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Hello, everyone. Welcome to Economic Impact. It's October 14, 2025. I am with Stéfane Marion, our Chief Economist. Hello, Stéfane. A bit different today. You know, in absence of economic news and then the weight of the budget of Mr. Carney, we're going to talk about performance, but also gold.

So, we have a U.S. government shutdown, we're still waiting for a budget in Canada, China and the U.S. are still going at it with tariff threats. But in the meantime, new all time high for equities as of last week, Denis. So, the absence of news seems to be good news for markets. I can't promise we're going to end the year at a record high. It's been a fantastic year, up more than 30% since April. So, let's keep an eye on the next few weeks. As I say, I think there's going to be more volatility.

And all assets are performing well also.

Yeah.

Which is unusual.

In the meantime, Denis, if you want to look at it from an asset class perspective, you couldn't go wrong this year. So, it's a fantastic vintage for a Canadian investor. This is total returns expressed in Canadian dollars. So, we've had, you know, good performance for the Canadian dollar year to date, but up more than 20% for emerging markets. Look at the S&P TSX, up more than 20%. But as I said, you couldn't go wrong this year because every asset classes were up. The only ones not beating inflation would be a Canadian bond market and obviously cash. But all in all, a good vintage for Canadian investors.

And for the first nine months, the S&P and TSX are doing quite well if you compare to the past.

Well, 20.7% for the S&P TSX, 8% for the S&P 500. If you put this in perspective, more than 20% in nine months for the S&P TSX doesn't happen very often, Denis. Last time it happened, you have to go back to 2009 as the economy was rebounding from the Great Financial Crisis. Prior to that, you have to go back to the 2000's, just before the bursting of the NASDAQ bubble, so, fantastic performance. So, let's not be too greedy as investors either, right?

Yeah. And not only that, but all sectors inside the TSX did well.

All sectors delivered positive returns, except for healthcare. But I have to say that, you know, beating the index, 3 sectors beat the index, IT, banks, but the one that had the most leverage on the overall index was materials, up more than 76%, and, within materials, gold stocks were up more than 100%.

And now gold stocks represent a lot inside, you know those indices.

Some people will say, well, it's a record. It's not there yet, Denis. So roughly 11% of the S&P TSX.

Very close though.

The market cap is gold stocks. Going back to the 1970s, the only other instance where we surpassed the current level would have been in 2012. Remember back then people were fearing the debt crisis in the Eurozone. My view, Denis, I do have a strong conviction that we will probably exceed the all-time high in the next few weeks just because of the geopolitical backdrop.

We are at the high right now at $4000 U.S. and the gold.

You're right. So, if you go back to, and if you express this, because I wasn't sure if you were talking about in 2025 dollars, but you were, $4000. If you go back to the 1970s and if you express everything in 2025 dollars, in 1980, yeah, gold prices was lower in nominal terms, but in 2025 dollars it was the equivalent of $2800. Can you believe it's only at the beginning of this tear we were still below $2800 and now we're at more than $4000. So, the question is, is there still upside for gold? If you want still upside, you need more buyers, right?

And there's a lot of buyers. The world is buying gold right now.

Everyone seems to be buying gold. But I think that where it becomes interesting is that there's an institutional demand for gold and central banks are accumulating gold. They own now 36,000 tons of gold, which now represents roughly 1/4 of their total assets. So, and in the meantime, not everyone, that's the global average. If you can look at a country like Germany is at 70%, but a country like China, which is a big central bank, they still own less than 7% of the total assets in gold.

Yeah, which is very unusual. But now, they own more gold than treasuries.

At the global level, you're right. That 26% seems high, but if you put it in perspective going back to the 1970s, it's still much lower than what we saw there in the 1970s. But you are right to say that they are, the central banks, the institutional demand is diversifying out of U.S. treasuries. And now for the first time since the early 1990s, the central banks own more gold than U.S. treasuries. So, that's part of this whole geopolitical backdrop uncertainty. These central banks are big. If they're not sure about whether the U.S. will still have a dominant role in global financial markets, there they are diversifying and they're not buying Bitcoin, they're buying gold as opposed to U.S. treasuries.

They're buying gold, but they want to buy more.

So, you could say at 26% that they had enough. And there's a survey, there's an interesting survey that's published every year and for the first time since the survey has been available, we reached a new all-time high about, you know, the so-called willingness of these central banks to accumulate more gold. And now we have 43% of these banks saying, you know what, I might still buy more over the coming year. So, that's the point of today's presentation. There's demand for gold, people are asking us what's happening. What characterizes the current cycle for gold is this institutional demand coming from these central banks.

Yeah. We're going to change the subject a little bit. It seems that tariffs bring a lot of money and from Trump's pocket.

True. And that puts uncertainty on inflation and that is also a source of demand for gold because these central banks are saying, well, clearly the U.S. wants to disengage from the global supply chain or they want to reindustrialize, it might cost more. And at the end of the day, this old, you know, tariff collection now, Denis, which really started in June, now reaches $360 billion annualized in Q3. Don't forget, Denis, we said it last month, we're going to end the year at $500 billion of tariff collection. So, that is also part of the reason these central banks are saying, well, that might put more pressure on inflation, lower U.S. dollar. Buy gold because of this uncertainty.

Well, thank you, Stéfane, and thank you all for continuing to listen to us. But above all, don't miss our next meeting in November. Thank you.