Gold Reflect
By 
Didier Darcet
1 October 2019

Antifragile Gold

Gold is the ultimate antifragile asset. Unlike fragile assets such as equity indices, antifragile assets react positively to stress. Does it make sense to constantly hold gold in a diversified investment portfolio? ‘No’, is the answer. 50% of the time, when currencies act as stores of value, gold is a useless asset. However, the other 50% of the time, when currencies are debased, gold is a vital asset, insofar as it is the centre of pricing of all other financial assets. This paper will take the former 50% of the time to be ‘Wicksellian times’, while the latter 50% to be ‘Keynesian times’. World economies re-entered ‘Keynesian times’ on January 31st, 2019, following the monetary policy reversal of the FED. Statistics on portfolio allocation advocate a switch in these periods: from bonds to gold, from developed economy equities to emerging equities, and from cash to real estate. Gold, however, is not antifragile by nature; it has only turned antifragile since the end of the Gold Standard in 1971 because of its pricing in currencies. And currencies are fragile assets


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