The gold bull etc

The debasement of the silver coinage in the Roman Empire’s dinari in the three centuries from its zenith in Suetonius’s The Twelve Caesars to the revolving door reigns of 200 odd sad sack imperators in the third century AD whose careers ended up as headless tips floating in the Tiber, constituted a 95% devaluation of the dinari, the reserve currency of the planet between 27 BC and 300 AD – by Matein Khalid

Yet when Nixon defaulted on the Bretton Woods gold-dollar link in August 1971, he engineered a 99% devaluation of the US dollar for the next 54 years. Trump says that the world stiffs America on trade. The math says America has stolen 99% of the world’s wealth via monetary debasement since August 1971. JFK’s Bessant said it best. Our currency, your problem. So, it is perfectly rational for me to vastly prefer gold rather than Uncle Sam’s greenback as a store of wealth in the long run, though I know what Lord Keynes predicts for us all in the long run.

France’s President Giscard was dead wrong when he called gold a barbarous relic and started a run on US gold reserves at Fort Knox, that Trump claims are not even there. Lenin called gold is only fit to pave the latrines of capitalists. Yet where is Lenin now? Dead as a doo doo and mummified on Red Square in the Kremlin. While Trump sits on pure gold throne/latrines in Trump tower/Mar-a-Lago and rules the world. The Banque d’France no longer exists and its Mermaid Queen Christine serves the Tutonic Fatherland in Frankfurt.

I knew Black Tuesday was inevitable as gold’s RSI was 86 while the US dollar Index crept up to 99, the end of Diwali meant no more bullion buying to adorn millions of Hindu brides and the cooey-cooey bromance between Trump and Xi meant a sharp fall in the geopolitical risk premium. What next?

Gold could take a big hit lower if Trump and Xi sign a historic grand bargain next week in Seoul when the Tariff Man morphs into Soul Man. If the government shutdown ends, the FOMC makes nasty noises about the 3% CPI when its dual mandate inflation rate is 2% or Putin does a Sadat and flies to Kiev to embrace peace with Ukraine, gold could have the mother of all selloffs and fall as low as $2800 an ounce. Will this happen? No but…

Sir Isaac Newton’s Principia Mathematica contended “in a situation of infinity, any possibility, no matter how remote, has a physical manifestation”. As an investor, I am in the probability and not the certainty business, which I leave to my fundamentalist compatriots who once hid in Afghanistan caves until their Taliban buddies overran Kabul. Now it is Pakistan Airforce F-16 jets napalm bombing Kabul for the Free World.

Optically, post massacre gold looks not loony tune overbought now that the one-month RSI has fallen to 61 but I know scores of hedge funds have been killed by unhedged gamma risk and trapped longs facing extinction event margin calls sell what they can, not what they must as their LPs feel rigor mortis set in. Crisis, what crisis?

The ugly truth is Dr. Auric at $4134 is drowning in a quagmire of macro doo doo. The 200-day moving average is at $3318, the 50 day moving average is $3758. I do not like jumping out of airplanes without a parachute as, while born a Sindhi, I do not want to end up as a Thauddani, let alone a Kriplani LOL!

The 1970’s proved that war, oil embargoes, superpower conflict, genocide and mullah led revolutions/USSR military invasions in the Middle East were ideal for a gold bull run, as was stagflation and an incompetent Fed. Dr. Auric rose from Nixon’s $35 to Reagan’s $850 an ounce in January 1980, a 24X return. Gold exceeded its 1980 high only in September 2025, when I slashed my exposure to zero. I had gone long Auric in late 2022, just below $2000 an ounce once I was convinced that Powell’s draconian tight money cycle was over at Fed Funds 5.25% and Biden’s seizure of $300 billion in Russian central bank reserves and Kremlin’s ejection from SWIFT would be noticed by the autocrats and monetary mandarins in Beijing, Tehran, Havana, Pyongyang and Caracas. Uncle Sam’s five-star capitals from the Axis of Evil.

The GFC took gold from $300 to $1000 circa 2010. QE, the Euro/Club Med debt crisis and the Covid virus took us to $2000 by 2020. Ukraine, the Russian sanctions and Trump tariffs took us to $3000. A potential Indian/Pakistan nuclear war and trade war with China took us to $4400 before Black Tuesday wiped out the naked and the dead Auric bulls. Even at $4134 an ounce, I do not want to be a fat and dumb gold bull and tiptoe on a minefield that can blow up any moment under me. In other words, I do not want to fall in love with Dr. Auric since I fear she will not love me back in the next six months.

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