Gold a key material in AI technology

In its Q3 gold demand trends report, the World Gold Council (WGC) indicates that demand for gold originating from the electronics sector was down by 1 percent compared to the same quarter last year.

US President Donald Trump’s tariff policy is weighing on what’s typically a season of upward momentum for demand from this segment of the market as manufacturers gear up for new product launches.

“Typically in a technological development era, you’ll see gold used early on in the technological developments, and then often very quickly substituted out because it’s expensive,” said Cavatoni. “But what’s been encouraging for us is that gold’s superior properties are keeping it very much in the discussion around the technological uses.”

Gold’s electrical conductivity and resistance to corrosion make it an ideal component in AI tech, which relies on high-performance computing infrastructure such as specialized processors, memory chips and high-speed connectors.

Gold demand from the memory sector jumped during Q3 as AI infrastructure continued its rapid expansion. But perhaps the strongest growth came from gold’s use in printed circuit boards, essential for AI servers.

“Strong performance was recorded in AI server infrastructure, satellite communications, consumer graphics cards, and PC market applications,” notes the WGC report. “AI server demand was the single most significant factor driving growth, propelling gold usage through continuous specification upgrades.”

Record-high gold prices have not been an impediment to demand in the AI sector because of two important factors. For one, alternatives such as silver or copper cannot match gold’s superior resistance to corrosion and oxidation for long-term reliability. Secondly, the actual amount of gold used is only a fraction of the materials used in the fabrication of these products, so manufacturers are still comfortable with their margins even at US$4,000 gold.

It seems that for now, AI tech makers are willing to pay a premium for gold to ensure the reliable performance and longevity of their products. While gold usage in AI technology is a relatively small part of the overall demand for the metal, it is helping to support otherwise weakening demand in the technology sector.

Gold as a hedge for a potential AI tech bubble

A more prominent AI-related driver of gold demand is growing fears of an AI tech bubble on the verge of bursting. That’s because gold’s main purpose in an investment portfolio is to hedge against stock market volatility through asset diversification. As safe-haven demand for gold grows, so too does its price.

Analysts at major financial institutions have said that some of the increasing investment demand for gold can be attributed to investors using the metal as a hedge against a significant market correction in AI stocks.

A prime example of the gold price taking off following a tech bubble bursting occurred in the early 2000s with the end of the dot-com rally. The price of gold gained more than 620 percent between 1999 and 2011 to reach US$1,825 as investors pulled out of the stock market in droves and the US Federal Reserve lowered interest rates.

Is the market growing too fast? A UBS Group (NYSE:UBS) report shows that this year global AI spending is expected to reach US$375 billion and then climb further to hit US$500 billion in 2026.

The hype around AI is fueling valuation growth for many tech companies, especially the giants. The biggest AI stocks also rank among the Magnificent 7 technology stocks, which make up a significant portion of the overall valuations of both the S&P 500 (INDEXSP:.INX) and Nasdaq Composite (INDEXNASDAQ:.IXIC). Apple (NASDAQ:AAPL) and Microsoft are now boasting US$4 trillion market caps, while chipmaker NVIDIA recently surpassed US$5 trillion.

Shiller price-to-earnings ratio.

Chart via Multpl.com.

Another indication that the equity markets may be in trouble is that the Shiller price-to-earnings (PE) ratio, also known as the cyclically adjusted PE ratio, is now flashing red.

An important metric of market health and future returns, the ratio is calculated by dividing the current stock or market index price by the average of the past 10 years’ earnings, adjusted for inflation.

A typical range for the Shiller PE ratio for the S&P 500 is between 17 and 28. Right before the dot-com bubble burst and investors fled to gold, this ratio was flashing red at 44.19, its highest recorded ratio.

As of November 10, the S&P 500 had a Shiller PE ratio of between 39 and 40.

US AI stocks slumped during the second week of November, reported CNBC, on the perception that equity valuations are overstretched amid a backdrop of a slowing economy. Looking ahead at the next two years, Goldman Sachs (NYSE:GS) CEO David Solomon is predicting a potential 10 to 20 percent pullback in the equity markets.

Similarly, Bloomberg reported that Michael Hartnett, chief investment strategist at Bank of America Global Research, said in a note to clients that AI growth has spurred the top tech stocks to sky-high valuations, and gold may be one of the best hedges for a possible bubble burst in AI-related equities.

Macquarie analysts are also pointing to gold as a hedge against a potential AI bubble burst if tech firms can’t deliver on their high productivity promises. The firm has an interesting take on the parallel rallies that have occurred in gold and AI this year: “Optimists buy tech, pessimists buy gold, hedgers buy both.’

AI euphoria may be outpacing reality

At the Booms, Bubbles and Busts panel, fear that the AI bubble is reaching critical mass was the prominent theme.

