Why Is Everyone Buying Gold? Capital Preservation in a Fractured World
In July, global investors are not just watching gold, they are repositioning around it. Spot prices have surged past USD 3,300 per ounce, marking a near 70 percent rally since mid-2023. But this is no ordinary price cycle. It is a signal that institutional capital, sovereign funds, and private wealth are questioning the foundations of monetary trust.
From new vaults in Singapore to smuggling seizures across Asia, the rush into bullion reflects more than fear. It reflects a shift in how risk is being priced and stored. Capital is moving into assets that do not depend on government policy, market liquidity, or institutional reassurance.
Behind this surge sits a broader anxiety. China’s economic softness is deepening, EV markets are collapsing, and geopolitical stress from Ukraine to the Middle East is pulling liquidity inward. In that context, gold becomes a placeholder for what feels safe, liquid, and apolitical.
At Fairhaven, we do not speculate on metals. But we pay attention to what they represent. The same forces lifting gold are now supporting institutional demand for real assets in stable jurisdictions. In this report, we unpack what this means for investors, and why capital rotation into New Zealand is picking up pace.
This month’s edition covers:
Why global gold demand has surged despite rising yields
Structural forces behind gold’s demand surge
How shadow demand and smuggling signal deeper institutional mistrust
What China’s slowdown reveals about capital behavior in fragile markets
Why this matters for real asset strategy and NZ positioning
New Zealand's latest market updates
Our top investment opportunities in the current environment
1. Why Gold Is Back in the Spotlight
A Fragile World Is Pushing Investors to Old Comforts
In recent months, the global appetite for gold has surged. This is not just retail speculation or gold bug enthusiasm. Central banks, sovereign funds, and institutional allocators are steadily accumulating positions. The price of gold has climbed from under USD 2,000 in mid-2023 to over USD 3,300 by June 2025. This happened despite rising real yields and a relatively firm US dollar. Traditional macro theory would not predict that outcome.
So what is driving it?
The answer lies in sentiment, not just fear. At the institutional level, there is a growing sense of structural risk. Across boardrooms in Singapore, Zurich, and Dubai, the dominant question is no longer how much gold can return, but what remains safe when sovereign debt, political leadership, and market confidence all feel uncertain at once.
We are not just seeing a typical hedge against inflation. This is a form of portfolio insurance. Gold is becoming a foundational asset again, used to anchor exposures when the rest of the system feels vulnerable. From fatigue in global credit markets to unresolved geopolitical conflicts, capital is moving into a defensive crouch.
This pivot is about preserving liquidity and sovereignty. The institutional narrative is changing, and gold is back at the center of it.
Singapore’s New Gold Vault Sends a Message
One of the more overlooked but telling developments came in June, when Le Freeport Singapore announced it was expanding its high-security gold vault capacity by 30 percent. This was not done for speculative storage. Private bankers in Singapore confirm that the expansion is meant to meet rising demand from ultra-high-net-worth clients, family offices, and discreet state-backed accounts.
Singapore’s regulatory stability, geopolitical neutrality, and world-class private banking ecosystem are turning it into the Swiss vault of Asia. The message here is simple: gold ownership is no longer just about price performance, it is about custody, secrecy, and liquidity under stress.
Smuggling and Retail Hoarding Reflect the Other End of the Spectrum
At the opposite end of the market, data points from India, China, and Turkey reveal rising levels of gold smuggling and informal cross-border buying. In China, demand for jewellery-grade gold is up 24 percent year-on-year, despite broad economic malaise. In Turkey, smuggling arrests are on the rise, with border officials citing more frequent seizures of raw bullion.
This isn’t about speculation. It is about capital preservation. The behaviours we are seeing resemble those in the early 2010s during the Eurozone debt crisis and Middle Eastern currency devaluations. Where official capital channels fail, private hoarding begins.
2. Structural Forces Behind Gold’s Demand Surge
Safe Haven in a Fractured World
At its core, the rally in gold reflects a global appetite for protection. What began as a hedge against inflation has evolved into a broader risk-off move by institutional and private wealth managers alike. Between the war in Ukraine, heightened tension in the Middle East, and slowing Chinese growth, investors are searching for an anchor. Gold, unlike most other assets, offers neutrality. It does not carry counterparty risk, political alignment, or regulatory overhang.
