Gold

Gold is an interesting one; it came up today in client conversations.

Normally gold likes volatility and doesn’t like high real interest rates. And you pop that it into a model and the model says “huh, maybe don’t buy gold at these levels”.

But then, it is held out as an inflation hedge and portfolio diversifier, and that maybe the cost curve support is there, given that inflation has pushed production costs up by +25% in many instances, and so the old $1300-1500/oz is some new meaningfully higher number.

Could be, could be. We were happy to buy $NCM below $20, and maybe Newmont in the low $50s, but physical gold, at these levels, is a harder one for us.

But we can definitely get the appeal, and it has been, alongside the USD, one of the few investments that has been ex post positive return whilst being negative correlated to stocks and bonds.

Sharpe ratios, which I laboured on about today (in context of another fund) off the charts.

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