, and they steal an aluminum space.

And that is something that, again, you know, we think is being priced in. to the silver market. So it could be one of these, you know, times where, and I'm sure you've heard this reference before, where you buy the rumor and you sell the fact. So once the announcement does come, I mean, maybe there is this sort of move lower in silver prices. Or, of course, you know, there is the possibility that silver is removed from the critical minerals list. I mean, those are the two sort of angles to potentially watch out for. But I would, you know, sort of say to your question, see more that, you know, the run up in silver so far this year, to me, feels like it's a little bit overdone relative to the underlying fundamentals. And, you know, if we do see a course correction

back lower, it wouldn't surprise me in the least. Yeah. And I guess, too, I think people often forget how tiny the silver market is compared to the local market too, because, and because of, you can point to that alone, seeing that it will be more volatile as soon as there's large amounts of money going after a meaningful amount of silver, you'll see those swings a bit more. So, no, it's definitely interesting. And I guess the argument as well would be that silver doesn't have that same kind of monetary premium that gold would have, right? Yeah, it doesn't have that historical cash, let's call it, right? I mean, it is an important precious metal, and we still do call it a precious metal.

But, I mean, you nailed it. If we're talking about the importance of the market and the size of the market impales in comparison to gold. Having cash on hand is essential for any business. traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience, too, until we switched to the new EQBank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits,

and 50 outgoing and 100 incoming free interackey transfers. And to sign up, quick and fully online, no branch visits because, let's be honest, no business owner has time for that. We use it for our own business and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at EQBank.ca slash business. Winters in Canada can be pretty cold, but they can also be pretty magical. We're thinking about taking a short trip from Ottawa to Quebec City, for the winter carnival. My wife and I spent our honeymoon there a few years ago, so it will always have a special meaning for us. And now with my daughter, she'll also get a chance

to appreciate how great Quebec City is. She'll be able to practice speaking French and I can already picture her lighting up when she sees the ice sculptures or tries snow tubing for the first time. After a full day of activities, I can imagine us heading back to our home away from home on Airbnb, making a warm dinner, maybe picking up some local pastries for dessert, and just winding down playing some board games with a nice glass of red wine. It got me thinking about hosting our own place. While we'd be away, our home could give another family the chance to enjoy winter loot in Ottawa as it will just be sitting empty while we are away. The nice part is we get to decide when our place is available and it lets us make a little extra to put towards our next

trip instead of having our place just sit empty. Your home might be worth more than you think. Find out how much at Airbnb.ca slash host. Calling all DIY, do-it-yourself for investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing.

amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends. And there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up, some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on

there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Okay, well, let's switch to what's some called digital gold. So I've heard you talk about Bitcoin a little bit. It's something I do own a little in my portfolio, so I do understand the arguments. But the strong advocates constantly refer it to digital gold due to its fixed supply. I tend to think about it. There's advantages and disadvantages to Bitcoin versus gold. Obviously, it's much easier to send than gold would be physical, especially if you're looking to have physical delivery. But do you view it as a legitimate alternative to gold as a long-term store value? Or is it just too early to draw any conclusion being

roughly 15 years old and age. And on the demand side, that is something I'm really curious to see what you're going to say. Could gold be much higher if it wasn't for Bitcoin? Is it cannibalizing that demand? And to what extent it would be your best estimation? Yeah. I mean, here's what I say.

It's really difficult for me to say that Bitcoin is cannibalizing gold demand in a year where we've seen gold prices rally by 60%, which is. one of the more stronger years on the historical record. So I know people like to say that there's a rotation between coin and gold during different periods, but we'll get into a little bit of that. What I want to unpack first, Simo, is this idea that Bitcoin is a store of value. Because while I would say that there is room for Bitcoin in the investable universe, in fact, it's done extremely well over the past 10 to 15 years, you know, I do take umbrage

with people that refer to as a store of value. I mean, to me, it's way too volatile for it to be a store of value at this point. And for anybody out there that disagrees with me, then, you know, like, would you want to take all of your aggregate savings and park it solely in Bitcoin or would you want to park it solely in gold? Now, history would tell you what the obvious answer there is, right? So as a store of value, over the past several decades, we've seen it. I mean, gold is basically outperformed most other assets, including.

I would tell you my answer would be gold, yes, even though I do it on some Bitcoins. No, same thing. Same for me as well, right? So, but like, oh, the last several decades, I mean, we've seen gold outperform the S&P 500, right? So that tells you everything that you need to know about gold's staying power as a store of value, right? Now, you could say it's still too early in the game with respect to Bitcoin. But, you know, what I'll say to that is that typically the outperformance of Bitcoin relative to gold this year. I mean, this has typically been associated with increased institutional adoption as well as regulatory changes.

