The Rise of Hard Assets
In essence, our investment approach focuses on identifying significant macro trends and strategically positioning ourselves to capitalize on them, primarily by targeting highly inefficient market segments that have historically been mispriced relative to the potential economic shifts we anticipate. Given the current context of one of the most undisciplined monetary and fiscal environments in history, we firmly believe that the best decade-ahead looking strategy today includes preparation for a likely profound capital migration towards hard assets by investing now in the fundamentally undervalued businesses that find and produce them.
To put it plainly, today’s Michael Lewis “Big Short” opportunity, in our view, is the ongoing devaluation of fiat currencies relative to real assets with limited supply, which are imperative to society either as commodities or sound money.
This macro thesis has recently been reinforced by gold’s resurgence as a crucial asset for central banks, particularly following the Russian-Ukraine conflict, when the US froze approximately $300 billion of Russian holdings in Treasuries. While the European Central Bank, the Bank of Japan, and other close US allies still maintain substantial holdings of Treasury securities, China, once the primary financier for the US, has unmistakably shifted its focus towards gold as its core holding. In our perspective, this transition is just the beginning.
