The Current - Why the world is in a ‘gold rush’

Episode Date: January 29, 2026

The price of gold hit another record high this week. People see the precious metal as a safe haven during unstable times. But there are other reasons we have coveted gold since the dawn of civilization, not all of them rational. We'll hear from Douglas Porter, Chief Economist at BMO Financial Group and Globe and Mail columnist, John Rapley, about the allure of gold and what's drawn people to it over centuries.

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We are living, it would appear, in a golden age. The price of gold reached historic highs this week, and that has some people cashing in. I'm here to get a quote for a scrap silver and scrap gold. I came three weeks ago for the first time. It's in the couple thousand range. I was selling my gold about one month ago, because I heard gold was going up, and I thought, why not keep life fluid, rather than in bricks or whatever?

And my gold was in charms, collected in Europe in 1968, and they had been in my safety deposit box ever since. And I thought, I'm not using them. Use the money. Those are people outside the Canada gold location in Vancouver that shop buys and sells scrap jewelry. CEO, Tyler Whitmore, says it has been busy at locations right across this country. Business recently has been seeing historical growth. We're seeing lineups at the door across to all of our stores. Customers are bringing in gold rings, chains, earrings, watches, things like that, that are just sitting in drawers. It depends on the item, the purity of the item, you know, a necklace, depending on the size.

Like, you might be looking at $500 to $1,000. While some people are selling their gold for cash, others have been buying it. Gold prices climbed above $5,000 U.S. an ounce on Monday. Douglas Porter is the chief economist at Bank of Montreal. Doug, good morning. Good morning. What do you make of the fact that people are lining up outside gold stores cashing in on the jewelry that maybe was just collecting dust in a drawer?

Well, it's pretty amazing. I mean, when you look at it, gold prices have gone up by almost $1,000 just since the start of the year, and they've basically doubled from a year ago. I think we've gone into the full speculative realm now. It's moved from going to, from a, from a move that you could explain by central bank buying and, you know, weakness in the U.S. dollar to something much more than that. This is, this has really turned into, I would say a global speculative, I'd almost have to use the word frenzy. Tell me more about this. Why, I mean, $5,000 in ounce, it was just a few months ago, people were surprised that gold was getting close to $4,000 in ounce.

why is there, it seems like, a ceiling that is rising and rising, rising, rising when it comes to the price of gold. Yeah, and one thing I would point out is it's not just gold in isolation here. We've also seen silver and some of the other precious metals, if anything, silver has actually risen much more quickly than having gold. So initially it was a move by some central banks, you know, for instance China and maybe Russia to move away from the U.S. dollar. they began to accumulate gold. This is what really kicked off the strength. But it's really broadened out, and it's moving so quickly now that it's really attracted attention

among all investors. And frankly, it's really gone beyond, like literally into untowarded territory. For instance, if you think of the last great run in gold, it was in the late 1970s, early 80s, and that followed a period of very, very high inflation. inflation average more than 10% through the 1970s. Even if you were to adjust those prices back in 1979 and 80 and put them into today's values, we're still way beyond that, which shows you just how incredible this run has become.

And what I find interesting is in the last few years, you know, the narrative has been that Bitcoin or cryptocurrencies were going to be the new digital gold and we're going to basically step in and replace gold. Well, they've been silent throughout this episode. In fact, if anything, cryptocurrencies have actually pulled back. And I do think that part of what's going on here is those who were, you know, trying to avoid the U.S. dollar and really didn't have much faith in other currencies, were looking for an alternative. Initially gone into cryptocurrencies.

