A value investor explains his change of heart on gold, which he previously dismissed because it has no cash flows. What changed his mind: the three pillars supporting the U.S. dollar’s reserve currency status, namely economic strength, political stability, and military superiority, are all cracking simultaneously. The United States carries its highest debt level since World War II with a 6% peacetime budget deficit, deteriorating strategic alliances, and insufficient military capacity against modern warfare. Despite these weaknesses, the dollar retains its status as the world’s reserve currency due to the lack of any credible alternative, channeling capital seeking safety toward gold, an asset no government issues. The investor positions gold as one position among many in his portfolio, taking a few slots previously held by stocks or cash, rather than a dominant 30% share.
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