Frank Giustra, the founder of Goldcorp, was once labeled out of touch when he first positioned himself in gold back in 2001. Today he judges that central banks have already built a floor under the gold price, that major miners will go on to acquire smaller mining companies, and that quantitative easing will return once again. He has set three hard conditions for himself to sell gold: world peace, honest politicians, and benevolent bankers, and he believes these are nearly impossible to achieve.
Giustra has more than 45 years of industry experience and is also a longtime director of the International Crisis Group. He gave an interview at an investment conference in New Orleans on October 29 local time, and his memoir, "The Money Trap: My Unexpected Path to Wealth, Philanthropy and Peace," was officially published on November 3 US time, which is November 4 Beijing time. He said: "Many black swan events are lurking in the shadows, and once risks erupt, policymakers will choose loose money again, and I can be certain that we will still see large-scale quantitative easing in our lifetime."
In his view, the situation related to Iran is the most prominent near-term risk. On the day of the interview, Brent crude oil prices broke above $110 per barrel, and the market was broadly pricing in peace expectations in advance, which he does not agree with. He believes there is a possibility of strike action after the US midterm elections, and an escalation of conflict would push oil prices higher and even drag the global economy into a deep recession. However, he also revealed that all parties are still conducting diplomatic communications behind the scenes and that an agreement could be reached, though it is uncertain whether conflict will break out first.
Giustra's long-standing bullish underlying logic for gold is rooted in the enormous fiscal costs brought by war. He pointed out that the wars in Afghanistan and Iraq cost about $8 trillion, and long-term massive spending will gradually consume a nation's financial strength, ultimately leaving it able to keep operating only by diluting the value of the dollar. When the dollar depreciates, the gold price naturally rises. This is an objective mathematical rule, not subjective speculation.
Central banks around the world continue to de-dollarize and increase their gold holdings, providing support for the gold price. The World Gold Council released data on November 3 US time showing that in the third quarter, central banks made net gold purchases of 321 tons, the fastest pace since 2024. He advises physical gold holders to hold for the long term, as the core value of gold is passing on family wealth.
Looking back to 2001, when the gold price was below $300 per ounce, he was mocked endlessly when recommending gold to institutions and was described as unrealistic. Although there is optimism in the current market, there is no nationwide frenzy, the general public has not yet rushed in on a large scale, and the market has not yet entered what is traditionally considered a major gold bull market.
The mining landscape is brewing change, and the copper resource gap holds opportunities. Mining companies are currently under pressure from rising costs, and several gold miners have seen fuel and all-in sustaining costs rise significantly. Giustra himself holds shares in leading miners, and he believes the downside for the gold price is limited and remains optimistic about his holdings. He also mentioned that large gold mining companies are sitting on abundant cash but their mineral reserves continue to be depleted. In the future, in order to replenish resources, they will eventually acquire smaller mining targets, and for now they are only in a wait-and-see stage.
Compared with gold, he is more bullish on the copper sector and predicts that a huge copper supply gap will emerge. For years, major miners have preferred to upgrade old mines and have rarely built new projects, leaving supply growth weak. He is focusing his positioning on the Colombian market, where the government is actively attracting foreign investment into mining and oil and gas sectors, and relevant cooperation frameworks and mining contracts are being implemented one after another, making the investment outlook worth anticipating.
After decades of ups and downs in the market, Frank Giustra has always stuck to his gold allocation logic. In his eyes, long-term variables such as geopolitical risk, fiscal deficits, and weakening dollar credibility will not disappear, and combined with the floor provided by continued central bank gold buying, gold's value-preservation properties remain irreplaceable in a turbulent environment.
Spot gold weekly chart Source: Yihuitong. As of 11:00 Beijing time on November 4, spot gold was quoted at $3,934.44 per ounce. Sina's major cooperative platform for futures account opening is safe, fast, and guaranteed.
Comments