Gold for the 21st Century Episode 1 | David Gornall, Strategic Advisor for Precious Metals, Abaxx Exchange & Former Chairman, LBMA

This episode explores the evolving role of gold in the 21st-century financial system, particularly its potential as a high-quality liquid asset. Against the backdrop of rising geopolitical uncertainty and a questioning of the US dollar's dominance, the discussion highlights the increasing central bank gold reserves, contrasting with John Maynard Keynes's earlier "barbarous relic" assessment. More significantly, the conversation delves into the structural issues within the gold market, such as the discrepancies between the London OTC market (400-ounce bars) and the US futures market (smaller bars), leading to price dislocations and challenges for hedging. For instance, the difficulty for physical gold holders to effectively hedge using futures due to margin calls is discussed. The need for regulatory changes, specifically recognizing gold as a high-quality liquid asset for liquidity coverage ratios and collateral purposes, is emphasized. This would improve access to capital, particularly for smaller players in Asia, and enhance the overall usability of gold as collateral, especially in regions with bond shortages. Ultimately, the episode suggests a future where gold enjoys parity with government bonds, reflecting its growing importance in a diversifying global financial landscape.