Gold up 2.3X past 2 years. But what about the 10 years drawdown in between.
- Amar Harolikar
- Dec 2
- 2 min read
As Buffett says "As “bandwagon” investors join any party, they create their own truth - for a while"
If you had bought it at it previous rising tide (like now) in 2011 you would be waiting for nearly 10 years till 2020 just for it to reach your buying levels.
If it happens again - and it could - do you have the stomach to wait till 2035 or beyond?
Gold has been on a rise since COVID. Central banks loading up, especially emerging markets after the U.S. froze Russian assets. Goldman Sachs and many others say it'll keep rising. Maybe it will. But any of those reports warning you about a potential repeat of the brutal 10-year drawdown? I haven't seen one.
Buffett said this in 2011 when gold was hot:
"...Tulips, of all things, briefly became a favorite of such buyers in the 17th century. The major asset in this category is gold, currently a huge favorite of investors. Gold, however, has two significant shortcomings, being neither of much use nor procreative.
What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth - for a while"
To pull the report
Head over to quants agent at quants.tigzig.com. Open source. Free
Prompt: "get me SPR for gold futures and S&P 500 past 20 years."
Gold futures work as a decent proxy for gold prices. The drawdown data is brutal. Agent is free to use - run your own reports across securities and time periods.
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Goldman Sachs (Mar '25) https://www.goldmansachs.com/insights/articles/why-gold-prices-are-forecast-to-rise-to-new-record-highs
Buffett's 2011 letter
