Over the past couple of days, financial headlines have been dominated by Japan. Rising government bond yields, pressure on the yen, and the role of U.S. policymakers in helping stabilize markets have all generated plenty of discussion. Like many investors, I started reading because I wanted to better understand what was happening in Japan. I ended up asking a completely different question.
Gold is one of the few assets that grandparents, parents, and grandchildren have all recognized as wealth. Empires have risen and fallen. Currencies have come and gone. Entire industries have been created and destroyed. Through it all, gold has remained gold. That alone should tell us something about its role in a portfolio.
I recently had an incredibly valuable conversation with Alain Gilbert of Gilbert Analytics. Although we theoretically sit on the complete opposite spectrum of gold and precious metals, there is great reason to align and understand both sides.
Do you remember what happened to money in the 1970s? Or after 2008? Or during COVID? Most people remember the headlines from those periods. Fewer remember what was happening underneath. These weren’t just isolated crises tied to oil shocks, housing markets, or a global shutdown. They were different versions of the same underlying pattern playing out. Those were debasement cycles.
(Hint: there is usually no moat) A financial advisor we work with recently arrived at our partner vault facility with thousands of pounds of silver coins in the back of his truck. For years he had been storing them across a ranch in ammo boxes. Yes, real ammo boxes. Most were buried in the ground. Others were hidden in sheds or tucked away in corners of buildings.