Early in the 20th century, the British economist John Maynard Keynes changed his position on monetary policy during the Great Depression famously stating, “When the facts change, I change my mind. What do you do, Sir?” Early in the 21st century, the facts appear to have changed on monetary policy’s impact on gold prices. Consequently, we changed our minds as well.
Since joining Broyhill ten years ago, I have remained steadfast in my constructive stance on gold, authoring our first letter on the yellow metal in 2007 with gold trading around $600 per ounce. Over this period, gold’s phenomenal run contributed meaningfully to portfolios, both in terms of returns and in terms of diversification during periods of market stress. But the facts have changed and gold appears to be broken.
In April 2013, we shared this perspective with clients in a letter titled, The End of The Gold Era, which represented a significant shift in our thinking at the time. Our thinking here has not changed over the past two years – gold and most of the commodity complex remain in the “too hard” pile.