Gold’s Surge, Fear, And Strategy

We unpack gold’s surge, why central banks—especially China—are buying, and how to balance conviction with risk. We share how we trimmed, built a cash buffer, and considered collars to cut downside while staying in the trade.

• Central bank demand as a structural tailwind
• China’s reserve ambitions and gold accumulation
• Dollar and U.S. policy risk shaping safe‑haven flows
• Rate cuts, inflation hedges, and market plateau
• Trimming exposure after parabolic moves
• Cash as optionality and a volatility buffer
• Using collars on GLD to cap downside
• Silver’s link to gold and industrial demand
• Energy and oil debates tied to AI growth
• Practical mindset: avoid FOMO, take profits, redeploy

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Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.

Chapters

• 0:51 Setting The Gold Question
• 2:09 Too Late Or Just Early Trim
• 3:52 Cash Buffer And Market Plateau
• 4:45 What’s Driving Gold: Theories
• 6:49 China’s Buying And Reserve Ambitions
• 9:49 Dollar Risk And U.S. Policy Concerns
• 10:45 Rates, Inflation Hedges, And Skeptics
• 12:29 FOMO, Parabolic Moves, And Discipline
• 15:25 Hedging With Collars On GLD
• 17:36 Anxiety, Profit Taking, And Mindset
• 21:10 Silver, Oil, And The Energy Debate
• 23:02 Closing And Listener Feedback

Transcript

SPEAKER_00: 0:27

Welcome everyone to Skeptic's Guide to Investing. Today we're glad to have Clenn back from his Japan um trip. Uh it sounds like it was a good time, 30 days away and walking around doing 10,000 steps a day. He's he's looking very fit, and uh we've got to talk about the latest um hysteria. And today it's about gold, the shiny yellow metal that never seems to be able to figure out how much it's worth. So it's gone hyperbolic, and uh we're all wondering does gold know something that we don't know? Is there something happening in the mainline system that is making people run to gold as a protection trade, as a safety trade, as uh I'm worried about all my other assets, so I want to have a little bit in safety. So, Clint, how safe is gold? And is it the place that we all should be taking a little bit of our NVIDIA and our Avgo and our Microsoft and putting it in the yellow metal and just forgetting about it for a while?

SPEAKER_01: 1:43

What do you think? So I think the key question right now, Steve, is is it too late to make this trade? Uh, I think if we if it were months and months ago, it would have been a great time to get into gold. And in fact, I did, okay. I think I started getting into gold maybe about a year ago or eight months ago, something along those lines, and sort of let it rip in my portfolio. And so as of Thursday, uh when I got back from Japan, uh it was at um I I had about 18% of my portfolio uh in gold, uh, which uh, you know, which is a lot, right? And you had this big drop in gold on Friday, and you had another drop in gold uh on Monday and on Tuesday, right? Um, today being Wednesday. And and so it started to kind of scare me. Like, you know, should well should we, you know, have we reached a top? Should I start trimming my portfolio so that I'm, you know, sort of back to where the gold price was maybe three weeks ago or a month ago, or you know, two weeks ago. And so I have been trimming every day since Friday. And so now down, you know, I was 18%, now down to about 11%, and buying some additional stocks and and sort of uh beefing up uh beefing up cash a little bit. So I've got about right now I've got about um 20% in cash in the portfolio. And you know, you might wonder, well, why do you have so much cash in the portfolio? Well, I'm concerned about stocks as well. You know, are stocks, are we reaching the peak on stocks? Uh, you know, we haven't seen, even though we've been at, there have been days where we've been at highs, it's really sort of bouncing around on a plateau. And so uh I'd rather not ride the market down, right? I'd rather have uh I'd rather have uh a good buffer in uh in cash. And so I've got about 20% uh in cash. Um, you know, that's yeah, but I think that's smart.

