Asia's Gold Rush? | Shaokai Fan, World Gold Council | Tank Talks Asia

SHAO KAI: 260406

SHAO KAI: Together India and China make up roughly 50% of the entire consumer market in the world, about 25% each.

MANISHA: In the world?

SHAO KAI: In the world. 50%.

MANISHA: That's incredible.

SHAO KAI: In fact, I would say the growth of India and China as economies in the past 25 years has been a game changer for the gold market in general.

MANISHA: The Egyptians thought it was the flesh of the gods. The Romans built an empire on it. The Lydians of Ancient Turkey minted the first gold coin around 600 BCE, creating the blueprint for thought about value for the next two and a half millennia. Today, central banks are buying gold at the fastest pace in 50 years and leading that charge? Of course, it's Asia.

Welcome to Tank Talks Asia. I'm Manisha Tank, from me and the rest of the team at the AsiaWorks Studio in Singapore, a very warm welcome. Thanks for being here. And in this episode, we're gonna dazzle ourselves with the story of gold. We'll explore Asia's fascination for it, and of course, ask how high could it go?

My guest today sits at the center of the story, the World Gold Council's Shaokai Fan, has a reliable grip on why the oldest asset in human history is having a moment right now.

Well Shaokai, welcome to the show. It's really good to have you with us. So how about you tell us what your title is and what it is you actually do on the daily?

SHAO KAI: Sure. Well, first of all, thank you very much for having me. So I've got two roles at the World Gold Council. I'm the Global Head of Central Banks, which means I lead our relationships and engagements with central banks around the world who are of course very big gold investors and gold holders. I'm also the Head of Asia Pacific ex China, and that means I lead our engagements with policy makers, market participants throughout this entire region, trying to grow the frontiers of the gold market.

MANISHA: Well, I'm really glad that you are here and that we can talk a bit more about gold 'cause it's having this massive moment right now. First of all, a bit about your career. I think you started off in Wall Street, right?

SHAO KAI: I did, yeah.

MANISHA: So what happened? How did you end up where you are today?

SHAO KAI: Well, like many a young kid led astray who goes to, you know, business school in the United States, I worked as an investment banker for a few years.

It was definitely an interesting experience, really good for understanding basic finance and business concepts. But, you know, in the end it wasn't really for me. I have passions that are more geared toward like international relations, world history. So I decided to go back to graduate school to find what I could do that was still a viable career, but included those passions.

And after grad school, I worked for the US government for a bit, for the US Treasury Department, in a role that basically monitored world markets, but reported to major policy makers, like the president, on what was happening in markets at the time. And from that point, I was able to find jobs within finance and banking that still covered central banks and governments, and eventually led me to this role, the World Gold Council, where I cover central banks.

MANISHA: So when you heard about the role, what was it about it that you thought, right, this is the right thing for me? You mentioned history and actually gold has an incredibly rich history as an idea, as a philosophy, as an asset.

SHAO KAI: History was definitely a big part of it. Like I said, I'm a big student of history and gold just transcends all of human history. It is more or less the oldest financial asset class. It's been around as long as there's been human civilization, so that aspect always really excited me.

But of course, even in more recent history, whether you're talking about the gold standard from the end of the 19th century or the Bretton Woods system, the middle of the 20th century, that aspect also really interested me because it involved how financial history is woven into world history as well. So I think that really was a big part of why this role attracted me.

MANISHA: I've always been fascinated by the idea of gold because I've wondered, you know, someone dug it up once, how did they know that this was valuable?

SHAO KAI: It's really interesting, right? This metal that is, yeah shiny, kind of pretty, somehow became a universally accepted store of value and store of wealth and symbol of opulence, not just in one specific corner of the world, but basically every civilization around the world that encountered gold was able to realize that, hey, this is something special.

