Did I miss it?

Most of us carry the memory of one that got away. The stock we studied, nearly bought, then passed on because it had already run so far. We watched it climb without us, and the watching taught a lesson we may not have noticed we learned, that what has already risen is what we have missed, and chasing it now would be foolish. It is a fair instinct when we are judging the worth of a company, and a poor guide when it comes to gold.

Gold has put a version of that feeling in front of a lot of people lately. It climbed to records, then slipped well off the highs, and the reaction I hear most is some form of “I missed it, the run is over, it has corrected, and from here it either settles or drifts lower.” That reaction is natural. It also misreads what this kind of asset is for.

The question only makes sense for a bet

“Did I miss it?” is the right question for a speculation, something you buy hoping to sell it higher later. It even has its place when you take a position you mean to hold for years and want a sensible entry price. Point it at protection, though, and the question falls apart. Nobody stands in a hardware store deciding against a smoke alarm because smoke alarms got more expensive last year. Nobody declines home insurance because premiums went up. You buy those things to be covered, and within reason their price is close to beside the point.

Gold’s job is what it does to the rest of your wealth in the moments that matter most. Outrunning equities was never the point; over the long run, stocks have compounded faster, and they should.

What you are buying

Its real work shows up when fear takes hold. The correlations among your other assets climb toward one, and holdings that looked diversified fall together, when you need them to behave differently. Gold has a habit of doing the opposite, holding or rising while the rest sinks. That is the attribute you are paying for, the way it behaves when everything else is breaking down.

It will test your patience. Gold sits still when you want it to move, then climbs hard when you least expect it. That is the asset being itself, and it makes no difference to why you hold it. You hold this for the long term, ignoring the headlines each quarter. Pierre Lassonde, the Canadian mining figure who has spent a lifetime around the metal, has said he buys gold hoping never to sell it, and to pass it to his grandchildren. That is the time horizon the asset rewards.

How high can gold climb? How low can the purchasing power of a currency fall?

Seen that way, the sharp climb and the pullback do useful work; they demonstrate the very thing you are buying. An asset that can move that far on its own schedule, free of your portfolio, shows you its independence. Volatility and all, that is why you own it.

How high can it go?

People often ask me how high gold can climb, and I have come to answer with another question. How low can the purchasing power of a currency fall? They are the same question in different clothes. An ounce of gold is an ounce; its weight and its nature never change. What moves is the quantity of dollars, pesos, or euros it takes to buy that ounce. So a rising gold price is largely a falling currency, set against something that holds still. On that view, “how high can it go” is a question about how much faith you place in the money on the other side of the trade. That idea deserves an article of its own, and one day it will get one.

The limits, stated plainly

Gold does not pay interest; that is the cost of holding it. It offers diversification in return, and that matters more now that bonds, once a dependable offset, increasingly move with stocks themselves. Gold earns a real place alongside the rest of what you own, large enough to matter and capped so it never dominates, and the research that supports a sensible allocation also warns against overdoing it.

The price level barely touches that logic. If a reasonable starting position is a few percent of your wealth, held for how it behaves over years and crises, then whether you began near a high or a low matters far less than whether you began at all. What you are doing is closer to taking out a policy than timing a trade. I will not pretend to know where the price sits three or six months from now; no one does, and anyone who tells you otherwise is guessing with confidence. The longer arc is easier to think through. As long as currencies are run by central bankers with a printing press and every incentive to use it, the supply of money tends in one direction, and gold is priced in that money. History makes that easy to credit. Every paper currency ever issued has lost ground over time, for one reason. Expand the supply of money and each unit buys less. The Canadian dollar has lost more than 96% of its value since 1870, by the Bank of Canada’s own reckoning.¹ The US dollar has lost about 97% of its purchasing power since 1913.² Both sit among the more disciplined currencies in history; plenty of others have gone to nothing. Priced in gold, the major currencies have all run one way, some slowly, some in ruin. The direction has a century and a half of record behind it.

Timing the wrong thing

The timing question misfires for a deeper reason. Picture someone who timed it perfectly, who bought gold at its lowest and watched it climb. If that gold sits in a brokerage account inside their own country, inside their own financial system, they have won a trade and bought none of the protection that counts when it counts, when accounts are frozen, when a transfer suddenly needs permission, when a programmable rule decides what your money may do, or when a government reaches for emergency powers it has already shown it will use. Your protection comes from where the metal sits, in your name, in a private vault outside your jurisdiction, beyond the reach of a freeze or a coded restriction. That is independent of the price they paid.

Put the two side by side. Would you rather hold gold bought at today’s price, held safely in your name beyond the reach of any single institution or jurisdiction, or gold bought a decade ago for a fraction of the cost, sitting in an account where the rules could one day be rewritten to limit what you may do with it? The one who paid more and holds it safely is in the stronger position.

So put aside whether you missed something. The only question is the same one it always was. Is a portion of your wealth protected, held where no single authority can reach it, or is it not? If it is not, the price on the screen this morning is a distraction from a decision it was never about. If that is the question worth answering, I can help you begin.

The fuller reading and allocation ranges sit in How much gold? on this site.

Footnotes

1. Bank of Canada, A History of the Canadian Dollar, Appendix A: “Purchasing Power of the Canadian Dollar.” The Canadian dollar has lost more than 96% of its value since 1870 (GDP deflator). https://www.bankofcanada.ca/wp-content/uploads/2010/07/appendixa.pdf ↩

2. U.S. Bureau of Labor Statistics, CPI Inflation Calculator. A 1913 US dollar holds roughly 3% of its purchasing power today, a loss of about 97%. https://www.bls.gov/data/inflation_calculator.htm ↩