Well, I think a great amount of that money is now shifted over into precious metals and mostly. How much of this has to do with Donald Trump, the U.S. President, anybody who has seen images of his changes to the Oval Office and other parts of the White House knows is a big fan of gold. And yet there are people who pin what's happening right now on his policies. Yeah, I think it's, he certainly played a part in this, you know, by aggravating relations with much of the rest of the world. There, you know, there is, as I said, there is a drive to, to so-called D-Dolarizer to move, move away from the U.S. dollar. There are some questions over the, you know, the currencies long-term.

look, but I will point out that gold was very strong, really since about 2021 or so. I think it really got kicked off first and foremost by the run-up of inflation that we saw during and after the pandemic. That's really what I think got the ball rolling. But there's no question that, you know, it's gathered steam in the last year. And I would say that the policies of the administration have probably, you know, led some to, as I said, to try to move away from the US dollar, they're looking for good alternatives. And, you know, of course, gold has always been there. It has its ups and flows, but it certainly seems to be the biggest beneficiary of the move away from the U.S. dollar. Why are those precious metals seen as a safe haven in rough seas? To your point,

it's not just gold. Silver, somebody said, was behaving like gold on steroids. You have copper that is reaching very high prices as well. Why are those metals seen as a safe haven? So, first of all, I would say copper is a little bit of a different animal. I think the strength we're seeing in there is somewhat unrelated. But silver, yeah, and good point. It's almost quadrupled in the last year. I think, you know, it basically, it goes back many centuries that, you know, that gold was always seen as a safe harbor, something that you could transport or you

could take with you. You know, you can actually touch it and feel it. You can put the gold bars under your bed. It's not stashed away in a bank somewhere. you have that value there under the mattress? You can, and it's recognized around the world. You know, some would say the U.S. dollars like that as well. You know, U.S. dollars could be accepted almost anywhere,

but I think, you know, U.S. dollars can be inflated away, and they can always print those. It takes a long time to actually add to the, you know, the amount of ounces of gold that are out there worldwide. But, you know, it's partly, it's a historic relic, maybe not so much of a relic anymore, and as I said, it's widely recognized around the world is a store of value. Gold is Canada's second largest export after oil, is that right?

So in the latest month, in the month of October, we're actually getting trade date for November in a matter of minutes here. But in the latest month, gold actually moved ahead of oil and motor vehicles for one month. Now, some of that gold is actually not physically crossing the border. It's interesting when they count trade that it's the balance of payment, so it's really just the money going back and forth. across the border like that, gold could be in someone's vault. But if you were to sell it to an investor in, say, Britain, the gold doesn't necessarily have to physically move, but it gets counted as an export.

And I think to a large extent, that's exactly what's going on here. But yes, you know, we are the fourth largest producer in the world, and suddenly gold has become our number one expert. I never thought that gold would be a force driving the Canadian dollar. But, you know, now that it is at least temporarily, number one merchandise export, suddenly you have to talk about gold as being a factor helping support the Canadian dollar. I was going to say, what does that mean if the price of gold is going up and this is now,

at least briefly, our largest export, what does that mean for the Canadian economy? Well, it's interesting. The reality is that it doesn't mean that much because, and not to talk down the industry, there are roughly 20,000 or a little bit more than that, people who are employed in the gold mining sector. It's a significant industry, but not a particularly large one. The reality is most of the strength in gold will benefit people who are holders of gold. And yes, it does benefit the gold companies that are on the TSX.

Probably a lot of your listeners are invested in gold, and they don't necessarily even know it. You know, if you have an index fund, that's in the Toronto Stock Exchange or your mutual fund holds a lot of Toronto Stocks or even your pension fund is heavily invested in the Toronto Stock Exchange. are probably heavily invested in gold as well. It's one of the reasons why the Toronto Stock Exchange rose by almost 30% last year. Gold was a very big part of that solid gain. I wouldn't say it was the lion's share of that, but it was one of the reasons why the Toronto market was one of the strongest in the world. It was partly thanks to gold.

So a lot of it is basically a wealth effect for many Canadians, where you will sort of quietly see some gains from the strength in gold. Two quick questions before I let you go. One is do you worry that this is a bubble that will pop? I do. You know, we have seen this movie before. You know, for those who would like to study another episode, something like this, I would look back at 79 and 80.

