When assessing a portfolio's overall need for gold you obviously have to compare that need to the overall performance of the economy.
Easier said than done.
There are many economies. There's the financial economy that serves those with financial assets. That is explicity the top 10 percent, although the lion's share of these assets and associated gains go to the top tenth of the top 1 percent.
By every account that part of the economy is doing well, depending high how up you are in the top 10 percent.
Then there is the real economy that produces goods and services that can be split into things that those with assets like to buy for themselves and things that are non discressionary like food, insurance, education, shelter, health care etc., that even those with no assets must purchase.
This part of the economy is doing real well for those with assets. And even for those without assets it's doing okay right now because these are things that must be purchassed. However the 90 percent is currently going deep into debt to be able to purchase these things. Even even some discessionary purchases for those below the billionaire class are beginning to feel a pinch.
Finally there is the the monetary economy. This measures the monetary health of the economy. How much debt does it take to keep the economoy operating? How much return does the economy provide for a dollar of debt? And how much money is being created when we produce this debt? ANd most important, what does the debt/money inflow do to prices over time?
This part of our economy is deeply deeply ill. Perhaps terminally ill. According to the Congressional Budget office, sovereign debt is growing at 8 percent per year. Debt service is over a trillion per year. And with long rates backing up to 4.5 percent that number is growing.
And it is this Deeply Ill Monetary Economy that necessitates the purchase of gold. Gold is you only hedge for wealth preservation for the necessary monetry debasement that is happening right now.
At some point this monetary debasement will morph into a debt crisis that will produce something akin to hyperinflation - or deep dark stagflation.
A lot of people think we are just about there. Ray Dalio. Stan Druckenmiller. Jamie Diamond. Hank Paulsen. There are not weird alt bloggeres. They all think you need gold for the inevitable crisis. Mayber they're right.