Now, once we move past that, it's really hard to ignore the fact that gold has been relatively steady for most of this quarter while Bitcoin has sold off, right? So, again, this hasn't been a particularly constructive quarter for risk, but that tells you everything that you need to know right now, including, you know, Bitcoin sort of, let's say, allure potentially as a diversification instrument relative to gold. I think that that's not really much of an argument at this point at all. And we touched on this a little bit earlier as well, gold has something that Bitcoin doesn't have, right?

So gold has historical cash. I mean, it's been used as a medium of exchange for almost 3,000 years now in different jurisdictions, right? So, you know, that's, you know, we have to really think about its allure, the fact that it is physical, its rarity, it's durability and divisibility that make it ideal for trade compared to prior barter systems and the like. Now, you could say that Bitcoin does address some of those changes to a degree, but it still doesn't have that same degree of cash,

nor does it really have that same sense of stability that gold has. Yeah, and I mean, having a long track record at the end of the day inspires confidence, right? I think that's probably a very easy way to put it. And like I mentioned, like I own both, but to your question, And I would definitely, if I had to put everything in one asset, I would likely choose gold just because I think the risk profile is quite high for Bitcoin. And usually what I tell people is like, look, you don't need to have a huge allocation. It's an asymmetric bet, right? So I kind of tell them, what percentage of your portfolio are comfortable going to zero and it doesn't wreck your financial life?

And then you can put them in Bitcoin. That's usually when people ask me about it, that way they don't. They can stop make those very volatile drawdowns like we actually saw in the last. last couple of months of Bitcoin. Exactly. Exactly. Couldn't have better myself to go. Okay. Now, shifting away from gold, other types of investments, what are you seeing in terms of opportunity right now? I was listening to a couple of recent interviews. I think you even mentioned in terms of equities. It could be, yes, there's the whole AI narrative that the markets are overvalued, whether in the aggregate you're looking at the CAPE ratio or you're looking at the

Buffett indicator that are historical highs, but those are averages, right? Like the big ones tend to pull the rest of the market up. So what I found personally, and I don't know if you agree, is that there are certain sectors that can be very attractive for investors right now if they're willing to go against the tide a little bit. Yeah, for sure. I mean, and we can mention a few of them. You know, for one, healthcare. Health care is still fairly cheap right now. And the added kicker is that, you know, if you're a believer that we're in this sort of late part of the macroeconomic cycle, meaning we're going from a period of extended growth towards something that's, you know, closer to a slowdown, let's say, you know,

then health care is a traditional defensive pick that tends to outperform in that environment. And, you know, something else that's really worked of late is that, you know, we've seen an increased degree of chop in the AI space with respect to tech. So, you know, there has been this sort of element of outflows from the tech and communication space as investors, has become a little bit more concerned about the fact that, not the fact, but the potential that this could be a bubble that we're seeing the AI space and going into areas that are a little bit less or least undervalued. And that, again, does include health care.

So I think that, if we're looking into 2026, we would say that is one of the sectors that, you know, we're prioritizing and sort of saying that, you know, this could be a space that's ripe for underperformance insofar as a top-down perspective is concerned. You know, the other space, if you want to bring it closer to home and look at Canada, I mean, I think this is especially, let's say, timely, given the fact that, you know, we are coming off a week where all the big six Canadian banks reported. And I think one of the telling things about that is the fact that, you know, loan growth this year, which again has been the traditional driver of growth in revenues for Canadian banks, but it was one of the more subdued years in recent memory when it came to loan growth. But nevertheless, you did see revenues continue to grow for Canadian banks. So what does that tell us? It tells us that more and more banks are beginning to rely less and less on retail banking as a sort of driver of revenue growth. And there's a lot more of a reliance, let's say on fee-based revenues. And again, that strength through diversification aspect when it comes to Canadian banks is something that we think is going to carry over to 2026. And a lot of these, you know, actually all of the banks are fairly well capitalized at this point. So that means potentially returning value back to the showholder either through dividend income.

