Episode summary
“Still Bullish Gold”
The Markets
· · Hosts: Chris Hussey · Guests: Lina Thomas
Summary
Gold’s recent volatility is being driven less by a change in the long-term thesis than by positioning and options activity. Lina Thomas says private investors and central banks are competing for limited bullion, with lower Fed rates reducing gold’s opportunity cost and worries about fiscal sustainability pushing demand for a debasement hedge. She argues that call-option demand on gold ETFs helped fuel the rally, then amplified the selloff when dealers unwound hedges after late-January policy headlines eased those worries.
Thomas remains bullish and expects gold to reach 5,400 by the end of 2026, while saying the forecast still leaves room for upside because it assumes only steady central-bank buying and Fed-cut-driven private demand. She thinks additional diversification flows could add meaningfully more demand, but also more sharp price swings.
Silver, by contrast, is described as a liquidity-squeeze trade. Thomas says London vault liquidity has been drained by metal moving to the U.S. ahead of tariff concerns, so new demand can trigger outsized spikes or drops. On broader commodities, she sees some of the same insurance-demand themes spreading, but not a durable super cycle, because higher prices should eventually bring new supply online.
Key takeaways
- Lina Thomas expects gold to reach 5,400 by the end of 2026 and says there is significant upside risk to that forecast.
- Thomas says gold’s volatility is being driven by call options, dealer hedging, and the debasement trade rather than a broken bull case.
- Thomas prefers gold over silver because gold has a structural central-bank bid and silver’s liquidity squeeze creates extreme swings.
- Thomas says silver’s price action should stay erratic because London’s liquidity buffer has been depleted by metal moving to the U.S.
- Thomas does not expect a commodity super cycle, arguing that higher prices in non-gold commodities should eventually pull in more supply.
Notable quotes
“So, we're still bullish gold. We're expecting gold to go to 5,400 by the end of 2026”
“this debasement risk is basically where the volatility is coming from”
“We're not expecting that liquidity to restore any time soon”
“gold is something that you cannot bump. It's something that you cannot scale”
“we definitely prefer gold over silver”
How the episode opens
This is The Markets. I'm Chris Hussey and today is Thursday February 12th. And I'm with Lina Thomas, who is our senior commodities analyst within Goldman Sachs's Global Investment Research Group.
Lina, thanks so much for joining us on The Markets. Thank you so much, Chris. All right.
You're the gold and silver specialist. So, let's start with gold, if we can. It's up over the last 12 months.
Six months. Year to date. Everything.
Even yesterday on a payrolls report it still went up 2 percent. However, last couple of weeks we did see some volatility. It had a 15 percent dip.
What do you make of gold today and the volatility that's just been reintroduced to it? Well, we've seen actually an acceleration in the gold value in 2025, right? And it has to do with the fact that private investors, joint central banks in competing for the same limited gold bullion.
Now, why are these private investors enter the gold markets? Well, two reasons. One, the Fed is cutting.
And so, the opportunity cost of holding gold is now lower. But two is the so-called debasement trade. So, basically, fears or worries around fiscal sustainability in a lot of Western economies.
And this debasement risk is basically where the volatility is coming from. Why? Well, one way of expressing this debasement risk is through buying gold call options.
And what we've been seeing in 2025 is that gold call options have been steadily building through 2025. And in January, probably on the back of all the headlines that we had in January, that gold call option demands went vertical. Now, the thing is call options is that as prices go higher, dealers that had sold these call options now have to start buying gold to hedge their positions.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- gold volatility
- gold price outlook
- commodities
Companies and tickers mentioned
- GS
- Goldman Sachs
Watch the episode
Watch ““Still Bullish Gold”” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from The Markets
The Markets, this episode and its artwork belong to Goldman Sachs. Octagon is not affiliated with the show; this page is an independent summary.