You know, it doesn't mean that gold is going to completely erase its gains. But you know, at some point, it is just going to get so far beyond any fundamentals that it will pull back sharply at some point. I cannot tell you when that point will be. Our gold analysts, our commodity analysts, at the start of the year, put out a piece saying that the bullish case could see gold going as high as $8,000 an ounce by next year. And given what's happened in the last month, that's easily achievable. But yes, I do worry that as quickly as it went up, it could pull back very abruptly as well. And so just very briefly, I'm not asking you for investment advice, but if somebody wants to get on the bandwagon, what would you say to them?

I would say be very cautious in terms of adding. I'm not necessarily dissuading. I actually do think it makes sense for any investor to have at least a small part of their portfolio in gold or in gold-related shares. But I would be very careful, especially after the run it's had. You know, I'll just quote the – well, not exactly quote, but paraphrase Warren Buffett. He said, for most goods and services, people wait until they're on sale. But for some reason, when financial assets run wild, they actually want to jump in and buy. And, you know, he never liked that fact that people always wanted to buy financial assets after they had gone.

up a lot. And I think this would be a classic case where Warren Buffett would not be too happy with investors piling on. Doug, good to speak with you. Thank you very much. Yeah, thanks for having me. Douglas Porter is the chief economist at the Bank of Montreal. He was in Toronto. You know that feeling when you reach the end of a really good true crime series? You want to know more, more about the people involved, where the case is now, and what it's like behind the scenes. I get that. I'm Kathleen Goldhardt. and on my podcast crime story, I speak with the leading storytellers of true crime

to dig deeper into the cases we all just can't stop thinking about. Find crime story wherever you get your podcasts. Those are some of the practical reasons that people are putting their money into gold. My next guest says the attraction to gold goes well beyond the financial aspect. The people around the world have treasured it since the dawn of civilization.

John Rapley wrote an article for the British online magazine Unheard. about what he calls gold's mystical allure. John is a political economist, author of Icarus economics, why rich economies are struggling, how to fix them. John, hello to you. Hi, good morning to you. What do you make of the gold frenzy? Again, people lining up at pawn shops,

rooting through, you know, perhaps some of the heirlooms that they were given thinking, I could cash in now. This is just collecting dust. Let's get some money. Well, I think Doug Porter really sort of, you know, he ticked all the right boxes. You know, it is a mystery. It's quite mystifying. I think there is some element of FOMO going on at this stage now, people just getting in because it is going up by the day, kind of rather what happened in the, you know, during the parabolic phase of cryptocurrency.

And I think there is also some, although it's difficult to tell how much, there is some purchases by central banks, which are looking to diversify their reserves out of the dollar. But the main driver does seem to be retail purchases, people who I think are being driven by two things. One is just trying to catch, you know, trying to opportunistically ride that wave. And the other one is, I think there has been a long concern about currency debasement.

And I think it's now coming to really to a mature phase, particularly because it's practically now the explicit policy of the Trump administration. to keep increasing the money supply and, you know, inflation be damned. If the inflation statistics aren't good, you fire the messenger and you get a new one. So I think there is a combination of both kind of that rational calculation, but also I think there is this kind of mystical element because it's a strange thing, gold. I mean, it has no practical uses.

And yet we love it because, well, we love it. In other words, humans have always loved it. And so having it, possessing it, gave one power. And I think that is almost, we're supposed to live in a rational age, but it's an almost atavistic lure, you know, to sort of, you know, go back in sort of times of uncertainty to what our ancestors did. Believing that will always hold value. Let me ask you about that. You wrote about that.

You said that gold, these are your words, produces nothing. And unlike other precious metals, such as silver, has virtually no industrial applications. But its value derives from a tautology. We want gold because we want it. Everyone wants it, so we know it has value, therefore we want it. What is that about? Well, it's just that. I mean, and trying to explain why people want it using any kind of rational explanation is very difficult.

