If we take the axion that gold is an instability hedge as true, then what do we know for sure about global instability and what can we expect as probability?
Things we know for sure:
1) The world has changed from a Unipolar (The United States) center of global power to a Multilateral (China/Russia/Iran axis vs the US) center of global power. This change will necessarily create instability until a global understanding of this new order has been established.
2) The world debt situation has crossed every line that seasoned wealth managers consider to be red flags of instability: Debt to GDP, Debt Service to GDP, Debt derivatives to the Global underlying assets. And all of these things are accerlerating towards unprecedented levels of instability.
3) Financialization and Permanent Negative Real Rates have created a massive imbalance between rich and poor - and Super Wealthy and Middle Class - and this trend is also accelerating at a pace wherein all the assets are being concentrated in fewer and fewer hands while the cost of living rises at alarmng rates. This creates massive instability within countries.
4) Government in the US has become concentrated in the hands of the Super Wealthy. So the world's largest economy is now a wholy owned subsidiary of the Billionaire Class. This is a majorly unstable situation as the goals and aims of the Billionaire class is at diametrical odds to the goals and aims of the rest of the country.
Things that we can surmise:
1) Tarrifs. Tarrifs lead to instability. Tarrifs and counter Tarrifs destroy supply lines, create global tension, and lead to trade wars that can and do often lead to hot wars.
2_ Anti Immigrant sentiment in almost the entire First World is also historically tremendously destabilizing for the countries the foster this sentiment. It led to the Second World War in the 1930's which was the last period wherein this sentiment was most similar to our present era.
3) Over valued equity markets lead to mean reversions that tend to wipe out capital for those who can least afford it. That is to say small speculators who follow trends without understanding how to hedge postitions and how to understand valuations in terms of historical means.
It is especially true when wages stagnate in relation to the cost of living so that desperate citizens are driven to gamble what little capital they can accrue.
We are currently at extremes of specualtion and valuation that exceed the markets bubble of 1929 that led to the great depression. Many believe This Time is Different because of AI. But this time has never ever been different.
When this bubble bursts the rift between the super wealthy and the middle class will expode as many middle class families will become part of the working poor. Nothing could be more destabilizing
4) Loss of faith in Institutions. This is not only on the rise but is being amplified by the ruling class. This only happens in periods of Autocracy wherein the Tiny Ruling Faction want to destroy the validity of any competing governing bodies. This is tremendously economically destabilizing because investment occurs in direct proportion to faith investment parties have in the Oversight and Enforcement Intstitutions that make Contract Law viable. Without an iron clad faith that a contract will be honored, economic activity eventually grinds to a halt.
This is true Internationally when treaties and even trade norms are violated, and this is true within nations when faith in Government institutions is damaged.
It would appear that this is on the rise in all areas. It can not be measured accurately. But over time the effects become obvious.
All of this - in so far as you agree with it - is reason to own gold. And reason to inrease your gold position.
To the extent that you disagree with all of the above then stay away from gold and speculate in whatever else you like.
