Multiple Factors Behind Experts’ Views on Gold as a Safe-haven Asset

The economic anxiety sparked by the tariffs in the United States has prompted some Canadians to turn to safe-haven assets. Precious metal traders indicate that this has led to a wave of gold buying frenzy.

Tyler Whitmore, CEO of Canada Gold, mentioned in an interview with CBC that the demand for gold at their 16 stores has surged dramatically. This could possibly be the period with the highest demand for physical gold bars in the company’s 15-year history. Buyers are feeling unsettled by the depreciation of the Canadian dollar and the risk of economic downturn, hence shifting to investment in physical assets like gold and silver that they can physically hold.

Toronto-based gold dealer Sprott Money has seen a 25% increase in the sales volume of gold and silver compared to the same period last year. Larisa Sprott, the company’s president, noted that since Trump’s election in November, she has witnessed “significant changes in the physical gold market.” Many customers are seeking security through the possession of precious metals, considering it as a last line of defense against more serious consequences in times of turmoil.

Anthony Herceg, Managing Director of North American Precious Metals Distribution at TD Securities, revealed that precious metal trading volume has seen double-digit growth in recent months. Particularly since Christmas, there has been a notable increase in demand, significantly impacting silver, platinum, and especially gold. Currently, the price of gold per ounce is around $4400, having surged nearly 20% in just three months, which could be challenging for some small-scale investors to bear.

Nevertheless, the surge in prices is not being driven by Canadian retail investors, but rather by the international market. Bart Melek, Global Head of Commodity Strategy at TD Securities, explained that large institutional investors have unique reasons for purchasing gold. Some institutions take advantage of price differentials brought about by tariff threats, buying gold overseas and reselling it to the U.S. market. Furthermore, the weakening confidence in the U.S. dollar as the global reserve currency has led central banks around the world to increase their gold reserves.

However, in many cases, the motivations of institutional investors are not significantly different from those of ordinary Canadians. Melek stated that concerns about inflation and tariffs indeed drive institutions to view gold as a hedging tool.