increases or share buybacks. These are themes that we expect to continue into 2026. And of course, if we do see a degree of housing stabilization and an uptick in loan demand, again, that's going to add additional tailwinds, let's call it for the banking sector. And insofar as net interest income is concerned. So we're fairly constructive on financials in Canada going forward. Certainly, we could also tack on the fact that, again, there's going to be a heavy degree of fiscal stimulus in the coming years. And a lot of that is going to entail or low. least require private sector participation. So again, there's plenty of room for capital deployment for Canadian banks going for. So we're quite constructive on Canadian financials

for those reasons. You know, shifting back a little bit, if you want something that's a little bit, you know, let's say global in nature and some space that we think is going to do fairly well in the coming years, we like funds that track infrastructure projects, put simply. I mean, there's a massive need for infrastructure build out around the world. And again, there's solid macroeconomic tailwinds in favor of that. In the advanced world, of course, we've got aging infrastructure. In the emerging world, we've got changing demographics in the form of rapid urbanization and increasingly more and more younger people that are growing a bit older as well. All of this is going to require additional investment in infrastructure and the availability of

capital to do so. And remember what the underlying is for a lot of these projects. These are projects that are dependent on long duration revenues and also, of course, dependent on inelastic demand. We think these are attractive features to pay attention to over the next several years. Yeah, the infrastructure play is definitely something I've been looking at. We've been talking about on the podcast. And to what extent do you think the Trump administration actually is a big tailwind for that? Because clearly, you know, with the tariffs, I think it woke up a lot of countries, including Canada, to realize that they maybe shouldn't rely on. the U.S. all that much, whether it's defense spending, for example, that's an easy example

here, but it's also some natural resources project that seem to be definitely, the government seems to be more favorable for it. And then I'm looking at other countries. I'm sure I haven't followed Europe all that much, but I'm sure they have a similar kind of discourse where they probably need to get their infrastructure in a better place where they don't need to, they're not as reliant, for example, on Russian natural gas. I know there's been a lot of talk for nuclear power over there, but here as well. So do you think the circling bag is the Trump administration, probably a tail win for that? I mean, there's definitely a geopolitical realignment that's happening right now.

That is impacting trade. And of course, a lot of countries that hitherto relied on exporting, you know, that were potentially more competitive than the United States and in a few sectors. And we're relying on those exports contributing to gross a national product. That has taken a dent over the last little while. And if you're a country now in the midst of this transition towards sending exports to the United States and trying to rearrange yourself and offset the growth hit that could come from that, then yeah, it absolutely does make sense to spend more on upgrading your infrastructure. Remember, like if you're at a low point in the economic cycle, you know, additional spending on infrastructure,

Sure, that means more jobs, more jobs potentially should lead to higher net wealth. And of course, that hopefully should lead to more and more spending in the real economy. So, you know, to answer your question, CMO, I definitely do think that the increase in trade frictions is an important element towards a lot of countries looking more and more closely at infrastructure upgrades. But again, the other sort of kicker to that as well is that it does have meaningful implications for the fixed income space. Because, again, additional issuance, you know, obviously you're not going to hike tax

to fund these infrastructure increases, you're going to rely more and more on debt issuance. And at the margin, that should lead to an increase in term premium, that should, of course, potentially or could potentially migrate across boundaries as well. And so that, to me, is an important reason why we should continue to look at alts as that as playing an increase to increasingly important role in portfolios as a diversifier as opposed to fixed income. Okay. No, that's a great answer. And I guess to round this up,

Was there anything else you wanted to mention to our listeners, whether it's looking forward at their investment portfolios? I know some people tend to just focus on businesses. I like to look a bit more at the macro and then build a portfolio that will kind of reflect that. And some will have businesses. Some will have ETFs. It really will be a bit of a mix.

But I tend to approach things to have a portfolio that will be resilient in all different kinds of environments. But is there anything parting words we wanted to give to our listeners? and, of course, if there's other things you want to mention, by all means, do so. Oh, for sure. I mean, very much like you, Sebo, I'm a top-down analyst, so I always encourage everybody to do their best to be well-informed on what's happening in the macro space,

because so much of what happens at the individual company level is determined by the overall macro. So, you know, whether that's paying attention to the latest bank of Canada or Federal Reserve decisions, you know, whether that means paying attention to, you know, whether or not silver is on the critical minerals list, all of this matters. All of this is an important part of the portfolio construction process. So I would encourage our listeners, again, if you know, if you are interested in

increasing your knowledge of, you know, the macroeconomic space, you know, do as much reading as you can. We certainly do have tools available on the BMO Global Asset Management website to help you in your investing journey. Okay. Well, thanks so much for joining us, Bipen. It was great to have you on the podcast. Hopefully we can do this again.

Maybe we can do this middle or end of next year. Just see how things are trending as a whole on the macro space. Probably, you know, it'll be hard to avoid the precious metals. But really appreciate you coming on the podcast. You did not disappoint. I've watched a lot of your content and it was great having you. Thanks a lot. It was my pleasure, Simone.

Thank you for having me on. The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.