(Kitco News) - Gold’s rally has been impressive by any historical standard, yet one of the world’s largest precious metals investors argues that the most powerful force behind the next leg higher hasn’t even entered the market.
According to Ryan McIntyre, Senior Managing Partner at Sprott Inc., institutional capital remains stuck in what he describes as the “orientation phase” of the OODA loop—a military decision-making framework used by fighter pilots under stress. Until that loop advances, gold’s bull market may still be operating well below its full potential.
The OODA loop—Observe, Orient, Decide, Act—offers a useful lens for understanding why gold’s strength has failed to trigger broad institutional reallocation. McIntyre argues that large asset managers have clearly completed the first step.
“They’ve observed the price going up,” he said, noting that gold’s gains are now impossible to ignore. But observation alone does not translate into capital flows. The second phase—orientation—is where most institutions remain stuck.
McIntyre said that the problem for institutional players is that their knowledge base in the precious metals space has disappeared over the last decade. He noted that many firms no longer have internal gold expertise, or even a “champion” capable of arguing for precious metals exposure at the investment committee level.
Despite gold posting gains that would trigger aggressive inflows in almost any other asset class, institutions have yet to move beyond due diligence, he said.
McIntyre said that he has seen firsthand the institutional hesitancy toward gold. He explained that Sprott has not received a single new institutional mandate specifically targeting gold or precious metals equities—even after gold’s sharp rally.
McIntyre pointed out that if any conventional equity sector were up 60% or more in a year, asset managers would be “flooding the phones.” With gold, the reaction has been markedly different.
McIntyre pointed to multiple indicators reinforcing this view: gold-backed ETF holdings remain well below their prior peaks, mining equity participation is still deeply depressed, and risk appetite within the sector remains historically low. He said that these are not late-cycle characteristics; they are signs of a market that has yet to attract its largest potential buyers.
Although institutional investors continue to largely ignore gold, McIntyre said that this trend won’t last.
He said that a shift toward gold will be driven by instability elsewhere—particularly in equity markets that have so far insulated investors from hard choices.
Further turmoil in bond markets, as government debt continues to grow unsustainably, will also push investors to look for new safe-haven assets.
“Because of stubborn inflation, there's not a lot of room for error. It's a suicide mission to hold long-term bonds in this low-interest-rate environment,” he said.
As to what a new portfolio might look like as institutional players slowly start to adjust their holdings, McIntyre said that he prefers to build a 10% core position in gold and a 5% tactical position in mining equities.
With many analysts now seeing gold hitting $5,000 an ounce as a near certainty this year, McIntyre said that, regardless of price targets, he sees gold outperforming equities and bonds for the foreseeable future.
