Long-time readers will know we’ve spilled a fair bit of digital ink on things like oil, coal, heck… even Bitcoin.
But there’s one asset we have been suspiciously mum on so far. Gold.
Q4 2022 hedge fund letters, conferences and more
We did a deep dive on the “barbaric metal” in a recent Insider Newsletter issue and figured we’d also share some of our thoughts with you.
After just sitting there silently for the last couple of years (at least when measured in USD), we expect gold to shine again this year.
The way we see things, gold as a monetary instrument best moves on a loss of faith in the prevailing currency system.
And in today’s increasingly fracturing world, this is precisely what we’re seeing.
The “freezing” of Russia’s foreign currency reserves by the West last year sent a message to the rest of the world: your assets are no longer safe in our hands. Rule of law be damned!
This prompted countries from sea to shining sea to adjust accordingly. How?
Not by buying Bitcoin (as sympathetic as we are to the idea behind it). Instead, the pointy shoes have been stuffing their… ahem, vaults with that useless lump of rock — gold.
As per the Financial Times:
Central banks are scooping up gold at the fastest pace since 1967, with analysts pinning China and Russia as big buyers in an indication that some nations are keen to diversify their reserves away from the dollar.
You have to ask yourself, with everything taking place around us, why would that trend not continue — or even accelerate — in 2023?
Now, you might say…
“Surely, gold miners must’ve been ramping up production.”
Except that hasn’t been the case. In fact — much like the energy space (or any commodity, really) — production of gold has been slowly shrinking.
With all the tailwinds, we think you could do worse than gold.
It’s why we own precious metals stocks in our portfolio as well as physical gold, stored safely at our best equivalent of Gringotts.