So there seems to be some innate link between gold and the human psyche. There's no definitive answer, but some theories that we've come across are gold is of course golden colored, which is the color of the sun. And a lot of ancient cultures had sun worship. It led to it being seen as some type of wondrous metal that had the embodiment of the gods because it was basically sun colored.

MANISHA: Yeah.

SHAO KAI: And I think that led to it being accepted nearly universally by every culture as something that was worthwhile.

MANISHA: Coming up. Just how did gold become so special?

Where are we today with gold? What is our relationship with it today?

SHAO KAI: The entire international monetary system, the currency system we have today, was an evolution of a gold-based system. So you had the Lydians and then other civilizations striking gold coins, but eventually people thought, well, these gold coins are kind of heavy if they get stolen and you know they're gone forever. It's better if I just keep it somewhere safe. So why don't I go to a Goldsmith? And I'll say, Hey, you know, Joe the Goldsmith, I'm gonna leave this with you. Can you give me some receipt or something that says I have this with you? And the Goldsmith would issue you a piece of paper that says, okay, you have a hundred gold coins with me.

MANISHA: Yeah.

SHAO KAI: And eventually that piece of paper was able to just circulate as currency because it was entitlement to a hundred gold coins held somewhere. And that essentially was the birth of paper money.

MANISHA: Yeah.

ncy up until more or less the: 1970

People think the gold standard is ancient history, but gold was still a foundational component of the monetary system until the early 1970s. And still today it's a critical part of our modern financial system.

MANISHA: In a moment, some facts about gold and China that might surprise you.

Let's talk about what some nations in Asia are doing about gold, because it's having a massive moment in this part of the world. So China is building its gold reserves and it's developed the Shanghai Gold Exchange. And we can probably see that develop further.

The question then becomes does Beijing have a very established and mature long-term strategy for gold? And what does it mean for the rest of the market?

SHAO KAI: I do think that, you know, gold has been always culturally important to China, first of all. But also people forget, China's actually the world's largest gold producing country as well. So China's the biggest producer of gold. Russia, I think is number two. Australia's number three.

China's also the world's largest gold consuming country and it still consumes more than it produces. So it still needs to import some gold as well. I think certainly in recent months we've seen the PBOC, the Chinese central bank start to grow its gold reserves again, it's actually bought gold throughout different periods of history as well. And I think that kind of leads into a topic that will probably come up, which is central banks buying quite a bit of gold.

nts of gold buying ever since: 2022

Right now we're seeing a lot of Chinese consumers investing in gold, whether it's gold bars and coins, but also gold ETFs too, and also Chinese insurance companies now dabbling in the gold market, trying to diversify their holdings as well.

So I'd say gold is intrinsic to Chinese culture as an adornment of course, but now it's becoming much more intrinsic to the Chinese investment universe as more and more investors, whether it's retail, institutional, or central bank, they're all looking at gold as a way to diversify,

MANISHA: But what's really interesting in the China story is that it wasn't always so intrinsic. Silver was a really big deal in China for a very long time, right?

SHAO KAI: That's true. In fact, there's a lot of modern Chinese terminology that still uses the word silver in relation to money, like the word for bank, in Chinese is literally silver house, right? So silver has always played a big role. I think that might've been because of the accessibility of both metals in the past. But today in the modern market in China, gold is definitely a big part of it.

MANISHA: Next, just how much gold is there in India?

Let's move on to India. So I'm someone with Indian heritage. I remember having gold given to me by family members or as gifts, even if it was small tokens, a pair of earrings, for example, or a small ring, from as young as I can remember. And today, just for the show, I decided to wear some gold earrings. But the point is, you know, India has this fascinating relationship with gold. Tell us a bit about that.

SHAO KAI: So there's definitely a deep cultural affinity, a deep cultural love of gold in India. It is used widely as jewelry, as adornment. It's used as wedding gifts, for instance, but I think differently than maybe some other markets, that jewelry is both adornment, but also a form of household savings as well.

