A Crucial Distinction: Saving Is Not Investing
The foundation of everything that follows rests on a distinction most people collapse into a single idea but which deserves to be kept rigorously separate. Saving and speculating do not serve the same job. When I save, I am not trying to make money — I am trying to maintain the purchasing power of what I already have. Making money is something I do through investing and speculating: putting capital into high-quality businesses, into businesses I believe might become high-quality, or into private ventures such as media and educational enterprises. Those are bets on growth. Savings are something else entirely. They are a store of value, and I store mine, for the most part, in gold.
This is not a theoretical position for me. It is actual. I have lived it for decades, and the discipline of treating savings and speculation as two distinct functions is, in my view, the single most important thing a serious capital allocator can internalize. The biggest investing mistake is treating savings and speculation as if they perform the same role. They do not, and confusing the two is how portfolios quietly destroy themselves.
How I Actually Save
I am a systematic saver in gold, and I am not particularly price sensitive. I do not try to time my purchases or wait for the perfect entry. The only thing that ever causes me to sell gold is the appearance of an opportunity I find dramatically more compelling somewhere else. Short of that, I simply keep accumulating.
When asked whether I am adding to my savings now that gold has pulled back toward the $4,000 level, the answer is yes. Because I am not price sensitive, the natural follow-up is: what, then, is my criterion for adding? The answer is liquidity. Whenever a circumstance arises that adds substantially to my private liquidity, I direct part of that new money into gold.
A concrete example from earlier this year illustrates the mechanism. In January, after a hyperbolic upward move in silver, I sold 80% of my physical silver. That sale was a speculation — a deliberate, opportunistic trade. I then took 25% of the proceeds and moved them into savings, buying physical gold with most of it and adding a small allocation of very short-term treasuries with the remainder. The same logic applies to business income: I expect to make a reasonable sum from an upcoming natural resources investment symposium, and a substantial portion of what is left after expenses will once again go into physical gold. This is the pattern — speculative or operational gains are continually fed into permanent savings. Liquidity, in this framework, is ammunition. It is not there to chase performance; it is there to be deployed when something genuinely worthwhile appears.
Alongside gold, I keep working liquidity in Canadian dollars and occasionally in US dollars, but the core savings sit in metal.
The 2009 Sale — and Why It Happened
The last time I sold gold was in 2009, and the reasoning behind that sale is essential to understanding the whole philosophy. I did not sell because I thought the gold price was going to fall. I sold because I held gold as liquidity, and in the aftermath of the 2008 equities and credit market collapses, a wide range of financial assets had been driven to absurdly, ridiculously cheap prices. Those bargains were so compelling that they justified liquidating a portion of my gold — albeit temporarily — to acquire asset classes that were, at that moment, far cheaper relative to their value.
This is the rare event for which liquidity exists. One only seldom, and hopefully only seldom, dips into savings to buy assets that will raise one's material standard of living. 2009 was such a moment. The lesson is that 2009 mattered not because gold failed, but because panic temporarily made other assets absurdly cheap. The gold did its job: it preserved value and stood ready as dry powder when genuine opportunity arrived.
Absent another 2008-style psychotic break in markets, I expect the decision to sell my bullion will be made by my estate, not by me. That is how long the horizon is.
On Time Horizon — and the Nine Lost Years
A fair challenge to anyone holding gold as a savings vehicle is the question of time horizon, because gold's record is not a smooth ascent. After gold's price adjustment beginning in 2012, there followed roughly nine years during which the metal was flat, if not down. Someone who held gold for only five or six years inside that window would have been deeply frustrated — their savings would not even have kept pace with inflation. By contrast, an investor with a 20- or 30-year horizon would be laughing all the way to the bank. The holding period is therefore decisive.
It is worth being precise about what I did during those lean years: I did not merely hold gold through that period — I bought it continually throughout. Systematic saving means accumulating in the flat and falling years, not just the exciting ones.
The deeper point is about how we measure wealth at all. Markets can hit record highs while purchasing power quietly erodes in the background. Measuring wealth only in currency terms hides what your savings can actually buy over the span of decades. When I look at the basket of goods and services I acquire today, measured against my savings in gold, I am struck by how cheap real estate is, how cheap healthcare is, how cheap food is, how cheap energy is. When I began saving in gold, the metal was $250 or $260 an ounce. Yet if I measure the S&P 500's performance since the year 2000 against gold's performance over the same period, the increase in the S&P does not look especially attractive — and, frankly, neither does the increase in gold. Gold functions as a constant, a measuring stick, more than a growth engine. The uncomfortable question is not whether gold rises faster than other assets. It is whether your savings survive long enough, in real terms, to matter.
Mining Equities and the Collapse in Sentiment
Turning from the metal to the miners: there is an indicator called the gold miners bullish percent index, which currently sits at a multi-year low. While it tracks price, it has fallen far more than price has — a measure of sentiment running well ahead of the actual fundamentals. On a percentage-change basis, the GDX (the gold miners ETF) peaked at roughly the same time gold peaked earlier this year and has since fallen about 37%. The bullish percent index has dropped from essentially zero toward negative 100 — the lowest reading the scale allows.
