A Deep Dive into the Current Gold Market: Interview with Josh Phair, CEO of Scottdale Mint February 2025

A Deep Dive into the Current Gold Market: Interview with Josh Phair, CEO of Scottdale Mint February 2025

In a revealing interview with Kitco News, Josh Phair, CEO of Scottdale Mint, sheds light on unprecedented movements in the global gold market, where banks are rushing to relocate physical gold to the United States amid growing concerns over potential tariffs. Phair points to several key developments: lease rates have surged from typical 1-2% to over 10%, the Bank of England is experiencing significant delays in gold withdrawals, and there’s a notable shift in how gold is being positioned globally.

He highlights the possibility of central banks, including BRICS nations, diversifying into silver, while also noting the emerging trend of U.S. states considering gold in their reserves. According to Phair, these movements are happening largely under the radar of mainstream media and retail investors, suggesting potentially significant market implications as more participants become aware of the situation.

Interviewer: What are you seeing in the gold market right now?

Josh Phair: We noticed it back in December there was seemingly a tightness in metals. We saw the exchange for physical premium grow up, that increase in price. Normally consumers don’t see a small price – if we’re talking gold we’re talking sub $1, it might be really really pathetic on a percentage basis. Suddenly that price started growing not only on gold but also silver. Some people thought could this be a fund that’s blowing up that’s got to cover their positions via physical. Why are the banks offering such a premium?

After the first of the year, I think everyone realized this is primarily driven by tariff risk and the banks are not in the business of taking risk – they do not want to pick up pennies in front of freight trains. The goal was to get all the metal stateside. Traditionally the banks are shorting or they’re selling forward in the COMEX market, then they buy the physical metal from somewhere else in the world and import it to the states. That takes typically more than a month. Gold is a little quicker if you can find an airplane, but airplanes were very busy right before Christmas. You had full loads of passenger vehicles and you could only fit about four tons of gold per plane.

Interviewer: You mentioned there this unseen hand that you’re talking about and we’ve been hearing some of these rumors too. Why now and who could that unseen hand be?

Josh Phair: No one knows for sure. It would seem that perhaps we have a new Administration and so will there be a gold audit of the US gold reserves? You know they are the largest holder of gold in the world but we haven’t had an audit in a long time. Maybe someone got the heads up that they need to make sure there’s more material here. Does the COMEX and the banks do they just want to create an absolute huge war chest of Gold and Silver stateside in the event tariffs come? Will there be an exemption to a monetary metal?

There’s so much uncertainty with the administration it’s making things really excited. And Bassent, who is now in charge of a lot of the money inside the United States, does seem to like gold. You’re hearing things about will there be a Gold Bond, you’re talking about a sovereign wealth fund that’s now going to be created in the US.

Interviewer: Have you seen any credible signs that the US might repeg its official gold reserves? I mean I think they’re booked at just $42 an ounce right now, or is it more of a personal preference than real policy change on Bassent’s side?

Josh Phair: No one knows. It doesn’t change the value of how much that gold is worth but obviously they have a model where gold is worth $42. If they mark to market, we’re at $2,900 today, an all-time high, so obviously that would swell the balance sheet of how they report. But everybody knows it’s there.

I think there’s a theme here that it’s a combination of how much debt, how many dollars do you have outstanding and then how much gold do you have. Right now we’re seeing a rebalancing act throughout the world. All the focus has been on bitcoin as we ended 2024 and it feels like boy, it sure shifted to the physical gold market now. It’s a huge scramble all across the world. It’s not just the US that’s bringing in Gold – we’ve seen the BRICS countries for quite some time are stacking a huge amount of gold. Is this just the US wanting to make sure that they maintain the top place, the top holding for gold?

Interviewer: Talk to me a little bit about the gold prices here because everything that you just laid out would I would assume mean some good upside on the gold prices right? Talk to me over the next year where you see this considering Scott Bassent’s upcoming policy changes.

Josh Phair: Boy if I knew exactly where the price would be in the next six months, life would be a lot easier. If we take a bigger snapshot and look longer term, I think years – it’s got to go higher. I think we all realize that the financial system has been somewhat, some people would call it’s been cooked for a while, it’s been broken for a while.

Are we starting to see some fiscal responsibility coming in? Obviously we’re seeing a lot of auditing all throughout the US government and now they’re even talking about going to the Federal Reserve. I don’t believe we’ve had a modern day audit of that entity.