But certainly there is a deep cultural love of gold and it's used widely in temples, for instance, for religious reasons as well. So India is now the world's second largest consumer gold market after China, and together India and China make up roughly 50% of the entire consumer market in the world, about 25% each.

MANISHA: In the world?

SHAO KAI: In the world. 50%.

MANISHA: That's incredible.

SHAO KAI: In fact, I would say the growth of India and China as economies in the past 25 years has been a game changer for the gold market in general because these are not just two large markets in terms of their population, but they have deep cultural loves of gold as well.

And because of their growth and because of the wealth that both of these economies have accumulated, it's just meant a lot more sustainable demand for gold overall.

MANISHA: In terms of economies in Asia that are developing a more long-term relationship with gold, one of them that I think is quite interesting is Vietnam. A lot of people aren't talking about that.

This at a time where anecdotally I hear from a lot of people about a lot of work that is being done in Vietnam to make it an internationally viable investable economy.

SHAO KAI: Yeah and we're actually doing quite a bit of work in Vietnam as well, specifically on helping to expand the gold market there.

Vietnam also an intrinsic cultural love of gold to begin with, but they've also had a bit of a traumatic history in the 20th century. So you can understand why a lot of Vietnamese look to gold as a way to maintain their wealth, to maintain purchasing power.

About 15 years ago, the Vietnamese government actually had some pretty strict rules put in place for the gold market because they thought there was over speculation in the gold market. So they actually restricted imports of gold. They established a monopoly of who could do what within the gold market. For instance, only one company was allowed to create gold bullion in Vietnam. And they had also various curbs on the usage of gold, throughout the entire gold market.

But just last year, they've started to liberalize some of these rules a little bit. They've started to repeal some of them. They've abolished the monopoly. They're allowing different companies in Vietnam to start doing different things with gold. They're hopefully gonna start relaxing some of the import quotas as well, so gold can be imported into Vietnam more readily because gold is actually widely used in Vietnam. There's an insatiable love of gold there, but because of those restrictions, it's created some distortions in the local gold price. There's a very wide premium in the gold price in Vietnam versus the international market.

So I think part of the reaction of policymakers is to try to bring down that premium because it's leading to a distortion of the gold market.

MANISHA: Yeah. Speaking of premiums and differences between the Asian market and the global market, let's talk a little bit about gold as an asset.

So there is a situation in the Middle East and a lot of people would assume that in these times of uncertainty, where the news headlines are shifting every single morning when we wake up, gold would be surging because we see it as this safe haven asset. We see it as a store of value. Has that been the case?

SHAO KAI: So the gold price has gone down since the Iran war started and there's been a lot of talk about whether gold is still a safe haven and why has it gone down, despite the fact that there's been clearly a major geopolitical event. The simplest reason for why gold has gone down is, because interest rates might go up, and gold and interest rates have an inverse relationship.

There is another possible explanation as well, which is sometimes when you have major sell off events like we're seeing now, gold might actually react poorly in the initial stages because it's a very liquid asset class and there are a lot of investors out there who might need to cover short positions or they’re facing margin calls in the rest of their portfolio, and they just have to sell whatever they can. And because gold is liquid, they'll sell the gold to make that margin call.

I'll also note that a lot of other safe haven assets have really not been doing quite as well as people had hoped in terms of this crisis. The US Treasury market, which is, you know, the largest safe haven asset in the world, has also not been doing very well because interest rates might go up for one, but also because of the cost of the war and adding to debt sustainability issues in the US.

MANISHA: Yeah, so it's actually a far more complex picture than one might assume. You know, there are many people who might listen to this or watch this episode, you know, interested in whether or not they should invest in gold. But what I'm hearing from you is, we have to be really careful about how we define it as an investible asset.

SHAO KAI: Well, gold is definitely an asset that can add a lot of value into portfolios, but I do encourage anyone who's interested in investing in gold to do their research and the World Gold Council, of course, has a lot of research that's available for free to anybody who wants to look at it. But we do think that gold traditionally reacts well when there's geopolitical shocks, when there are basically black swan events.