Since January, net gold purchases by central banks have exceeded 350 tonnes according to the World Gold Council. The People’s Bank of China has been among the largest buyers, increasing its official holdings for 18 consecutive months. Singapore has now opened a second high-security vault for private gold storage, reflecting rising demand from high-net-worth investors across Asia.
Liquidity Without Systemic Exposure
Unlike real estate or equity positions, gold is highly liquid. It can be sold anonymously, transferred across borders, and in some cases, physically stored in ways that bypass financial disclosure requirements. This has led to a resurgence in informal bullion trade. Authorities in India and Southeast Asia report record smuggling seizures in Q2, particularly across land borders.
While Fairhaven does not speculate on illicit activity, the trend signals one thing clearly. More capital is trying to get into gold. And not all of it wants to go through formal channels. This is often a signal of elevated geopolitical or financial repression risk.
China’s Slowdown Adds Momentum
Chinese domestic capital is also increasingly flowing into gold. Real estate, once the dominant wealth preservation tool, is now viewed as structurally impaired. Youth unemployment remains elevated. Private business confidence is weak. And despite targeted stimulus, consumers are saving rather than spending.
In this environment, gold has become one of the few assets that Chinese investors trust. The Shanghai Gold Exchange has seen record trading volumes, and premiums on physical gold in China have spiked above global benchmarks. This is not just hedging. It is a quiet vote of no confidence in traditional domestic assets.
We Are Not in a Normal Cycle
What makes the current gold rally different is the convergence of mainstream and shadow demand. Central banks are buying. Retail investors are accumulating. And private wealth in Asia is repositioning quietly but decisively.
We believe this signals more than just fear. It signals a shift in how capital measures risk. In a world where assets like real estate, equities, and even sovereign debt are increasingly exposed to policy volatility, gold is becoming the control variable.
3. Gold Smuggling and Shadow Demand: What the Headlines Don’t Say
Not all gold demand shows up in official statistics. A growing portion is moving through unofficial or illicit channels, especially across developing economies and regions experiencing currency instability.
In India, customs authorities have recorded a sharp uptick in gold seizures at airports and border crossings, with over 3 tonnes confiscated in just the first half of 2024, compared to 2.3 tonnes in all of 2023. Meanwhile, Southeast Asia is seeing an increase in cross-border smuggling flows from Myanmar and Laos into Thailand, Vietnam, and Singapore, as organised networks arbitrage price gaps and exploit loopholes in customs surveillance.
This surge in underground activity reflects not just arbitrage, but a breakdown of trust in fiat regimes. In countries like Turkey, Nigeria, and Argentina, where inflation remains persistently high, retail demand for physical bullion has outpaced formal banking system flows. Households and businesses are bypassing traditional channels to convert cash into gold, often storing it privately or moving it offshore.
The scale of unreported demand is difficult to quantify, but its impact is real. Premiums for physical gold have widened in many regions, from USD 40–80 per ounce above spot in parts of India and the Middle East, to as high as USD 120 in Nigeria. These premiums signal tightness in supply and rising willingness to pay for physical delivery over financial exposure.
Singapore’s response has been proactive. The new high-security vault opened in June 2025 is not just a logistical upgrade but a strategic signal. Positioned as a neutral wealth hub with legal and regulatory clarity, Singapore is increasingly positioning itself as the preferred offshore bullion custodian in Asia. This vault, one of the largest of its kind in Southeast Asia, can store over 15 million ounces of gold and other precious metals, providing institutional and ultra-HNW clients with secure, discreet storage options.
In short, not all gold is being bought for the same reason. Some is purchased as portfolio insurance. Some are smuggled to protect family savings from local currency collapse. And some are quietly vaulted in safe jurisdictions far from where the headlines are being written.
4. What This Means for Investors
Gold is not just a hedge. It is a signal.
The scale and speed of recent buying across Asia and the Middle East is not just about inflation protection. It reflects a broader crisis of confidence in institutions, fiat regimes, and geopolitical stability. From central bank purchases to private smuggling, the story is not just about price. It is about positioning for disorder.
Investor behaviour is shifting.
In the past six months, the quiet rotation into hard assets has accelerated. We are seeing multi-asset investors reduce USD debt exposure, pull out of overvalued equities, and reallocate to physical gold, precious metals, and real estate. The thesis is simple. Income alone is no longer enough. Investors want resilience, tangibility, and liquidity across borders.
For New Zealand, this is a tailwind.