SPEAKER_00: 4:21

I I think you're you're you're I saw somebody out there telling us that gold is gonna hit 5,000 by the end of the year. And it very well could. I heard someone else say that you know it could hit 10,000 in two or three years. And and uh yes, it could. It could also, uh I was listening to someone on last Thursday or Friday, and they said we think it's gonna go back to its um you know 48-month moving average, which is about 2600.

SPEAKER_01: 4:52

Yeah. So nobody honestly, nobody really knows, right?

SPEAKER_00: 4:56

And that's what I'd like to talk about is that do we think the gold is doing what it's doing because of a safety trade? Do we think it's doing what it's doing because it's a precursor to inflation trade? Because people are saying as we lower interest rates, we know inflation's gonna go back up. And so the gold buying is really just a way to try to add another hedge to inflation. I know that there's all kinds of studies about gold being worthless and being dead money for 10 years, 12 years, 15 years. Um, I think those people also forget that stocks was dead money from 2000 to 2006 or seven, and then after the 2008 crisis, it was dead money until 2012-13. So stocks also go into dead money for a period of time. And I think it's um I I also think there's a lack of confidence in governments and fiat currency. I mean, so which of those is the reason that gold is gone in your mind? Give me a percentage. How much is fiat inflation and how much is nervous?

SPEAKER_01: 6:16

You can't give a percentage because they're all, you know, there's sort of overlapping reasons there. Um what's the number one reason? I I think uh the number one reason uh that gold has been going up is because China and some other central banks uh have been buying gold. Yeah, I I I think I think that's the number one reason. I think that's a I think that's likely to continue. I don't think they're gonna sell gold. I think it's it's likely to continue that they keep purchasing. So that's that is, I think, an underlying um underlying positive uh tailwind, right, for for gold. And I think that ties into geopolitics uh in that eventually uh China is looking forward to a day when uh it can try to um you know obtain um you know hard not just hard currency status, which it doesn't right now um still, but you know, status as one of the major reserve currencies. Um and so you know they they can do that only if they open up their current and capital accounts. And in order to do that, they need to create some confidence that people don't already have in in the Chinese authorities. And so to do that, you know, they intend to back that up with gold. So and they've been doing that. So I think that's a reason to hold uh hold gold. So that's that's the first thing I would say. Um second thing I would say is uh I think that I think that there are there's a lot, including myself, uh there's a lot of concern about policy, policymaking uh in the US especially. And I think that's putting um you know that's that is raising questions about the dollar, right? Uh and I think uh I don't see I don't see questions about policy um diminishing um you know throughout the rest of the Trump administration. I just don't just don't see it. And I see uh continued possibility, probability of political unrest in the United States. And I think that's likely to put some pressure on the dollar as well.

SPEAKER_00: 9:13

So Yeah, I mean I I think that when we we we might be trying to make it more complicated than it is. If the US is lowering rates, people are going to probably go for other places where rates might be higher or getting higher. And so I I always wonder if we, you know, if we just look at the direction of where we're going, which is lower rates, I think lower rates are inflationary. And I think most people believe that. Um for your first point about China being a buyer, I've believed that gold is a good investment because all of these countries are adding to their gold reserves. So if if we look at it and say, you know, listen to some of the people on the news who say gold is a horrible investment, it doesn't pay you anything, it's not, you know, it's it's not, it doesn't make sense as an investment. It's really just a fear trade and it doesn't have any. And then I ask, well, why are all these treasuries of all these countries buying gold then? Don't they have PhDs and people who are trying to maintain their current accounts? And and and why would they not be smart enough as you are that they wouldn't buy gold, they would buy something else. And it it it really does come down to China and the the one, I believe. Because China wants it to be a reserve currency, they want everything to be denominated. Right now, I believe that foreign transactions, somewhere around 70% of all transactions are in dollars. And I look at that number, and I think that number scares China because I think they want to be considered a reserve currency, they want to be considered the reserve currency. And right now their percentage backed by gold is somewhere less than 1%. And I think that the US, well, not exactly fully backed, is only backed by six to seven percent. And so when you look at that and you say, how do they get to six to seven? They just need to buy more. They're a buyer, but they don't produce any gold. It's amazing to me that China imports oil and imports gold. Things that you would think that being next to Russia, they should have similar, you know, democraistics of the earth and the crust, then that they would be able to get these things. But they're not. And so as the economy grows for China every year at whatever the government number is, five, seven, you know. Which is a fake number, but which is a fake number, but let's just say it's it's a positive number, and as it becomes bigger, the that means that the economy is bigger, and therefore the amount of gold they need is going up, right? So, as a country, if you don't produce it, then you need to buy it. And so, therefore, I think the demand that China is going to have is a 20-year demand, not a two-year demand. Oh, I agree with that. There's no question about that. So they want to be considered legitimate, and legitimacy comes when the world adopts your currency as the choice.

