The Glory of Gold
A gamble is just a gamble; it could go either way. And who wants to bet against gold? It was the star performer for the last 26 years...and the most reliable performer since the Flood
Monday, March 23rd, 2026
Bill Bonner, from Youghal, Ireland
The price of gold...wasn’t it supposed to go up, not down? And now...how far down will it go? And if it goes down in a crisis...what good is it? Kitco:
Gold sees biggest weekly loss in six years, faces more downside as inflation threat sidelines central banks
One of the little tricks Nature plays on investors is to make gold the safest asset you can hold...and, at times, one of the riskiest. When people begin to see it as a way to make easy money, the seat belts come off and the airbags are disabled. Then, gold becomes a speculative asset, with millions of people betting that it will go up...and driving up the price to unsustainable levels. They also leverage their gold holdings, to get more traction with them.
They are not gold buffs; they are gold bulls, betting that the price will go up. Then, when the speculative markets go ‘risk off,’ they sell their gold to return to the (short-term) safety of dollars.
This is what seems to have happened, triggered by a near-panic in the Near East. The Gulf states, with their vast deposits of oil-business assets, suddenly saw earnings dry up. The closing of the Strait of Hormuz left them with their oil...but no way to trade it for dollars. Short of cashflow, they sold their most liquid asset, gold.
At least, that is the story that is being told to investors. We happened to be in Zurich over the weekend visiting an investment manager. His phone rang off the hook last week as clients looked for answers. We just happened to be in the office when a call came in.
The caller was unhappy because his investment manager had not sold off his mining stocks when the shooting started. But who knew? Would it be a short, decisive war — a la Venezuela — or a real quagmire — a la Afghanistan?
A gamble is just a gamble; it could go either way. And who wants to bet against gold? It was the star performer for the last 26 years...and the most reliable performer since the Flood. Was he to abandon it, just because the price corrects a little? Isn’t this one of those moments that separate the real pros from the amateurs?
But we’re all amateurs. Some of us do serious research. Others play the markets like gamblers at the slot machines. And we all have ideas, opinions, guesses; we take our losses as ‘bad luck’...and attribute gains to our own genius.
“I think we’re going to see a big run-up in the stock market,” said the caller. “Because Trump is cleaning things up. All around the world. Eventually, that will show up in stock prices. I just want to go to cash now so I’ll be able to buy back in when prices start going up again.”
Will he get lucky? Will his insight pay off?
Maybe. (More on that tomorrow.)
Here at BPR, we deny genius and don’t trust luck. We don’t recommend ‘investing’ in gold, ever. We are HODLers — holding on for dear life — not gold investors or gold speculators. We use gold for holding our place in line, not to make money. The price of gold goes up and down. But it’s almost incidental. We count our wealth in ounces of gold, not dollars. So, a drop in the gold price has only a brief, notional effect on us.
But wait. We’re talking about real gold, not ‘paper gold.’ Real gold is physical. You can hold it in your hand or bury it in your back yard. Paper gold is a contract given to you by someone who claims to have gold...or access to it...at a certain price, of course.
The glory of real gold is that it has no counterparty risk. Others can go belly up; you still have your gold. But ‘paper gold’ is different. If the counterparty can’t make good on his promise, your ‘gold’ can disappear.
‘Paper gold’ is a speculation. That is most of what is selling off now. People are still holding their real gold...and so are we.
Do we hold gold forever? Well, no...we never really want to own gold at all. Buffett is right. It’s just an inert metal. It doesn’t add to anyone’s wealth — ever. We just hold it until we can trade it for stocks at good prices.
That moment has not yet come. But it will. Because when all the assassinations, explosions, artillery fire, jackassery, sanctions, inflation, budget busting and bombing ease off...and the dust finally settles...there will only be one thing left standing. You will go over and brush it off, to see what it is. And it will be gold.
Stay tuned.
Regards,
Bill Bonner
Good one today Bill. At 0500 EST it looked like the world had fallen apart. At 0700 after DJT posted a hold off in taking out Iran's power systems metals bounced back a little, oil came down a little, the DOW went from -1000 pts to +800 points. Many people may have had heart failure but those of us who believe in 5000 years of history just had another cup of coffee and life goes on.
Jim Marshall
Very good article, thank you for sharing it. What I especially appreciated is how clearly you articulated why one should hold gold in the first place. When an investor does not truly understand why something is in the portfolio, whether it is gold, stocks, or anything else, it becomes extremely difficult to stay disciplined when prices fall sharply. In that sense, clarity of purpose is often more important than price movements themselves.