VP of mining exploration explains how an erosion of trust in institutions & financial systems has created a unique growth environment for gold
Gold continues to behave like two different asset classes. On one hand, gold has offered protection, ballast, and a degree of non-correlated returns when risk appetites subside. In short, it has done its job as a risk hedge in recent years, especially amid steady waves of geopolitical uncertainty. At the same time, it has become a growth asset. Gold rose 12.8 per cent in 2023, 26.3 per cent in 2024, and has risen 28.5 per cent in 2025 so far. For Blake McLaughlin, the driving force behind these dual behaviours comes down to individuals’, institutions’, and nation states’ declining levels of trust.
McLaughlin is VP of Exploration for Axcap Ventures, a gold project investment firm. He explained that as geopolitical events and shifting social norms have eroded trust in traditional financial institutions and even some keystone assets like the US dollar, gold has picked up momentum. Investors, especially in the global south, are seeking out gold as a means of diversification contributing to its new dual role as a risk hedge and alpha generator.
“Compared to a year ago, or even maybe six months ago, the biggest change is global trust. I think the intrinsic in the value of gold rises as trust degrades,” McLaughlin says. “Because if we trust that systems will exist and that we can be friends with each other and follow the rules, then this system that we built is okay. But when we start to erode that significantly, which many people would argue has happened in the last six months globally, then we see more importance in the value of something that is more difficult to be manipulated, or arguably impossible to be manipulated.”
That erosion of trust, McLaughlin claims, can be seen in louder arguments against the fiat currency system, or in the de-dollarization policies pursued by central banks in emerging markets. While the anti-fiat movement has fixated on cryptocurrencies, those central banks have used gold as a replacement for their US dollar reserves and driven appreciation in the yellow metal.
Lowering interest rates have also contributed to greater preference for gold. In situations where national or corporate bonds are yielding less, the trade-off for investors becomes less challenging. While gold itself might not pay much income, its appreciation potential in this environment may seem more compelling than a bond paying around three per cent.
McLaughlin also leverages his own experience as a geologist, engineer, and gold exploration expert to inform his bullish view. He notes that supply for gold is beginning to become quite constrained. He notes that more money is being spent by miners on smaller and less promising deposits. Fewer new deposits are being found and those that are being found are yielding less. A simple supply and demand chart would show the potential for appreciation as a result.
One of the more interesting dynamics in gold over the past three years is that it has tended to grow alongside risk assets. While equity markets have hit and broken records, gold has done the same. For a traditional safe-haven asset to do so concurrent with market moves may seem unorthodox, but McLaughlin believes this is further evidence of gold’s non-correlated performance. He notes that risk equity performance in recent years has largely been driven by North American investors while gold performance has largely been a product of emerging market demand, resulting in this concurrent rise.
Because gold’s recent performance has been more a product of demand outside of North America, McLaughlin believes there is still potential for upside in gold as more North American investors look to this asset as a means of offsetting risk from their equity holdings. Even a marginal increase in typical US or Canadian retail allocations to gold might have a significant impact on the price. If North American investors lose their tase for tech stocks, McLaughlin thinks gold could benefit further. He argues that advisors can see gold playing more of a role in their clients’ portfolios as they reconsider what traditional asset allocation models can continue to do for them.
“The traditional 60/40, equity/bond portfolio needs to really be reevaluated,” McLaughlin says. “The strength and certainty of those bonds is certainly in question and needs to be very closely monitored. But this is a reasonable alternative to that type of structuring, or at least portion of that type of structuring that is something that maybe is a better fit for today's market.”