SPEAKER_01: 12:38

So, you know, that that was my thesis, my most important thesis for buying gold and holding it over the last year. Okay. What's happened is that people are starting to catch up with that thesis, and they're getting excited about it now after the price of gold has soared so much. And especially over the last month, gold has gone hyperbolic. And it's just crazy what happened in the month through Thursday. It's just crazy the the amount that it's risen. And so, you know, you've got all these folks about a month ago who you know were getting a severe case of FOMO, right? Fear of missing out. And they start plunging into gold and and it driving the price up. And you know, at that point, those who are you know, the smart money, and I I like to think of myself as smart money. I don't know, Steve.

SPEAKER_00: 13:42

Maybe maybe there's there's different types of efficiencies in the market. There's weak, semi-strong, and strong. And and so I would put you as the semi-smart money, not the truly smart money, but I think I think somewhere in the middle of semi-smart is where uh I I I think the semi-smart money would look at how much it's risen over the last month and say, I don't think it's gonna, I think I think now I think there's a greater likelihood that it'll fall than it is that it'll rise more.

SPEAKER_01: 14:18

Okay. So yeah, I mean, if at some point it starts to to to rise again in a moderate way, it may be worthwhile, you know, increasing my holdings again. Uh, but right now I I feel, you know, and I know a lot of people would say 11%, that's that's still a lot. And and and it is. So I'm not giving up on the gold thesis. I'm just you know taking my profits, right? From the loss.

SPEAKER_00: 14:49

I think it's smart. I mean, I I look at a name like Oclo, um, the the nuclear, um they they use uh smaller nuclear reactors, and uh there's no revenue for the company, and there's probably no revenue next year. And the question is just how much they're gonna lose, not how much they're gonna make. Right. And you know, it's up 625% year to day. So, you know, I I look at that and I say, geeze, gold's up 30 or 40, you know, in the last month. It's got another 570 to go before we get into you know ArcLo territory. I mean, I I think that assets are going up strictly because people have money and are using that money in those games to uh leverage themselves with uh call options and other ways to get exposures to upside. And I think the the thing that will mitigate that is that when you have a six percent down day or a five percent down day, all of a sudden you realize that this this isn't a one-way, one-way uh street. It's a two-way street. Yeah, I think that realizing that I've been encouraging everyone to to to put a little aside and then be prepared when it when it comes back. Um, and I think that it will. And I I believe, and we're gonna talk about this in our next you know, rare earth podcast, but I believe this discussion with China in the next two to three weeks is gonna tell us a lot. It's gonna tell us a lot about how we're gonna get along with China. And if rare earths are not available from China, the who's gonna be affected, the AI trade is gonna be affected because they need they need those magnets for a lot of the boards and and uh the chips that we manufacture. So I I think that it's wise to be prudent and it's wise to be skeptical. I believe that overall we know how this story goes. And when I think about gold potentially correcting to 2600, I think taking a third off or a quarter off like you did is a very good idea. I I don't think we should expect things to grow to the sky. I don't think trees do that. I don't think we should expect our stocks to do that and our positions. If it's gone up, great. Take some of your profits and reallocate and diversify so that you're well positioned if there is a pullback to take advantage of it.