Moderator Albert Lu, founder and president of Luma Financial, started the discussion by polling the panelists about whether the AI market is in a bubble right now.

“Yeah, we’re in a bubble. But in the 1990s we were in a bubble in the internet. So the question is, what stage of the bubble are we at?” responded economist and professor Peter St. Onge.

He recalled buying Yahoo in 1996 — when friends thought he was reckless — only to watch it soar. Today’s tech boom, he argued, is “without a doubt” a bubble, potentially 10 times bigger than the dot-com era.

In his view, the cycle will eventually break, but before a steep correction, he suggested there may still be room for tech markets to multiply, perhaps doubling or even surging eightfold, before an inevitable 75 percent wipeout.

Jim Iuorio, managing director of TJM Institutional Services, cautioned that while “it’s not that valuable … to say we’re in a bubble,” he believes markets are somewhere in bubble territory — but trying to pinpoint the exact stage is “foolish.’

He warned that many high-flying tech names could face a 30 percent correction within 18 to 24 months.

What’s convinced him most about this has been the frenzy around OpenAI-related announcements.

“Anytime they mentioned any partnership with anyone — just the mania that happened with those stocks — to me that means we’re in some sort of odd realm that I’m not comfortable with,’ he said.

Still, he isn’t exiting yet — Iuorio said he’s keeping his positions hedged and flexible while acknowledging “there is a very distinct possibility that one day you’re going to open up your portfolio and things will change quite a bit.’

For his part, Jim Bianco, president and macro strategist at Bianco Research, said he resists using the word “bubble” because “I don’t know exactly what it means.’ He noted that people often invoke it only when they think the cycle is ending, and aligned with St. Onge in arguing that the endpoint may not be near right now.

Bianco stressed that AI technology is “very real” and likely “more transformative than the internet,’ comparing the hype to late-1990s optimism about the web, which may have seemed exaggerated, but largely proved true.

Still, he cautioned that transformative technology doesn’t guarantee immediate investment success: buying into the internet boom meant enduring the dot-com crash and the long slog through the Great Recession before breaking even.

Investor Insight

InMed is a pharmaceutical drug development company advancing proprietary small-molecule drugs in Alzheimer’s and ophthalmology, backed by a revenue-generating manufacturing subsidiary. The company is an undervalued opportunity with cash exceeding market capitalization and multiple upcoming catalysts.

Overview

InMed Pharmaceuticals (NASDAQ:INM) is a biopharmaceutical company with a differentiated business model: advancing innovative therapeutic programs in Alzheimer’s, ophthalmology and dermatology, while generating recurring revenue through its BayMedica manufacturing division. This structure offers investors exposure to pharmaceutical innovation with mitigated financing risk, a rare combination among small-cap biotech firms.

The company’s lead drug candidate, INM-901, takes a new and broader approach to treating Alzheimer’s disease. Instead of focusing on just one suspected cause – a protein in the brain called amyloid beta – this drug is designed to act on several key processes that drive the disease. In preclinical studies, INM-901 has shown that it can protect brain cells, reduce inflammation, clear harmful protein buildup, and help new nerve connections form. These results led to improvements in both brain health and behavior in research models. This “multi-pathway” approach reflects the latest thinking in Alzheimer’s research, where major pharmaceutical companies are moving toward treatments that target the disease from multiple angles.

InMed’s BayMedica subsidiary manufactures rare cannabinoids via chemical synthesis, rather than plant extraction, ensuring purity, consistency and scalability. The business generates approximately $5 million in annual revenue and ~40 percent gross margins, selling to the global health and wellness ingredient markets. This dual business model gives InMed a cash flow-supported R&D engine, enhancing sustainability and valuation resilience.

Key Business Segments

Pharmaceuticals

InMed’s pharmaceutical programs are focused on developing new, small molecule medicines that address serious diseases where current treatments fall short. These drug candidates are designed to work on multiple disease pathways, offering a more comprehensive approach than traditional single-target drugs. The company’s current programs target Alzheimer’s disease, dry age-related macular degeneration (AMD), and a rare skin disorder called epidermolysis bullosa (EB). Each program is supported by strong preclinical or clinical data and aims to move into the next stage of development in the near term.