While the gold trade grabs headlines, the underlying drivers also benefit real assets in stable markets. The more volatility we see across currencies, commodities, and rates, the more valuable predictability becomes. And few markets offer the kind of macro insulation, institutional trust, and clean capital channels that New Zealand does.
Our recommendations
For USD and SGD-based investors, this is still a favourable entry point. FX levels remain attractive. OCR has peaked and is easing. There is limited new supply in key asset classes. Most importantly, capital is still early in this rotation. When institutional capital fully pivots to safety, pricing will adjust fast.
5. Fairhaven’s View and Strategy
From Safe Havens to Smart Allocations
Gold’s surge is not just a reflection of fear. It is an indictment of confidence. When investors across the globe start pulling liquidity out of equities, trimming exposure to long-dated bonds, and shifting capital into unproductive metal stored in vaults, the signal is clear: markets are bracing for uncertainty, and governments are struggling to restore trust.
This moment is not purely about geopolitics or rate paths. It is about institutional capital looking for safety, discretion, and optionality. And right now, gold checks all those boxes. So does Singapore real estate, USD-denominated infrastructure assets, and for a growing number of Asia-based investors, high-quality yield plays in overlooked markets like New Zealand.
The Fairhaven View
While we are not in the business of trading commodities, the macro signals that have driven gold to all-time highs are deeply relevant to what we do. Real estate is a lagging asset class, and often, gold is the canary in the coal mine. When it rises, the capital is rotating, not fleeing. The next wave of investment will be about re-entering productive markets with better risk-adjusted entry points.
For our investors, that means leaning into yield stability, real asset insulation, and foreign exchange upside. The NZD remains near historic lows. Cap rates in key regions like Waikato and Tauranga remain 100 to 150 basis points above comparable assets in Sydney or Singapore. Borrowing conditions are loosening. And now, global capital is watching.
We are entering the part of the cycle where bold, early positioning is rewarded. Fairhaven continues to structure investments that capture this opportunity while providing liquidity pathways, regulatory alignment, and institutional-grade underwriting.
As the gold dust settles, real assets will once again lead the charge. The question is whether investors wait for consensus, or move ahead of the curve.
6. New Zealand Market Update: July 2025
New Zealand’s macro outlook remains stable and aligned with our projections from June. The Reserve Bank of New Zealand held the Official Cash Rate at 3.25 percent following its July meeting, confirming our base case for a controlled easing cycle toward 3.00 percent by year-end.
Inflation remains anchored at 2.5 percent and GDP growth continues at a steady 2.0 percent YoY. The RBNZ's tone remains measured, emphasising data-dependence and stability in the face of rising global uncertainty. With U.S. bond markets pricing in renewed fiscal expansion and gold rallying to historic highs, New Zealand’s cautious stance reinforces its status as a yield harbour rather than a risk-on pivot.
Currency Positioning Advantage
Despite the domestic stability, the NZD remains subdued. NZD/USD trades between 0.60 and 0.61, holding near its lowest levels since 2022. This persistent weakness is a function of global USD strength rather than domestic softness.
For USD- and SGD-based investors, this FX window remains highly attractive. Entry at current levels improves cap rate translation and enhances total return once repatriated. This advantage may narrow in 2026 as global rate divergence compresses.
Real Estate Watch
The domestic market continues to stabilise, with momentum rebuilding beneath the surface. June 2025 REINZ data shows:
Sales volumes up 10.6 percent YoY
Median prices holding at NZD 795,000
Investor demand concentrated in industrial and large-format retail, particularly in urban fringes
While current featured listings show cap rates between 6 and 7 percent, we anticipate modest upward repricing as OCR cuts materialise and institutional capital resumes active deployment in Q4.
The Fairhaven View
The capital chasing gold is also chasing certainty. New Zealand real assets remain in a favourable position to absorb global flows seeking yield without volatility.
We continue to see FX mispricing, favourable debt conditions, and a closing window for first-mover entry ahead of OCR softening. Our 3.00 percent target by November stands. For investors seeking stability in a world hedging against disorder, now is the time to position.
7. Featured Listings: Strategic Entry Opportunities
From Vaults to Value: Why Real Assets Still Win
As capital seeks refuge in gold, we believe this shift is less about metal and more about mindset. Investors are looking for sovereignty, liquidity, and insulation from macro disorder. New Zealand real estate offers all of the above, with yield. And while bullion sits in vaults, quality property produces income, capital gain, and regulatory certainty.
