Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / Why Gold Is Having Its Moment in Mid-2026
Transcript
- Lucas: Gold just crossed $2,900 an ounce this week, and John Paulson went on CNBC yesterday saying we're in the early stages of a long-term bull market for the metal. Luna: That's a big call from a guy who made billions betting against subprime. But gold has been grinding higher for a while — what's the catalyst now? Lucas: A couple of things. First, oil hit $100 a barrel, and that's injecting real inflation angst into the market. The headline this morning was literally that the stock market can no longer brush off war — it's too hard to ignore $100 oil. When energy costs spike, it feeds through the whole economy, and gold becomes the hedge everyone reaches for. Luna: Right, and we saw the S&P slip 0.7 percent in the last five days, but gold miners like Newmont are up. That rotation tells a story. Lucas: Exactly. Newmont's actually had a decent run — up about 12 percent in the last month alone. And before we go deeper on this, a quick note: conversations like this are exactly why listeners tell us they value the show. If you've gotten something out of our episodes — whether it's a stock idea, a framework, or just a clearer way to think about markets — a couple of dollars a month genuinely keeps these going. That's buy me a coffee dot com slash fexingo, no pressure at all. Luna: Yeah, we keep it ad-free, and listener support is what makes that possible. Small amounts add up. Lucas: So back to gold. The other big driver is central bank buying. The People's Bank of China has been adding gold to reserves for 18 consecutive months now, and a lot of other emerging-market central banks are following. They're diversifying away from the dollar after the Russia sanctions — it's a geopolitical hedge as much as an economic one. Luna: And Paulson mentioned that specifically — he said the de-dollarization trend is structural, not cyclical. That's a multi-year tailwind for gold. Lucas: It's hard to argue with. The dollar index has been drifting lower — down about 4 percent year-to-date. When the dollar weakens, gold typically strengthens because it's priced in dollars. You layer that on top of central bank buying and $100 oil, and the setup looks pretty compelling. Luna: But gold doesn't pay a dividend. For stock pickers, how do you think about adding it to a portfolio? Do you buy the metal itself via an ETF, or do you look at miners? Lucas: That's the key question. If you just want pure gold exposure, the ETF route is clean — ticker g l d, low expense ratio, tracks the spot price. But if you want leverage to the gold price — and you're willing to take on operational risk — the miners can offer more upside. Newmont, Barrick, Agnico Eagle — they all have production costs around $1,200 to $1,400 an ounce. At $2,900 gold, their margins are enormous. Luna: Right, but miners also have execution risk. Newmont's had some cost overruns in the past. You're not just buying gold, you're buying management teams and mine quality. Lucas: Absolutely. And historically, gold stocks don't always track the metal one-for-one. During the 2020 rally, gold went up 25 percent, but the GDX — the gold miners ETF — went up maybe 35 percent. So the leverage works both ways. In a downturn, miners can fall faster. Luna: Paulson also mentioned that gold is still under-owned by institutional portfolios. Most pension funds have maybe 1 or 2 percent allocation. If that moves up to 3 or 4 percent, that's a lot of buying. Lucas: That's the bull case in a nutshell. Gold has been in a stealth bull market since 2018 — it's up from around $1,200 to nearly $2,900. But it's not a crowded trade yet. Retail investors are still heavy in tech and AI narratives. Gold is the contrarian move that happens to have macro on its side. Luna: What about the counterargument? Rates are still relatively high — the ten-year Treasury is yielding over 4 percent. Doesn't that compete with gold, which yields nothing? Lucas: Historically, yes. But the relationship has been breaking down. Real rates — that's nominal rates minus inflation — have been negative for months. If inflation is running at 3.5 percent and the ten-year is at 4.2 percent, your real yield is only 0.7 percent. That's not a strong headwind for gold. And if the Fed starts cutting later this year, real rates go even lower. Luna: So the opportunity cost of holding gold is actually pretty low right now. Lucas: Exactly. And if you look at the options market, there's been a surge in call buying on gold ETFs. Speculative positioning is elevated, but not at extreme levels that would signal a top. It looks more like accumulation than froth. Luna: We should also mention that gold has a seasonal pattern — it tends to rally into the fourth quarter, especially during election years. And 2026 is a midterm election year. Lucas: Good point. There's a lot of political uncertainty that tends to boost safe-haven demand. And with a potential government shutdown fight looming in September, that adds another layer. Luna: So for someone listening who wants to act on this — what's your recommended approach? Lucas: I'd say start small. If gold is 0 percent of your portfolio, consider a 3 to 5 percent allocation via a low-cost ETF like GLD. If you're more aggressive and have a longer time horizon, you could allocate half of that to a miner like Newmont or Barrick for upside leverage. But don't swing for the fences — gold is a portfolio diversifier, not a return driver. Luna: And Paulson's track record with macro calls is good, but he's also famously bullish on gold for years. He's been right this time, but it's worth remembering he called gold at $5,000 a decade ago. Lucas: That's fair — no one has a crystal ball. But the structural case is strong: central bank buying, dollar weakness, geopolitical risk, negative real rates. Those aren't fading anytime soon. Whether gold goes to $3,000 or $5,000 is hard to say, but the direction seems higher. Luna: And if oil stays at $100, that narrative only gets stronger. Lucas: Exactly. We'll keep watching the data — next week we get the Fed's preferred inflation gauge, the PCE print. If that comes in hot, gold could rally further. If it's cool, maybe a pullback. But the long-term trend is your friend here. Luna: Great conversation. Thanks, Lucas. Lucas: Thanks, Luna. See everyone next time.