“The most important thing is that technology evolves, but people don't. That's the biggest lesson of history—humans don't change.” – Simon Mikhailovich
In this episode of Outliers, I’m talking with Simon Mikhailovich (@S_Mikhailovich) about why gold is important in the current economy, how it maintains purchasing power over time, and important lessons from financial history.
Simon Mikhailovich is a contrarian investor and entrepreneur who is also the co-founder and lead manager of The Bullion Reserve (TBR), a private vehicle that enables investors to hold physical gold across multiple jurisdictions outside the financial system. Before starting TBR, he co-founded Eidesis Capital, was a Portfolio Manager at Falcon Asset Management, and with his deep understanding of financial history, predicted and profited from the financial crises of 2000 and 2008.
Chapters in this interview:
- 00:00:07 – Simon’s thoughts on gold’s role in the current financial market
- 00:07:19 – Why gold is important at this moment in time
- 00:14:22 – Cycles of financial euphoria
- 00:19:06 – The three ways to get out of debt
- 00:25:05 – Why holding physical gold is different and better than savings in other forms
- 00:30:46 – Gold is the ultimate insurance for bad financial outcomes
- 00:36:48 – Gold vs. other precious metals, and how gold is nature’s Bitcoin
- 00:41:58 – Should people invest in gold ETFs?
- 00:44:37 – Gold has no impairment risk or counterparty risk, and making money vs. preserving wealth
- 00:48:01 – How personal experience vs. historical experience affects our investment decisions
- 00:57:35 – How Simon has maintained an outlier point of view over time
- 01:03:37 – Simon’s recommended books on financial history
For more explore the transcript of this episode.
Links from the Episode
- Going for Gold in a Dangerous World - Barron’s
- Self-Proclaimed Contrarian Investor Bashes Bitcoin Digital Gold Narrative - NewsBTC
- Swiss gold exports and their destinations by country (chart from OEC)
- Ford Foundation
- Carnegie
- The Great Depression
- Recep Tayyip Erdoğan, President of Turkey
- Jeff Bezos
- Bitcoin
- South Sea Bubble of 1720 in England
- ARK Innovation ETF (ARKK)
- Cyber Risk
- Lehman Brothers
- Volkswagen emissions scandal
- SGOL
- Paper Hands vs. Diamond Hands
- Quote from Warren Buffet - "The less prudence with which others conduct their affairs, greater the prudence with which we should conduct our own affairs.”
- Vanguard
- Texas Bullion Depository
Investment Terms
- GLD
- Treasury securities
- Bullion
- Subprime insurance
- Exchange traded fund (ETF)
- COMEX
- Fiat terms
- Purchasing power
- Continental currency
- Survival bias
- Debt repudiation
- Special Purpose Acquisition Company (SPAC)
- Counterparty
- Marginal demand
- Gold securities vs physical gold
- Credit default swaps
- Impairment
Books Recommended in This Episode
- A Short History of Financial Euphoria by John Kenneth Galbraith
- The Dying of Money: Lessons of the Great German and American Inflations by Jens O. Parsson
- When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany by Adam Fergusson
- The Fourth Turning: What the Cycles of History Tell Us About America's Next Rendezvous with Destiny by William Strauss
- The Lessons of History by Will Durant and Ariel Durant
- The Dao of Capital: Austrian Investing in a Distorted World by Mark Spitznagel
Key Takeaway
“The most worthwhile reading, I think, is history—financial history. You can read about gold, you can learn everything there is to know about gold; that's not what it's about. It's about understanding history. It's about understanding, “What do you need to solve for? What are the potential outcomes?” If you have sufficient imagination of what the potential outcomes are, you don't need anybody to explain to you what to do about it. You will figure it out yourself.” — Simon Mikhailovich
