Industry and financial experts attending the 2016 LBMA/LPPM Precious Metals Conference this week debated whether financial and retail investors would continue to favor gold amid demographic changes in Asia or if another financial crisis unfolded.
Most participants agreed the accommodative monetary policy used by central banks to ignite economic growth following the 2007-2008 financial crisis had largely failed.
Though short-term interest rates in the US, the European Union and Japan fell to record levels, consumer spending and business investment failed to increase dramatically.
If another financial crisis erupted, additional monetary easing from central banks was unlikely to remedy the situation, and might only contribute to unsustainable debt levels, according to some financial experts.
"We're clearly in what I would term a period of unconventional monetary policy," Chris Watling, CEO and chief market strategist of Longview Economics, said during a panel discussion Tuesday, referring to the lowest interest rates set by the Bank of England in its 500-year history.
Moreover, the failure of US interest rates to move appreciably higher over the last six years, despite forecasts to the contrary by the US Federal Reserve, showed that policymakers are uncertain why monetary easing has not stimulated growth, he said.
"Every 40 years, the international monetary system...changes. It seems pretty clear to me that inflation targeting is not working," he said, referring to the Fed's aim of creating enough economic growth to raise inflation to 2%.
"Clearly in a world of heightened uncertainty, in a world where the international monetary system should change, there is a lot of volatility and gold is your currency of last resort," Watling said.
Yet despite the prevailing low interest rates and weak currencies, gold prices have not returned to their record highs of 2011, Watling and other market observers noted.
John Levin, global head of metals sales for ANZ Bank, said the failure of gold to reach those levels was in part due to growing supply over the last five-or-six years.
"More gold is printed every day, so you need that new demand driver to take that freshly printed gold off the market and create deficit," he said.
"Even with that, the market has done OK," he said, largely because gold remains deeply embedded in the cultures of Asia and the Middle East.
"It's a form of savings, and that's not going to change anytime soon, though it will change," Levin said.
But Tim Gardiner, head of Global Precious Metals for Toronto-Dominion Bank, wondered whether young people in emerging markets like India may not spend their money on other items like cars and air conditioners as they move into the middle class.
"When I take a look at the [projected] urbanization [in Asian cities], I want to go long real estate," Gardiner said. "As that [geographic and socioeconomic change] happens, does people's psychology change from seeing gold as a stored value to other things they can spend their money on?"
