Gold Bears and Bulls 2020

Currently a lot of Mocker discussion has revolved around the merits, and/or pitfalls, of investing in Gold. This is a popular topic in the investing community as well, with prominent investors both for (Dalio, Marks, O’Leary) and against (Buffett, Munger, Gates) gold.

Bulls

Macroeconomic environment is terrible: money printing is rife, uncertainty is high, global stability is falling, government debts are spiralling, domestic political extremism is on the rise.

Gold is a reliable store of value: Especially in challenging and uncertain times, it’s a hedge against inflation and is desired around the world.  

Bears

Gold is useless and outdated: Only 7% of the gold mined is useful for industry. Beyond that it’s desired because it’s desired. 

It doesn’t create value: A lump of gold is a lump of gold, it doesn’t produce a product people want. It doesn’t grow wealth. 

Synthesis

Most of the bear arguments are to do with the application of gold; and we agree under normal circumstances there are better places to put your money. But at this point in time we are not under normal circumstances: the world is locked down in a global pandemic, cash is being devalued globally in an attempt to stimulate the economy out of recession, if these attempts fail, where will people go to try to preserve their wealth until the storm is over?

We feel that gold is a sensible hedge, as part of your broader portfolio, until the storm passes. 4 out of 5 Mockers are holding gold (usually in Miner form) in their portfolios.

I’m hoping in two years to hate gold and love real estate

Bill Segall – Mockingbird Investments