Gold kind of scares me because very often the people involved with it seem to be slightly insane. My other problem is I don’t know how to value it. Unlike an equity that supposedly has cash flow attached to it, or unlike a bond that has a coupon, gold isn’t worth anything intrinsically beyond what somebody is willing to pay for it. I have ended up buying it, however, because I concluded it offered opportunity under two extreme outcomes. If the world went into deflation, then gold would act as a store of value while the financial system disintegrated. On the other side, we know people use gold as a store of value during inflationary times, particularly in a world in which you’re seeing competitive currency devaluations.
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