When I first started this blog in 2016, one of my earliest posts was about Gold and how I felt it was insurance rather than investment. If everything was normal it should match inflation plus a few basis points for 'holding cost.' If something terrible happened, then the 'insurance' function would kick in and the price would spike. The 2016 photo above shows my tiny gold holdings which I have not increased since 2016 (I think I bought a couple more bars/coins after the photo was taken but nothing after 2016).
Instead, my strategy was to invest in economies that have a significant commodities business as any increase in commodity prices would benefit that economy. Specifically, I have a large position in Australia, which is the 3rd largest producer of gold.
Recently, there has been a sustained increase in the price of gold, which cannot be explained by its 'insurance' function. Perhaps the idea of you should pay a price premium for a 'store of value' function has taken root thanks to crypto. Or crypto millionaires and moving some of their crypto winnings to Gold.
I do not plan to buy more Gold as I find it too difficult to value. As I mentioned in 2016, Gold doesn't generate earning or cashflow. Instead I hope to be a beneficiary of the Gold boom indirectly though the Australian market.
My 2016 Post: BuyafterCrash: Gold?
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Postscript: The morning after I posted this, CNBC reported a rare earths investment framework/agreement between US and Australia.
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