My company in particular, we’ve been called and it started in December – “Hey do you guys know where there’s more gold refining capacity?” And these aren’t the normal bullion banks. When you start looking around, clearly worldwide there is a big sucking sound of physical metal and it’s being transported primarily to the US right now.

Interviewer: Let’s talk about the bank of England situation because this gold issue has even dominated their pressers dedicated to its latest interest rate decisions. The bank of England Deputy Governor told the Press all existing slots at the bank of England to withdraw gold bars are booked up. Does this reassure you or do you still worry about whether the gold is truly unencumbered and ready for delivery if you were to request it?

Josh Phair: Obviously it doesn’t feel super confident. I think what he didn’t mention is that there are some other factors going on. What is the brand of the bar, what is the origin – it might have a tariff if it comes to the US so they’re having to sort. A lot of this gold isn’t necessarily been allocated by per brand per origin per location, it might have slightly different purity. If we go back, how old is this gold? Even the US government in Fort Knox isn’t of a spec that’s deliverable.

As you go through all that, those are 400 pound bars for example. Serial numbers, audits, where it’s coming from, and then I think there is a bit of banks probably delivering these things and they’re sending them off to be refined if they’re not of the right origin. What if they’re from a sanctioned country? You didn’t fully embellish maybe all the reasons for the delays. It obviously is not easy and doesn’t make you feel warm and fuzzy that there couldn’t be some problems there.

Banks are in the business of taking on as little risk as possible and this is why people are repatriating. We saw Germany a few years ago ask for their gold back out of the bank of England – did they get it fast? It took years. Did that make the Germans feel really comfortable? You’re seeing other countries now saying “hey you know what we want it back on our turf.”

I think we’re ending kind of the world of globalization. Now people are saying hey we need to be self-sufficient, we need to find new partnerships. For the same reason that China has been pulling their metal and buying metal out of Europe now for a couple years.

Interviewer: Do you think that we’ll see a new wave of countries repatriate? Do you think that this is just beginning?

Josh Phair: I do. So much so, I moved my company from Arizona and built a whole new facility in Wyoming and also a world-class vaulting facility. That’s basically set up to work with the banks, with sovereign governments and those types. Because we’re also hitting a new problem and that’s insurance limits. A lot of these bank vaults, not only has gold gone up huge over the last year but now all this gold’s coming in. What I call dollar-for-dollar insurance, and these are good companies that are managing this gold, but if you start looking at how much is their total coverage on their entire property… You might get an insurance certificate that covers that position, but if everyone had a total loss in a very unlikely situation, you don’t have dollar-for-dollar insurance.

So now you’re seeing people want to diversify away from New York, away from London. This trend is not going to stop and I think this is going to continue all around the world for sure.

Interviewer: I always wonder what it’s going to mean for the cost too. I mean, there’s such a speculation of gold shortages out there right now and we’ve heard this before but could there really be a shortage of gold? In what scenario is that even possible?

Josh Phair: When we look at ratios, if we go back 50 years ago central banks held gold – gold was probably closer to about 80% of their reserves and now we’re down to I believe 20% and it’s starting to grow. I don’t think the public is aware – people think of gold as this relic, but the reality is it is on the balance sheets of central banks and if they’re acting more responsible here and they’re starting to grow their positions.

We saw Singapore came in for the first time in 30 years, they bought just like two years ago. So you’re having new buyers come in and step in to where suddenly is the gold in the right place in the right form at the right time and clearly right now there’s a problem, there’s a bottleneck. We’re also seeing the same thing with silver for sure – it’s not in the right place at the right time.

Interviewer: You and I have talked about it a little bit over the past year – gold has soared by roughly $1,000 yet interestingly enough retail demand appears to have fallen off. I mean central banks continue to snap up record levels here. Talk to me about this dynamic – why are we seeing this, why would we have higher gold prices be surging if retail investors are subdued?

Josh Phair: A lot of it I think is distraction. It could be the people that are following the market are already fully committed, they’re pretty happy. Some have decided to sell. Discretionary income we know is pretty tight at this stage and so maybe there’s just less capital slushing around. Last year was a boom election year and so we didn’t really see a lot of gyration in the financial market. The banking environment was very very calm.