Highlights

• INM-901 (Alzheimer’s disease): INM-901 is being developed as a potential new treatment for Alzheimer’s disease, a condition that currently has no cure. Unlike many past approaches that focused only on a single cause, INM-901 targets several key processes that contribute to Alzheimer’s, including protecting brain cells, reducing inflammation, lowering harmful protein buildup, and supporting the growth of new nerve connections. In animal studies, the drug has shown improvements in brain inflammation and memory-related behavior, suggesting a broad protective effect. The program is now advancing IND-enabling activities, an important stage in translating INM-901’s scientific promise into clinical evaluation.
• INM-089 (Dry AMD): New drug being developed to help slow or prevent vision loss in people with dry age-related macular degeneration, one of the leading causes of blindness in older adults. The drug is designed to protect nerve cells in the eye and reduce inflammation, helping to keep the retina healthy. Laboratory studies have shown its ability to maintain vision-related function and protect retinal tissue. The company has developed a safe and effective eye-injection (intravitreal) formulation, which delivers the drug directly to where it’s needed in the eye. INM-089 is now moving toward the final preclinical studies required before starting human trials.
• INM-755 (Dermatology / Epidermolysis Bullosa): A topical cream that has completed a Phase 2 clinical trial in patients with epidermolysis bullosa (EB), a rare genetic skin disorder that causes fragile, blistering skin. The study showed the cream was safe, well-tolerated and helped reduce itching, which is a major symptom for EB patients. The company plans to advance this program through partnerships or licensing agreements.

Manufacturing (BayMedica)

InMed’s BayMedica division provides a steady source of revenue and a strong commercial foundation that supports the company’s drug development work. BayMedica specializes in making rare, non-intoxicating cannabinoids, natural compounds originally found in the cannabis plant, but without using the plant itself. Instead, these compounds are produced through biosynthesis and chemical synthesis, highly controlled processes that ensure every batch is pure, consistent and scalable for commercial production.

BayMedica’s ingredients are sold to health, wellness and consumer brands that use them in products such as supplements and topicals. Each cannabinoid has its own unique properties, and BayMedica is helping customers explore their benefits safely and reliably. The division is recognized as a global leader in rare cannabinoid manufacturing, particularly for cannabichromene (CBC), where it is among the largest producers in the world.

Product Portfolio: BayMedica produces several rare cannabinoids, including CBC, THCV, CBT and CBDV, which are known for their unique biological effects.

Financial Performance: In fiscal year 2025, BayMedica generated approximately $4.9 million in revenue, growing by 8 percent year over year, with around 40 percent gross margins and positive net income. These results help fund InMed’s pharmaceutical programs and reduce the need for frequent financing, a major advantage for a small-cap biotech.

Management Team

Eric Adams – Chief Executive Officer and President

Eric Adams has led a comprehensive transformation of InMed Pharmaceuticals’ leadership team and governance structure, reconstituting the board of directors and executive management while raising more than $35 million in capital to support operations and growth. With more than 25 years of experience in the biopharmaceutical industry, Adams brings extensive expertise in corporate development, capital formation, global market expansion, mergers and acquisitions, licensing and corporate governance.

Michael Woudenberg – Chief Operating Officer

Michael Woudenberg brings deep expertise in the development, technology transfer and commercialization of active pharmaceutical ingredients (APIs) and drug products. Before joining InMed in 2018, Woudenberg held senior roles at 3M, Cardiome Pharma and Arbutus Biopharma, and most recently served as managing director of Phyton Biotech. His extensive experience spans process and formulation development from laboratory and pre-clinical stages through all phases of clinical development, leading to validated, approved, and commercially manufactured APIs and drug products.

Netta Jagpal – Chief Financial Officer

Netta Jagpal brings over 20 years of financial leadership experience, primarily in the biotechnology sector. Before joining InMed, she served as vice-president, financial reporting and compliance at D-Wave Systems (NYSE:QBTS), where she led the finance team through its initial public offering. Jagpal spent 11 years at Zymeworks (NYSE:ZYME) in progressive finance roles, including senior director, finance and corporate controller, and also held positions at Angiotech Pharmaceuticals and Ernst & Young. She is a chartered professional accountant and holds a Bachelor of Business Administration in Accounting and Organizational Behaviour from Simon Fraser University.

Eric Hsu – Senior Vice-president, Pre-Clinical Research & Development

Dr. Eric Hsu brings more than 18 years of scientific leadership experience in gene therapy and biotechnology. Before joining InMed, he held senior roles at enGene, including vice-president of research and vice-president of scientific affairs and operations. His expertise spans gene transfer and expression systems, formulation and process development, intellectual property management, and research partnerships. Hsu has extensive experience leading R&D programs, expanding product pipelines, and overseeing research budgets and timelines.

Colin Clancy – Vice-president, Investor Relations and Corporate Communications

Colin Clancy is an experienced corporate finance and investor relations executive with over 18 years of experience across the pharmaceutical, cannabis, mining and financial services sectors. At InMed Pharmaceuticals, he leads the company’s capital markets engagement and communications strategy. Before joining InMed, Clancy served as vice-president of investor relations at Harvest One Cannabis.