What have the midterms to do with gold? AI Stocks sell off. Where will the money go? Nick Ward talk.

Summary

The discussion considers whether the recent decline in gold prices is temporary and how elections, US debt, interest rates, and a potential sell-off in AI stocks could affect demand for gold and silver.

Guest Nick Ward argues that the medium-term investment case for gold remains intact, while acknowledging that prices could fall further and that historical patterns are not guarantees. Host Clive Thompson says he recently bought physical gold and silver and sold his remaining AI-related shares.

Markets, Macroeconomics, and Assets

Gold and US Midterm Elections

Ward says gold has often moved sideways for several months after a president loses control of Congress, before rising. He cites these examples:

• 2018: Gold was around $1,200 per ounce, stayed relatively flat for roughly six months, then rose toward $2,000 by summer 2020. The subtitles describe this as a “40% increase,” although the quoted endpoints imply a larger rise.
• 2006–08: Gold was around $620 per ounce, fluctuated, then rose to about $1,000 in early 2008.
• 2010: After Democrats lost the House, gold rose from around $1,350 to above $1,900 per ounce within a year.
• 2022: Ward says gold bottomed five days before the election and rose over the following six months.

Ward’s broader historical claim is that gold was higher two years later in six of seven cases since the 1980s in which a president lost the House or Senate. He also cites an average gain of more than 25%. Elsewhere, he refers to “seven out of the last eight” outcomes being favorable. 1994 is cited as a counterexample when gold did not move. Ward emphasizes that historical patterns do not provide a dependable prediction.

Recent Gold Price Decline

Ward attributes the recent decline mainly to higher oil and energy prices, which could sustain inflation and lead markets to expect higher Federal Reserve rates. He says markets were pricing in three rate hikes by the end of the following year, while attributing a more limited, one-hike expectation to UBS. The Fed had held rates at its latest meeting, though Ward says two officials favored a hike.

Higher yields on US Treasuries can temporarily draw money away from gold, which does not pay interest.

US Debt and Monetary Policy

The speakers cite US debt of more than $40 trillion, potentially reaching $50 trillion by 2029. They discuss an interest bill of about $1.4 trillion and note that applying a 5% rate to the full $40 trillion would imply $2 trillion annually. They also acknowledge that existing debt was issued at lower rates and would roll over gradually.

Ward argues that high borrowing costs may encourage policymakers to tolerate inflation, expand the money supply, or pressure the Fed—a process he calls financial repression—which he sees as supportive of gold.

Thompson recalls a projection he made in 2017 of $27 trillion in US debt by 2026 and gold at around $4,000 per ounce. He says debt was already around $40 trillion. These are statements and forecasts made by the speakers, not independently verified in the video.

The speakers also cite the 2011 US credit-rating downgrade, after which gold reportedly reached a record high about two weeks later.

Central Banks and Currencies

Ward says central banks are buying gold and may diversify away from US Treasury bonds as those bonds mature. He describes the euro as a potentially unattractive alternative, citing political issues in France, and claims some central banks now hold more gold than US government debt.

Both speakers present gold as a potential protection against declining purchasing power in fiat currencies.

AI and Equity-Market Risk

The speakers describe sharp falls in Amazon and Alphabet (Google) shares. They discuss the risk that Alphabet’s AI products could compete with its search business and advertising revenue.

Thompson warns that broad index funds may have substantial exposure to US technology and AI stocks, including the S&P 500 and global equity index funds. He says exposure exceeds 50% in some cases; this is his assertion in the discussion.

Ward questions whether large AI investments—particularly spending on data centers—will generate adequate returns. He says AI-related borrowing has risen 12-fold and that AI search can use 8–12 times as much energy as a Google search. These are claims made by the speakers.

They expect some AI companies to succeed and others to fail. They also discuss whether cheaper, “good enough” local AI could reduce demand for the most expensive services.

Other Assets and Instruments

The conversation also mentions silver, gold-mining stocks, ETFs, cash, Binance, and central bank digital currencies (CBDCs). The speakers refer to a purported $6.3 billion Binance loss or disappearance, which they attribute to a reported cyberattack. The claim is not substantiated in the subtitles.

Portfolio Views and Practical Details

Gold Allocations and Personal Positions

The speakers say large banks often suggest a 5% allocation to gold. They cite Ray Dalio as advocating 15% and a Morgan Stanley chief investment officer as having suggested 20%. Ward presents these as publicly stated views and contrasts them with his claim that gold makes up less than 0.2% of the average American’s holdings.

Ward also cites a Royal Mint survey finding that only one in 12 UK adults holds some savings in gold.

Thompson says he sold his last AI-related stocks within roughly 30 days, bought physical gold and silver twice in the prior month, and is researching mining stocks. He describes himself as a net buyer of gold at current levels.

Dollar-Cost Averaging

Ward recommends spreading purchases over time rather than investing all at once:

• Buy in stages as prices fall.
• As an example, he mentions investing $10,000 at a time if the price drops another 3–5%.
• He cautions that buying a dip does not mean the price has bottomed.

Physical Metal, Funds, and Storage

Ward distinguishes between owning physical bullion and holding ETF shares. He argues that an ETF investor owns shares in a fund rather than metal in hand and might receive cash settlement in a crisis. He says physical gold can be held directly or stored in London or Zurich.

The speakers cite silver VAT rates of 8.1% in Switzerland and 20% in the UK. Ward says UK buyers receiving silver physically may need roughly a 21% price rise to break even, and says many clients instead use bonded storage in Zurich to avoid VAT. They note that withdrawing stored silver or transporting it internationally can be costly. These are commercial and tax-related claims made in the discussion.

Thompson says qualifying UK legal-tender gold coins are exempt from capital-gains tax. The discussion does not provide independent tax guidance or verify this claim.

Recommendations and Cautions

Ward’s central view is that the gold-price decline is short term and that the longer-term case is supported by debt, inflation, political uncertainty, and central-bank demand. He says established customers are buying on weakness, while some newer investors are nervous. He also reports that some clients are selling silver after its sharp moves.

Ward cautions against putting everything into gold, while saying it can form part of a diversified portfolio. The speakers repeatedly warn that gold and silver prices are volatile and may fall further. Ward says he dislikes price predictions and does not identify a specific price target or reliable turnaround date.

The discussion also raises taxes, inflation, currency risk, digital-platform concentration, and cyberattacks as investor risks. Views expressed on these issues are largely the speakers’ opinions.

Disclosures and Sources

The opening disclaimer says the program is for entertainment and educational purposes only. Neither the host nor the guest is an investment adviser, and nothing in the program constitutes investment advice. Gold and silver prices can rise or fall, and investors may not recover their initial investment.

Ward is identified as being from Gold Bullion Partners, which offers gold and silver information and services. The conversation includes an invitation to contact him.

Presenters: Clive Thompson (host); Nick Ward (also rendered “Warde” in the subtitles), Gold Bullion Partners.

Sources and institutions mentioned by the speakers: Betting markets; historical election and gold-price comparisons (no dataset named); the Federal Reserve; UBS; Bank of America; Goldman Sachs; the Royal Mint; Ray Dalio; a Morgan Stanley chief investment officer; MoneyWeek; and Binance.