When we see a lot of volatility that hits people’s pocketbooks, when they talk to their financial adviser and they start looking at what’s going on, they feel like they have too much leverage to equities or too much leverage to real estate – both are feeling a little topish here.

This phenomenon – we’re only a couple weeks into this even being public. I was not on X until literally three weeks ago and started talking about this. Now you guys are all over it, the whole industry is all over it, but I don’t think this is on Wall Street Journal yet either. Wait till people kind of figure out what’s going on – there’s a scramble for something. Right now the banks are clamoring for the material but yet retail is quiet. If retail tries to clamor at the same time, you talk about bottlenecks – incredible pressure on physical gold and silver could definitely come.

Interviewer: Obviously mainstream media still pretty quiet to the stories but they’re starting to turn over and cover a little bit of the gold and precious metals front. Longer term do you expect retail investors to return in full force or do you think that this is more of a permanent shift in who’s driving gold demand?

Josh Phair: Probably both. The big dogs are getting positioned in right now. A lot of it is just that they’re positioning it and where they’re domiciling it – like I mentioned before, the jurisdiction. A lot of it obviously prices are going higher on gold first.

Silver’s starting to inch up and as soon as consumers start to figure out that silver is now going to run yet another deficit – which means that we’re consuming more silver than we’re mining each year – once they realize like AI computer chips, solar’s not going away, we’re going to see a lot of demand that comes into silver. People are going to realize silver’s got a lot of opportunity to do really good this decade. I do see consumers waking up to this, people that probably don’t own any precious metals might start taking a look at this once this surge on the silver front starts to go.

Interviewer: On the silver front, how far does it go? I mean we’ve heard lots of people talk about silver going to finally see this magical $50 level but talk to me about it here – how far and how quick do you think silver is going to catch up?

Josh Phair: If you just look at historical ratios, if we take a big snapshot, go back a lot of time, we have seen ratios of 15-20 to one between gold and silver, and we’ve been hanging between 80 and 90 for the better part of the last year or so. I think gold might do its move first and then silver plays a violent catch up.

It doesn’t take much silver in the world for it to be cornered. We saw that with the Hunt Brothers around 1980 and they were forced to liquidate their silver position. A lot of people don’t realize that George Soros took a crack at it – he was slapped. And then Warren Buffett actually took a hard look at silver and started to acquire as well and was in the late 90s was told by the Commodity Futures Trading Commission to liquidate that silver. The reality is it’s not going to take many buyers to step into an industry to see some significant change.

Interviewer: I got to talk to you about these gold and silver lease rates because they’ve shot up – obviously a signal that the market for physical metal could be tightening or that there’s heavy borrowing demand in anticipation of further price gains. How do these surging lease rates typically reflect market conditions? Do the current high rates suggest a short-term squeeze or is it something more structural in the supply chain?

Josh Phair: This is very different. I’d say normally gold silver lease rates are sometimes less than 1% – let’s just say run that 1-2%. Now we’re seeing rates closer to 10 or higher. I think it just shows that normally a bank, they’ll own their gold but they might lease it out to someone to use it for a short amount of time, they’re able to create a bit little bit of yield off of that.

But right now they want it, and I think the biggest reason is they can deliver that into the COMEX exchange and capture a really juicy exchange for physical premium. They’re making profit by bringing gold to the US – why would you want to lease it out to someone else if you can make it? So that lease rate is going up to where it’s more equalizing to where their profits might be just on their transfer.

That I think is affecting also the retail market. Typically a retail coin shop, if they get an estate sale back, they’ll ship it off to another vault, they’ll finance it, and then they’ll slowly buy it back and sell it in their shop long term. This is how they kind of smooth it out. But now they might be facing 10 or 15% – suddenly trying to make 10-20 dollars an ounce on gold is gonna erode really fast if you’re trying to finance it.

All that gold is then being sold to the banks, to the refineries, and they’re then taking that and processing that material into COMEX deliverable brands. Really the banks are sucking a lot of gold and silver out of retail’s hands right now, whether people know that or not. We’re seeing refining backlogs of two and three plus months for silver right now from the COMEX brands at least here in the United States. This phenomenon is kind of quite wild – I’ve not seen it. It won’t stay the exact same, but I think it’s the bigger buyers first that are stepping in, and then at some point when retail learns maybe what’s going on and where this thing could be headed, this could be wild.

