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Equity Management Associates/Lawrence Lepard/July 2020 Quarterly
“I believe there is useful information in this relative performance. The fundamental driver for this outperformance is that enormous sums of money and credit were issued and spent by the US Government (Treasury & Fed). This action represents extreme monetary debasement, and gold can smell it. Investors are flocking to gold because they are slowly coming to see that the Government cannot escape from a debt trap without the Fed financing it and thus causing monetary debasement and, eventually, inflation.”
USAGOLD note: A lengthy look at gold and related investments that concludes the Fed has no choice but to inflate and gold will react like it did in the 1970s. If it reacts too quickly and strongly to the upside, says Lepard, monetary authorities might step in to make the ride as rough as possible for gold owners. When the ultimate goal is wealth preservation, it doesn’t matter if the ride is rough or smooth. It only matters that we make it to our destination wealth reasonably intact.