Head of Americas, World Gold Council
Global markets have been on a roller coaster since late February, impacting every asset class and aspect of the financial world. One area that has been front and center – in a good way – has been gold, as investors looked for ways to shield their portfolios amidst the unprecedented volatility. To help add some insight and perspective on this, we sat down with one of the leading experts on this topic: Joseph Cavatoni, Head of Americas at World Gold Council.
Joe, first things first, how are you holding up in the current environment?
All things considered, we’re doing well. Most importantly, our team is safe and everyone is keeping their spirits up. These are challenging and unique times, but we’re encouraged that our contingency and continuity plans have worked as planned and the shift to a remote workplace has been easier than expected.
As for the business, our mission and goals remain the same – educate the marketplace, speak with clients, issue new research, and be a voice for the industry – though the output has been on a much more amplified level. Transparency and high quality, credible information are critical during times of crisis, so we’ve raised the volume.
And as it relates specifically to gold, everything is functioning well under the conditions, and gold is performing exactly as expected. It’s an asset class that is front and center in the current environment, so it’s more imperative than ever for us to be a resource to investors and to provide real-time insights, data, and analysis.
Gold is one of the best performing asset classes year-to-date, though like everything else, it hasn’t been immune to market volatility. What’s your overall take on this?
Gold is behaving exactly as it should, which is incredibly comforting amidst all the volatility. During times of panic, fundamentals and underlying data often goes out the window as anxious investor behavior and declining market sentiment sets the pace. The entire investment ecosystem is undergoing a severe repricing in ways we’ve frankly never seen. However, we’re optimistic that gold will stay the course and reach or exceed the 18% plus growth we saw in 2019.
Gold is generally known as a safe haven, but the current volatility has shined a light on its role as an important asset class within investment portfolios. Investors of all sizes, from retail “Mom & Pop” to pension funds and other large institutional asset owners, are looking not just at performance – which fortunately for gold has been strong – but also on how gold interacts with other parts of their portfolios – in terms of attributes like diversification, correlations and liquidity.
Despite recent outflows, gold-backed ETFs have actually been flow positive this year – up $15.9 billion YTD. Does this surprise you?
Not at all. Over the last quarter century, exchange traded funds (ETFs) have established themselves as one of the most effective and mainstream way to the market. Their rise is well-documented – and for good reason: intra-day pricing, low cost, access to asset classes once reserved for only the largest investors, etc. They’ve helped carry the baton that mutual funds first ran with and will likely only continue to grow.
As for gold ETFs, it’s been a marriage made in heaven. People are becoming increasingly more knowledgeable about gold and how its benefits, and ETFs are a user-friendly vehicle to access it.
Governments and global central banks have reacted extremely aggressively to help counteract the economic impact of the virus. What’s your reaction to these policy efforts?
Central banks have little choice but to reassure the markets. We are in unprecedented waters right now, so all options must be on the table, from central banks to government relief efforts.
The breadth of the support is impressive but not altogether surprising. Once everyone truly grasped the impact of COVID-19, it was assumed that global leaders would step up to bolster their economies. But what has been surprising is the speed with which leaders have moved considering that governments aren’t necessarily known for being nimble or agile. In just a few short weeks, we’ve seen unprecedented stimulus efforts drafted and passed.
Looking ahead, what are you keeping a close eye on?
Like everyone else, we’re tracking the spread of the virus and hoping to see the curve flatten soon. While we’re obviously closely monitoring gold’s performance in the global markets, it’s important to recognize the humanitarian toll this pandemic is taking. We are hopeful the anticipated peaks will come sooner rather than later so we can start seeing the other side of this. Once the numbers start to slow down and reverse, we’ll see a trickle-down effect to the markets as investors regain confidence and global economies start to strengthen.
On a lighter note, when you’re not researching and talking about gold, how have you been spending your time at home?
When working at home, the lines between “work” and “home” really start to blur, so it’s important to maintain a sense of schedule and make a conscious effort to step away from the computer for downtime. Go for a walk, play ping pong, read with your children, listen to a podcast, make a fancy dinner and have the family get dressed up. Get creative!
And Netflix of course ?
Head of Americas, World Gold Council
Joseph Cavatoni joined the World Gold Council in September 2016 to lead US business strategy, which includes oversight of investor relationships, product solutions, research and marketing. In addition, Joe spearheads the firm’s global distribution and ETFs platform and serves as member of the Executive Committee.
During his three-decade career in the financial services industry, Joe has developed and demonstrated expertise in the areas of global capital markets, exchange traded funds, asset management, trading and business/platform development. He also spent more than 15 years working in Asia. Prior to joining the World Gold Council, Joe was a managing director at BlackRock where he was responsible for iShares Capital Markets – Americas and was a member of the firm’s Executive Committee. His responsibilities also included product development and management as well as running a global team. Prior to BlackRock, he held senior positions at UBS, Merrill Lynch and Bank of America focused on equity derivatives training, securities financing and lending.
Joe holds a Bachelor of Business Administration from George Washington University and a Master of Business Administration degree jointly from Northwestern University Kellogg School of Management and Hong Kong University of Science and Technology.