I mean, I think Warren Buffett expressed it most pithily. You know, he said a Martian would scratch his head looking at the behavior of humans, that we send armies of people, we hire armies of people to go into the earth, deep into the earth, to dig it out of the ground, we bring it to the surface, then we send another army of people deep into the earth to dig vaults. We bury it underneath, and then we hire yet a third army of people to stand guard over it to keep it safe. He said, what on earth is driving this? Because it's not really used as a currency.

It doesn't have the values of a currency. It, as I say, it has very few industrial uses. People aren't buying it because there's suddenly going to be a boom and, you know, and sort of fillings. And so it's, but yet it has always had this intense attraction. You know, people have killed over it. historically, you know, the conquistadors sort of went deep into the, you know, heart of Latin America, what became Latin America, trying to find it. And it's driven humans to all sorts of extreme lengths throughout history. But as I say, if anybody said they could explain rationally why that's so, you know, I think they'd be themselves a very rich person. There are phrases that we use that people perhaps don't think about the roots of. One of them is the gold standard, which means the best of the best. There was the gold standard. There was the gold standard. I mean, what do you make of the use of that and the popularity of that phrase, given what you've just said?

Well, it's like saying, you know, something is as good as gold, right? It's the same sort of idea that there's an elemental quality. I think that what it, I suspect what it comes down to is that unlike money, unlike, for that matter, cryptocurrency, which are both human creations, gold supply cannot be manipulated in any way by humans. It's fixed by nature. So it's almost as if you say, well, there's an ultimate argument. arbiter over which we have no control and we, you know, we are left with what is existing in nature. And I think that is one of the things which gives it that sort of, I mean, literally

rock, solid value to people that, well, you know, when governments, when central banks are flooding the economy, printing money, you know, nilly, willy-nilly, at least, you know, the gold supply won't go up and therefore it will rise in value. And I think there is an element of that and there. You quoted another economist who called what we're living through right now, a poly crisis. These are tricky times. And it goes back to what we were saying with Doug, that people are looking for some sort of safe harbor.

If people cling to gold during uncertain times, what does it say about the rise of the price of gold right now? Well, yeah, and that brings back the question. Is this just a bubble that's going to burst? What sort of damage will it do will it burst? Is there something structural going on so that, you know, that, for example, if it is the case that a lot of this is being driven by central bank purchases. And there is an attempt to, you know, some of the stable coins, for example, are sort of backed by gold. And if there is, in fact,

an attempt to sort of create new currencies or to create, as the Chinese are doing new payment regimes, which can be backed by gold, is there going to be a structural increase in demand for gold that corresponds to the fall in demand for fiat currency and most especially the U.S. dollar? that is what we really can't say for sure. I agree with Doug Porter. I think this is a bubble. It's going to burst, but how far it will go down

and what sort of damage it can do. That is the great unknown. I'd be more confident speaking about some of the other parts of the market. I consider frothy about the damage they'll do on the way down or what the impact will be. But gold, it's hard to say. I think some of this is people wanting to keep it

for the long term. I'm going to let you go, but have you ever consisted interested in investing in gold yourself? Is this something that you've thought about, getting the gold bars, maybe putting some money into gold, given the uncertainty that we live through right now?

Oh, many, many years ago, I actually bought some gold coins, some paper leaf coins for my children at the time. I mean, certainly are my children, but I bought it for them at the time, which they immediately turned around and sold to buy things like skateboards and pay for soccer fees.

But, you know, it would be, worth 10 times, or actually more like about 16 times what I bought them for. They were very cheap at the time. But I had a sense that there was going to be a long run up in the price of gold for the reasons I said having to do with the basement. And at least on that one, I can at least sort of say, I told you so. That's not to think about the value that could have been accrued. I'm sure the skateboards were exciting at the time. John, good to talk to you. Thank you very much. Have a great day. Bye-bye. John Rapley is a political economist and the author of Icarus, economics, why rich economies are struggling and how to fix them. That book comes out next month.

You can also find him. He has a weekly column in the Globe and Mail. You've been listening to the current podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon. For more CBC podcasts, go to cbc.ca.ca slash podcasts.