Interviewer: We talked about these hypotheticals, we talked about tariffs but let’s go back to gold and tariffs here for a second. Have you seen any tangible impact from these rumored tariffs on gold sourcing or pricing yet or is it more of an industry still in wait and see?

Josh Phair: A little bit of both. Some people say there’s no way that gold could ever have a tariff on it – you know, it’s a monetary metal. But again I just look at what the banks are doing. Why are they moving it so rapidly here? Why are they charging a higher premium if you need it, and they’re charging a higher premium for it above the spot price?

I think I just look to what the banks – those are the ones managing the most amount of money in this industry and they have a risk department. They’re factoring in some sort of risk obviously. Trump tomorrow could come out and say don’t worry guys, gold and silver no matter what, even if it’s coming from Mexico, it will have an exemption. But he hasn’t been in the business of giving exemptions, or at least so far he’s not given a whole lot of clarity I guess is a good way to put it. So a risk factor is being attached to that unknown variability.

Interviewer: If tariffs were imposed would that likely drive more gold trading into alternative global hubs or does the US market – is it just too dominant for that to happen easily?

Josh Phair: Probably both. But at the same time are the other hubs going to give away their metal if people are paying a premium somewhere else? This is where I think you’re going to see almost like when you go to a restaurant in Europe – you’re getting tax included. You sit down in a restaurant, it’s all included, whereas if you’re in the US, you’re going to get hit with all these taxes at the end of your bill.

The world is just going to say “you know what these metals are worth more” and so we may settle at a different worldwide price. There’s just so much consumed here in the United States that it’s going to need to come in here. Like we were talking before, it’s going to keep changing, it could get worse in terms of – we just there’s so much uncertainty so it’s hard to predict exactly what’s going to take place.

Interviewer: I gotta ask you too, there’s another rumor – it’s kind of surprising – that certain central banks long associated with gold holdings might also consider adding silver to the reserves. I want to talk about it because it’s obviously unconventional given silver’s industrial uses and price volatility, but is there any real substance to this chatter about central banks diversifying into silver or is it mostly speculation?

Josh Phair: The chatter is very real. Russia put out a draft budget report for 2025 and it included silver. I think now everyone’s going “wait a minute” – if Russia has significant influence over the rest of the BRICS Nations, what if they were to put X% of their reserves into silver? There’s just not enough of it.

Whether it’s silver or other critical minerals, there is no doubt that governments are looking at precious metals of all types. I think we’re going to see rare earth minerals – that may not be a monetary instrument for them but it may be of strategic importance for either technology, for military use, or whatever. Even the United States had a silver stockpile for military use 20-something years ago and that’s depleted and gone now. I think this chatter is based on actual fact, and the question is: does this expand out?

Interviewer: To your point, China has just announced a pilot program allowing 10 major issuers to invest up to 1% of their assets in gold – an opportunity that could unlock nearly $27 billion in fresh demand. And at the same time Beijing and other BRICS nations keep boosting their Central Bank gold reserves. Talk to me about these moves – do you see it as a broader push to challenge the US Dollar’s dominance or are they primarily about economic security and maybe diversification?

Josh Phair: Totally, it’s both. I think as people are looking at their balance sheets – look at an insurance company, they don’t want to go out of business. Insurance companies, do they make money on the premiums coming in? It’s only when they reinvest those premiums. They’re trying to make a vig on those premiums long term for investment.

The fact that you’re seeing China basically pushing their insurance companies to really deleverage some of their risk that might be in real estate – China has some financial and economic headwinds and some problems as well, it’s not just the rest of the world, everyone’s facing difficult times. I think that definitely shows a willingness to want to deleverage a little bit their balance and to build a little more gold.

But to your point, I think it’s very clear that the BRICS countries want to be asset backed. Their sovereign wealth funds have been buying mineral rights all over Africa for the last decade and for the most part the United States has been kind of quiet in this realm. I think there’s no doubt that people want to be leaders in terms of growing whether that be oil and energy or whether that be minerals for sure.

Interviewer: If China’s Insurance pilot proves successful do you expect other BRICS Nations to implement similar policies? Obviously further driving up global gold demand.