I think this time was a bit of a special case because of the feed through of inflation, et cetera. But if you look at the beginning of the Ukraine war, for instance, gold did very well then. So what we tend to emphasize is that gold has a very unique financial behavior. It reacts typically very differently than a lot of other assets react and therefore can add a lot of value as a diversifier and as something that reduces correlation within a portfolio.

So we encourage investors to think of gold in that way. Don't think of it as something that's always gonna go up, even though of course it's done very well in recent years. Think of it as a way to have something that brings more diversification and balance into a portfolio.

MANISHA: Alright, well Shaokai, I'm really curious, what are some of the conversations that you're having behind closed doors, to the extent that you can share, with some of the central bankers. In particular, what are some of the questions that they're asking you?

SHAO KAI: Central banks have been big buyers of gold, like I said before, and of course, they've held gold for centuries. In many ways they're an easier audience to talk to because, unlike maybe some retail or institutional investors who are very new to gold, central banks have been dealing with gold now for a very long time.

Some of the questions of course, relate around the political environment, geopolitics, where do you vault gold, for instance. Central banks still largely store their gold at the Bank of England in London, or the New York Fed in New York. But I think increasingly there have been questions about growing political risks around where do you store your gold and what are some of the best practices for storing gold therefore. Should they bring some of it back to the home country, for instance, or should they diversify where they store?

So those are conversations we've been having with a lot of central banks. Other conversations are simply, you know, should we be buying more gold now? Is now a good time because the price is so high, right?

It depends on the central bank. Other questions are around the geopolitical situation of the world. Do we think that gold is going to have a longer term use as a viable reserve asset? And we think emphatically, yes, it will.

MANISHA: Now look, I spoke to an analyst recently who talked about the gold price. And even talked about the gold price going as high as 6,000 US dollars an ounce in a year.

I found that rather surprising. I just wanted to get your reflections on that sort of commentary.

SHAO KAI: Well, so first and foremost, the World Gold Council is not allowed to forecast the gold price. So we don't have internal forecasts, but certainly we think the demand underlying the gold market remains very strong.

So in: 2025

10 years ago when I started with the World Gold Council, you know, gold was a conversation out there, but I think most investors viewed it as a fringe asset class or maybe something that was useful for very specific purposes. Now, it's very much moved to the center of conversations.

MANISHA: So, you know, you've grown up with Chinese heritage, is that right?

SHAO KAI: Yeah.

MANISHA: You studied in New York, you've worked in London, you're here in Singapore, like you're all over the place. But you've lived that east west financial story.

What do you think it is perhaps that in the west fundamentally people don't get about Asia and finance, but also this emotional connection to gold.

SHAO KAI: I think that's, you captured the right word. Emotional connection. Western investors may not realize that a lot of investors in this region have gone through traumatic events within living history. In Asia, for instance, we had the 97 financial crisis, which not only led to, you know, a lot of economies going bust, a lot of stock markets going bust, but civil unrest. You know, protests, really just dangerous destruction of property that happened in some markets as well. And that type of scarring, that mental scarring, I think lives in the heart of how a lot of investors still perceive the investment universe, and they always know that they need something safe and reliable.

One of the big growing areas of gold, especially here in Singapore, has been high net worth individuals buying gold and storing it in Singapore. And, you know, because of Singapore's role in our region, a lot of those high net worth individuals come from places like Indonesia and other countries in Southeast Asia, which have had traumatic experiences during the 97 financial crisis.

So gold is very much intrinsically linked to how investors respond emotionally in this region. And maybe for western investors, they may not have had that history.

MANISHA: Yeah, absolutely. And I sense that having a bit of gold stashed somewhere, it kind of delivers a sense of confidence in a time of unease.

Just ahead. Gold versus Bitcoin?

