A value investor’s reluctant case for gold

The fact that I am writing this is a bit shocking to me.

I have been indifferent to gold for a long time, and for a simple reason: it falls outside my value framework.

It has no cash flows.

I have no idea what it is worth.

I can debate the value of Microsoft or Caterpillar with my value investor friends.

We can stress test each other’s assumptions on revenue, margins, capital expenditures and arrive at cash flows.

Gold has none of that.

It is perceived as currency, as a store of value.

It is a story.

It is worth what other people are willing to pay for it.

And yet here I am.

Here is what changed my mind.

Not something about gold.

Something about the dollar.