Capital Preservation • Fiduciary Logic
Protecting Gains After a Historic Gold Move
Gold may still go higher. But after an extraordinary two-year surge, the responsibility shifted from participating in upside to protecting capital.
What changed
We did not sell gold because we lost confidence in it. We sold gold because the risk profile changed.
When any asset rises this far and this fast—even one with sound fundamentals—it becomes vulnerable to sharp reversals. At that point, the greatest risk is no longer missing upside. It is giving back gains that were already earned.
- Gold can still rise — the long-term thesis remains intact.
- But risk has changed — extreme moves invite volatility and crowding.
- Our duty shifted — from participation to preservation.
Gold didn’t fail — it did its job
Gold exists to protect against monetary stress and loss of confidence in paper systems. A dramatic rise is not a failure of discipline. It is evidence that the hedge succeeded.
What we are not saying
- Gold is broken.
- Gold has lost its role.
- Gold was a mistake.
What we are saying
- The move was historically extreme.
- Short-term downside risk became elevated.
- Preserving gains became the priority.
Why Gold Is Vulnerable When the Equity Reset Begins
When a long-overdue equity reset begins, markets do not unwind gently. The first phase is almost always about liquidity. Investors sell what they can to raise cash, not what they want to sell. Profitable and liquid assets can become targets.
After gold has more than doubled in two years and reached emotionally charged levels, it can become a natural source of liquidity. It is profitable, liquid, and easily sold. That can make it vulnerable in the earliest stages of market stress.
Historical reminder: “dash for cash” phases have hit gold before
- 2008: gold declined roughly ~30–35% peak-to-trough during the liquidity scramble.
- 2020: gold declined roughly ~10–15% in a compressed, mid-March liquidation window.
These were not failures of gold’s long-term role. They reflected forced selling, repositioning, and liquidity needs early in stress.
A 20% decline is not extreme in this environment
If equities begin their overdue reset, gold could give back 20% or more in the initial phase. That would not mean gold is “wrong.” It would reflect forced liquidation and profit-taking.
But this cycle carries a unique danger. Markets have gone years beyond where a reset normally would have occurred. Valuations, leverage, and speculation are historically stretched. That raises the probability that early liquidation pressure could be sharper and deeper than normal.
This cycle is not normal
In this environment, gold could drain far more than 20% before stabilizing, even though its long-term role remains intact.
The fiduciary framework behind the decision
Has the hedge already delivered?
When an asset more than doubles in two years, it has delivered an extraordinary result.
Has behavior turned speculative?
Extreme price moves often signal emotional positioning and fragile liquidity.
What is the cost of waiting?
Allowing historic gains to evaporate is not patience. It is risk exposure.
Why We Chose 100% Cash — Before the Reset, Not After
This was not a partial decision. When an asset more than doubles and markets are overdue for a reset, trimming is no longer protection. The only real risk control is liquidity.
In past equity stress events, gold has sometimes weakened during the earliest phase as investors raise cash, meet margin calls, and offset losses elsewhere. Many of these liquidity-driven phases have played out over the first several weeks of the unwind—often roughly the first 30–45 days—before longer-term defensive behavior reasserts itself.
This cycle carries elevated downside risk for gold
Because this equity cycle has stretched far beyond normal limits, gold could give back 20% or more, and in a disorderly reset it could be significantly worse before stabilizing.
Waiting for that decline to occur would have been reactive. Acting before it occurs is fiduciary discipline.
- Historic gains were protected.
- Exposure to liquidity-driven selling was reduced.
- Full control was restored through cash.
- Optionality was preserved for future opportunity.
Moving to cash was not about calling the exact day of a correction. It was about recognizing that the downside risk had become unacceptable relative to the reward of staying invested.