You have made publicly, I believe, an argument that gold beats Bitcoin as a reserve asset. Is that correct?

SHAO KAI: I don't know if I use the word beats. But certainly they have very different financial behaviors. Right. And, you know, we're not here to say that gold is better or worse than Bitcoin or other cryptocurrencies, or vice versa. We're just here to say that they're quite different asset classes.

s really evolved where now in: 2026

And I think gold has those first two characteristics in spades. And of course it's done well historically as well. It has delivered return too, but that's really the icing on the cake for reserve managers.

but at least where we sit in: 2026

MANISHA: I wanna get your personal view here. So let's just say for a moment, you're not representing the World Gold Council. Asia is very much talked about as being, you know, the future of the global economy because this idea that the economic epicenter of the world has shifted to the east.

So what does that mean for gold as an anchor in a new system? Where are we gonna be in our relationship with gold 20 years from now?

SHAO KAI: Governments here increasingly realize that gold is going to be a growing part of their financial systems and that they need to grow their financial infrastructure to make sure that gold is anchored here as well. Already the majority of physical gold demand is in Asia. I mentioned China and India are the largest and second largest markets, but it's not just demand, supply is also here as well.

China's the largest producer, Australia, although not part of Asia per se, but certainly from a time zone perspective, very close to Asia is the third largest producer of gold. So there's a lot of gold supply coming from this region as well. So certainly I think the gravity for the gold market is going to start shifting to the east, over the coming decades. That's without a doubt.

In terms of what it means for the economies of this region as an anchor point, you know, a lot of central banks in Asia have already been buying a lot of gold, we mentioned the PBOC already, but here in Singapore, the MAS has bought quite a bit of gold in recent years. Both Malaysia and Indonesia, their central banks, they both bought gold just in the last few months. So I think that the central banks in this region are going to view gold more importantly in their reserve assets too.

Overall, I think Asia's really going to be the leading force behind the gold market. China and India for sure are still gonna be very large gold markets, but Southeast Asia can be that third pillar of the gold market. Vietnam is just rediscovering gold. Indonesia, for instance, is taking steps to promote gold more readily in its domestic market as well. And that's a country of 200 something million people. So I can see that being another major pillar for the gold market too. So really the future of gold, I believe, is in Asia.

MANISHA: Absolutely. Well, we keep saying Asia's where it's at. That's why we're doing this show.

So Shaokai, we ask all of our guests to bring a memento to share with us and we put it here on the Tank Talks Asia shelves, which I'm delighted to say are getting filled up nicely, gradually. I know that you had a memento for us. You haven't been able to bring it in. I'm assuming that's because it's gold bullion and it's quite difficult to carry.

SHAO KAI: It is very heavy. You know, one of those large bars, they’re 12 and a half kilos right? And it's about 2 million US dollars these days. So I wish that could have been your gift, but I feel like that would've been potentially a safety and security hazard here as well.

MANISHA: What are you saying? So then what is it you are gonna give us?

SHAO KAI: I have a little container of gold leaf, like it's in a little glass jar. Which you can, you know, sprinkle on top of cupcakes or food or something if you wanna have an extra special day. Or of course you can use it to decorate things or just keep it in the jar itself.

MANISHA: Well, I appreciate the gold leaf and maybe if you come back next time, we can talk about the bullion.

SHAO KAI: Looking forward.

MANISHA: Well what a conversation that was. We covered so much, including all of that history about gold. If you’re curious, there's more in our show notes where you can further your understanding on some of the topics we covered. Thanks from me and the rest of the team at the AsiaWorks studio in Singapore for making it to the end of this episode. It's been great to connect.

Join us again next time and why not like and subscribe so that you'll know exactly when that next episode drops. You can also access our playlist. We cover everything from sport to history. It's all on Tank Talks Asia. Until next time, I'm Manisha Tank. Bye for now.

Tank Talks Asia is an AsiaWorks production and the views and opinions shared by our guests are their own.