Time is The most important Part & Will a 10% fall will change Macro where Every Central bank is Debasing Currency & Almost all are Buying Gold .... & To be precise These are Price insensitive buyers .. Which means GOLD falling currently in price a low probability event ( You can never be sure ) in such a case These Companies Holding GOLD as collateral giving currencies would gain in purchasing power .... Hence if GOLD goes up in price so will these companies (2) As you noted there is high default in this segment but GOLD price would take care of it .... only problem is of fraud
“At elevated multiples, even low-probability events matter because the margin for error narrows sharply”… that is why “probability-impact” matrix become so much important in investment or you may call it thinking in terms of probability…
Time is The most important Part & Will a 10% fall will change Macro where Every Central bank is Debasing Currency & Almost all are Buying Gold .... & To be precise These are Price insensitive buyers .. Which means GOLD falling currently in price a low probability event ( You can never be sure ) in such a case These Companies Holding GOLD as collateral giving currencies would gain in purchasing power .... Hence if GOLD goes up in price so will these companies (2) As you noted there is high default in this segment but GOLD price would take care of it .... only problem is of fraud
Good Article…..
“At elevated multiples, even low-probability events matter because the margin for error narrows sharply”… that is why “probability-impact” matrix become so much important in investment or you may call it thinking in terms of probability…
Nice article