Josh Phair: Every time the BRICS does a meeting everyone’s always asking what do they tie out with gold. We’ve even seen Trump post on X a few times warning for the BRICS not to create a competing currency and not to back it – now he didn’t say back it with what, so I’ll let you and the viewers think about what that might be.

I think this is a very real thing that the BRICS countries, whether they get along historically or not, it definitely feels like there’s economic ties that are being grown and being driven especially as we leave the globalization world. Is this almost like a two-world system? I’m not really sure what this is going to look like but clearly trading partnerships are rapidly changing.

Interviewer: We got to talk about these hypotheticals – you and I talked about it briefly here – treasury secretary Scott Bassent, it’s clear he’s a fan of the gold market. If the US did decide to revalue its gold holdings closer to market prices, what impact could that have on global confidence in the dollar, especially with China and other BRICS Nations accumulating bullion?

Josh Phair: What is kind of interesting is I think all of us would agree that the United States for decades now has had reckless spending. Where is it going? You look at what’s happening with Elon and basically he’s sticking in his AI systems and looking at where those slush funds are going.

If you can control your expenditures and reduce some of that – call it hugely irresponsible spending – all throughout and talking about knocking out complete departments, some of this could almost be deflationary in a sense. If they are beefing up, let’s say the gold reserves, is almost like a bond rating. We saw what was it 15 years ago, the S&P downgraded the US debt.

We could be in a situation where Trump and the new Administration is trying to bolster the United States. After all he said it’s going to be a golden age – again maybe he’s just saying it’s going to be so amazing everyone’s gonna be spending money and having a lot of things, or maybe there is some sort of tie with the actual gold product. But clearly, I think you’re seeing an attempt to control spending and perhaps shore up some of the balance sheet.

Interviewer: It’s been interesting even on the lawmaking opportunities too. Here at Kitco we’ve been exploring the sound money theory – we had Judy Shelton on the show and meanwhile there’s a number of states that are exploring treating gold and silver as legal tender again or even holding bullion in state coffers. Could this grassroots movement eventually push the feds to rethink gold’s role in the monetary system or do you think it’s just too fragmented to make it a real thing or a real impact right now?

Josh Phair: When you look at the United States, there’s obviously quite a bit of federal money but a lot of people don’t realize how powerful individual states are. Take the state that I’m in for example, Wyoming – they manage it’s in the 30-some billion not even including their pension funds. If they were a sovereign wealth fund they’d be a top 20 in the world.

I testified just two weeks ago to the Senate Revenue committee, and then it ended up for a gold bill for Wyoming to own gold. It’s going to pass, it’s going to go on to the house. I believe there’s more than a dozen states right now with bills about buying gold.

When you start looking at Wyoming – Wyoming’s a little bit different, most states – it actually has lots of capital. When we start looking at states, if they look at their retirement accounts and everything, you talk about a significant amount of gold buying pressure that could exist. Clearly states have problems right now and it’s all related to money, it’s all related to inflation, budgets are blown. The people are getting – there’s bills that aren’t getting paid, so they have to keep increasing taxes.

Certain states, people are moving – people are fleeing, businesses are fleeing New York and California and they’re going to other states. That impacts another state, it could impact them good or bad. It depends on what they do with those revenues coming in, how they spend it, what do they do with it. But if we look at what’s going on at the Central Bank level and we look at how states are managing their mega billions of dollars as well, you talk about a whole new buyer of gold that hasn’t existed in most of our lifetimes.

Interviewer: What a year Josh! Any anticipation what do you think’s coming up next? What are we going to report on?

Josh Phair: Oh man, good question. I think we’re going to be talking more about tariffs and then the impact on – obviously we saw steel and aluminum got hit for 25% today. I think you and I probably will be talking about something coming soon.

At the end of the day, I’ve been in this space for quite some time. I’ve never seen anything quite like this but yet consumers are unaware of what is happening. Things are rapidly changing. We were joking earlier, it’s like kind of look at the watch every hour – there’s news dropping every single day and it’s hard to keep up with it. Frankly I don’t think people are able to even understand what is happening.

But I definitely think that major major changes – it’s going to be an explosive decade ahead.

Interviewer: Well if you’re watching the mainstream media you have no idea what’s happening but we got it over here at Kitco news. Josh Phair, founder and CEO of Scottdale, joining us today. Thanks for this my friend, appreciate the time.

Josh Phair: Thank you.

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