This divergence is significant. When sentiment collapses faster than price, the disciplined question to ask is whether fear itself has become the dominant feature of the market. A 37% drawdown in the miners, set against a broader breakdown in conviction, often signals emotional liquidation arriving before any genuine deterioration in fundamentals. Capital tends to reallocate during exhaustion, not during euphoria — and retail participants, watching headlines, usually miss this because they interpret pain as information when disciplined capital treats it as inventory.
The price of a miner does, of course, move on the back of gold itself, even though the company's intrinsic value may be quite separate from its quoted price.
Price Versus Value, and the Mood of the Conference
This brings us to a teaching point that has been central to my philosophy for a very long time: the market is a facility, not a subject. It is a venue you use, not an authority you obey. Money is made on the delta — the gap — between price and value. To the extent that the price of an asset or a company falls relative to its underlying value, that is a good thing, not a bad thing. A falling price against steady value is the very mechanism that manufactures future returns.
So when asked whether the speakers and attendees at my upcoming symposium — the real event takes place in early July — will be despondent given the grim mood, or whether the narrative will instead shift toward lower valuations representing a better buying opportunity, my answer requires understanding the intellectual complexion of my audience. Asking my attendees how they feel about gold is rather like walking into an evangelical church in the American South and asking the choir whether they believe in God. The veteran members have, for the last several years, enjoyed a singularly good experience, and many of them firmly hold the price-versus-value conviction. For that reason, my task at the conference will more likely be to temper enthusiasm than to create it, across both precious metals and natural resource assets. The mood, I expect, will be one of informed ebullience: even where the price of a company has fallen, its value may well have stayed high. The market's darkest mood often appears right before investors rediscover the difference between price and value.
Reading Today Through the Lens of the 1970s
Some analysts worry that gold is repeating its past secular bull-market pattern — a double top, a correction, and then capitulation — pointing to the late 1970s through 1980 and the early 2000s through 2011 as templates, and fearing a 2011-style breakdown is now underway. I approach this with an important caveat: my own decisions are driven fundamentally, not technically. I do not navigate by chart patterns.
Fundamentally, I would attribute the recent softness in gold to three factors. The most important, by far, is higher US nominal interest rates. Higher rates increase the attractiveness of the US dollar and are tough on the prices of dollar-denominated assets — with the possible, and temporary, exception of something like SpaceX. The second factor is that these conditions correlate reasonably well with fears of a recessionary or deflationary recession. The third is a related anxiety: that a credit collapse combined with a recessionary environment could derail inflation. My view is that most of these fears are misguided. I cannot tell you where the gold price will go in the near term — nobody can, though many will try.
What I can do is point to historical resemblance, and the period we are living through reminds me of nothing so much as 1975. Consider the arc carefully, because the younger generation has not lived it. From 1970 to 1975, fear of inflation grew steadily in the population, and gold rose from its price-controlled level of about $35 an ounce to a high of roughly $200. Those political fears around inflation prompted the US Congress to do something fairly unusual: they actually decided to address it, and they allowed interest rates to rise. That increase in rates cratered the price of gold from about $200 back down to about $100. It also cratered a great deal else — the US bond market, the US equities market, durable goods sales, and new home construction all fell.
Then came the decisive turn. After a fairly brief period, Congress and the broader political and voting class lost their nerve. They abandoned any pretense of defending the sanctity of the dollar, and interest rates were forced back down. It became clear to savers and investors around the world — not only in the United States — that political expediency mattered more to policymakers than the integrity of the currency. Once rates were engineered downward, gold exploded from a low near $100 an ounce to a high of about $850.
The lesson is that policy incentives repeat with uncomfortable consistency even when history does not repeat cleanly. The 1975 comparison matters precisely because rising rates initially looked like a victory over inflation — right up until political tolerance for the pain evaporated. The detail most investors forget is that the other assets collapsed before monetary discipline did. Savers who assume policy will stay painful long enough to fully restore purchasing power may be badly underestimating political reality.
It took two extraordinary things to finally break gold in 1981: very high real gold prices, and a tripling of the US interest rate under Volcker. At that point gold had to compete with a US Treasury yielding 15%. We are a very, very long way from anything resembling those conditions today.
Positioning Tells You What People Believe
I want to be unambiguous: I am not suggesting that anyone place 100% of their net worth in gold, in SpaceX, or in anything else. The future is a set of probabilities; there is no certainty whatsoever, and prudent allocation reflects that.
But for the American investing public — I cannot speak as confidently for Canadians — gold and gold-related securities currently represent about one-half of one percent of total savings and investment allocation, down from a four-decade mean of roughly 2%. That figure is more revealing than the price, because positioning tells you what people actually believe, not what assets are genuinely worth. Everyone praises diversification, right up until the assets they ignored become scarce. Broad participation in gold remains historically low despite years of macro instability — and protecting wealth tends to be deeply unpopular right up until the moment it becomes urgent.