SPEAKER_01: 17:36

Yeah, too many people uh just get this uh fear of missing out, and they just keep piling into something that eventually is going to drop, and and then they all get upset, embarrassed, whatnot, when all of a sudden there's a huge pullback. And I'd rather not I'd rather not um I'd rather not be that person, right?

SPEAKER_00: 18:02

Yeah, can I can I just propose one other choice, which um I've been listening to um Thoughtful Money and Adam Taggart, and he's a pretty big proponent of gold, and he owns a pretty good amount of it, and he's hedging his gold with a collar. And I think it's you know there are options on GLD. So if you if your exposure to gold is in the ETF, it's buy a put, sell a call, maybe at 5,000, buy a put at 3200, and say, okay, um, those numbers are for the overall price of gold, and the ETF price will be different. But you get the idea 20 down, 20 up, and you've then immunized yourself against a move back to the moving average, and you've positioned yourself so that if a caller expires and it hasn't done anything but gone up to 4500, you reset it to 5500 and 20, 3500.

SPEAKER_01: 19:07

Yeah, the only the the only problem with that is um you know by selling some of it, I'm developing cash that I can put into others to put into stocks, right?

SPEAKER_00: 19:18

Right into but you also already have cash, so yeah. Um it's yeah, I I think that I I like to be a middle child, as I've told you. I like to do things that are kind of in the middle. You sell a little, hedge a little, and then all of a sudden you feel like you've done something. So there's a there's a real benefit to getting off your seat and doing something. I think sitting there and worrying is not the right choice. I mean, we spend 90% of the time of or the things we worry about never occur. The 10% of things that do occur that we worry about, the outcome is usually better than we expect. Our worry is killing us, it's creating our anxiety and all of these things. And you shouldn't have this anxiety if something's up 35%. It's it you should just be grateful and say, okay, I I I flipped this coin and it went my way. Now what I'm gonna do is to try to immunize myself and make myself stronger so that I can go out and find the next opportunity. Right. I think that by doing that, you are you know you're always in the dynamic of growth mode versus fear mode. You're not gonna get very far in fear, you will get further with growth.

SPEAKER_01: 20:42

Yeah.

SPEAKER_00: 20:43

Anything else we want to say about gold?

SPEAKER_01: 20:46

Um, no, I think uh yeah, I would also say that you know the silver trade uh was paralleling gold and has been paralleling gold. So I just say that, and and then and a lot of people were saying, well, gold's up, so maybe I should put more in silver now. I'm not sure that that's such a great idea. I think you should look at gold and silver as the same part of the same complex.

SPEAKER_00: 21:12

Yeah, the thing about silver is silver has a little more purpose, right? It has plating and other things that it it does have a demand in the market. I I've been listening to a lot of people talking about the relationship between oil and gold, and that it's way out of whack. And that what it means is that probably all of these servers and all of the uses that we're seeing for some of the technology is gonna require more energy. All of the crypto mining requires energy. Therefore, oil is eventually, and with peace in Gaza, that's gonna lower the price of oil and it's gonna create a buying opportunity, and the next commodity to buy is oil. I I think it's it makes a lot of sense. It's a long-term play. Um, there's different ways to buy it with futures contracts or with um, you know, producers, but I I kind of believe in the energy trade, and I believe that oil will play a part in this whole AI revolution. So I think it's uh just like you need uh servers and and and you need energy to run the servers, you're gonna need oil to provide that energy.

SPEAKER_01: 22:23

So Steve, that's not sure. I'm not sure I agree with you on energy. Um, but you know, we can leave that for a different podcast.

SPEAKER_00: 22:32

All right. So um thanks everybody for listening. We appreciate you and appreciate having Clumb back. And uh please listen in, give us your comments, give us suggestions, and we love producing good material that you want. So let us know. All right, everybody, have a good day.