Below are three institutional-grade assets reflecting this opportunity.
1. Auckland
(Boutique Hotel/Apartments)
Asking Price: NZD 24,750,000
Land Size: ~3,634 m² (freehold)
Built-Up Area: ~3,725 m²
Configuration: 62 fully furnished apartments + 64 car parks (individually titled)
Current Use: Operating as boutique hotel
Estimated Cap Rate: 7.0% – 8.0%
Estimated NOI: ~NZD 1.715M – 1.96M
Occupancy: 85%–90%
Notes:
Strategically positioned in Avondale, this bulk residential asset offers both immediate income and long-term value creation through unit sell-down. All apartments are on individual titles, allowing for staged divestment while maintaining core yield.
Break-Up Projection Scenario:
Assuming an average resale price of NZD 525,000 per unit (below Auckland's median), a gradual sell-down of 62 units could yield ~NZD 32.5 million gross.
Estimated Returns:
Initial Equity Required: ~NZD 7.5M (assuming 70% LVR)
Gross Realisation: ~NZD 32.5M (over 3–5 years)
Net Projected Gain: ~NZD 5.0M–7.0M after costs, depending on timeline and exit strategy
IRR: ~18%–22% (based on phased divestment and rental yield during hold)
This is a rare opportunity to acquire a high-spec, cash-yielding residential block in one line, with flexible exit pathways, either via ongoing hotel operations, long-term tenancy, or strata resale.
2. Christchurch - Institutional Logistics Facility
Asking Price: NZD 21.5 million
Land Size: ~20,000 m²
Built-Up Area: ~10,200 m²
Gross Rent: ~NZD 1.9 million p.a.
Estimated Cap Rate: ~7.0%
Occupancy: 100% leased to FMCG and distribution clients
Notes:
Modern logistics built with excellent access to Christchurch Airport and SH1 corridor. Anchored by national FMCG distribution tenants under long leases with CPI-linked escalation. Located in a region benefitting from post-quake infrastructure upgrades and growing e-commerce fulfillment needs.
Leveraged Projection (5-Year Hold):
Assumes 60% LTV at 6.0% interest-only debt, 2% annual rent escalation, and terminal exit at 6.75% cap rate.
Initial Equity: ~NZD 8.6 million
Total Leveraged Cash Flow (5 Years): ~NZD 7.0 million
Exit Sale Proceeds (Net): ~NZD 10.5 million
Estimated Leveraged IRR: ~15.3%
Equity Multiple: ~2.05x
This property offers a rare blend of yield, tenancy strength, and long-term logistics demand, well-aligned to capital rotation trends observed in the current macro environment.
3. Auckland Fringe –
Dual-Tower Office Complex
Estimated Asking Price: NZD 38.0 million
Land Size: ~4,000 m²
Built-Up Area: ~12,500 m² (across dual towers)
Passing Net Income: ~NZD 2.71 million p.a.
Estimated Cap Rate: ~7.1%
Occupancy: ~90%
Notes:
Strategically positioned along the Symonds Street ridge with substantial capex upgrades completed, this dual-tower commercial asset offers long-term flexibility across co-living, education, and hospitality use cases. Proximity to CRL, university precincts, and transport infrastructure underpins medium-term value creation potential. Rental income is diversified and under-rented relative to area benchmarks, with scope for upside through re-leasing or repositioning.
Leveraged Projection (5-Year Hold)
Assumes 60% LTV at 6.0% interest-only debt, 2% annual rent escalation, and terminal exit at a 6.75% cap rate.
Initial Equity: ~NZD 15.2 million
Total Leveraged Cash Flow (5 Years): ~NZD 11.5 million
Exit Sale Proceeds (Net): ~NZD 18.4 million
Estimated Leveraged IRR: ~15.1%
Equity Multiple: ~1.96x
This asset combines income security with conversion optionality, making it a compelling core-plus play for investors positioning ahead of a broader office recovery or residential adaptation wave in Auckland’s fringe CBD.
Disclaimer:
The property details, financial figures, and projections provided in this article are based on publicly available information and internal estimates as of July 2025. They are intended for informational purposes only and do not constitute financial advice or an offer to invest. Projections such as IRR and equity multiples are indicative only and subject to change based on market conditions, financing terms, and execution strategy. Interested parties should conduct independent due diligence and consult with a qualified advisor before making any investment decisions. Fairhaven Property Group accepts no liability for decisions made based on the information presented herein.
