Lau here.
You may be familiar with Achilles, the great warrior of Greek mythology who fought in the Trojan War. His mother dipped him in the River Styx as an infant to make him invulnerable. It worked, everywhere except the heel she held him by. For all his strength, an arrow to that one vulnerable spot was enough to kill him.
From my experience, investors are much the same.
Most of them can handle a recession, a market crash, a bank failure, even a war. What they can’t handle is watching something they own fall in price. Especially their “high-conviction” positions, where a few bad days can shake a thesis they were certain of a week earlier.
In short, patience is most investors’ Achilles’ heel.
Last week put that patience to the test for anyone holding precious metals.
Gold had its worst October since 2008, closing Friday at a one-year low, 30% below its January record. Silver fell below US$50 for the first time in almost a year. Mining stocks fell harder still.
Meanwhile, the stock market lost more than a trillion dollars on Friday alone, forcing investors to sell liquid assets like gold and silver to meet margin calls.
In other words, there were plenty of arrows flying. And after three years of being right about precious metals and mining stocks, plenty of investors took one in the heel and sold.
Now, should you be tempted to join them this week, I suggest you take a look at this chart first. It compares the start of this bull market in 2022 with where we are today.
The green line is 2022, the red line is today. Each starts at the high gold hit just before it began falling, and is measured in months from there.
I picked 2022 for a reason. That February, full-scale war broke out in Ukraine, and within two weeks gold had jumped above US$2,000 an ounce, a whisker from its all-time high. But then the war sent oil through the roof, with Brent crude approaching US$130 a barrel. Inflation hit 9%, and the Fed raised rates from near zero to 4% in nine months, its fastest tightening in forty years.
As a result, gold, the thing that was supposed to protect you from all that, fell for seven straight months. By late September 2022 it was down 22% from its peak. And the gold stocks, of course, fared even worse, with the big miners roughly cut in half.
If this sounds eerily familiar, look at where we are in 2026. Another war, this time in the Middle East, with far worse consequences for global energy markets. Oil back above US$100 a barrel. Inflation running hot again. And a Fed that has already raised rates once and, as of Friday, is expected to do it again next month.
Same four ingredients, and the same reaction from gold. Only this time the drop has gone further, 30% over nine months.
But look at what happened after the September 2022 low. That’s where the green line turned. From there, gold went from about US$1,600 to US$5,600, a gain of roughly 250%. Which means the people who sold at the bottom watched it more than triple without them.
Granted, there’s no guarantee of the same outcome today. After all, none of us has a crystal ball. But it’s worth keeping that historical context in mind before calling an end to the bull market, especially when the fundamental reasons for owning gold have only grown stronger since 2022.
Because if more than twenty years of doing this has taught me anything, it’s that the hardest part of a good decision is usually leaving it alone.
Anyway, I covered all this in more detail in Saturday’s essay. It includes an expanded version of the chart above, comparing this bull market with those of the 1970s and 2000s and showing what followed their big selloffs. I also look at what drove last week’s selling and who was buying. If you read one thing from me this week, make it that.
You’ll find it below, along with my other recent pieces and two paid-subscriber alerts covering precious metals, uranium and rare earths.
Gold Just Fell 30%. What Happened, and Why You Should Be Buying, Not Selling.
Gold fell to a one-year low yesterday. It closed at about US$3,900, down 30% from the record it set in January, and it was the worst October for gold since the financial crisis. Silver did even worse. It broke below US$50 for the first time in nearly a year and is now down 60% from its January peak.
Palantir's CEO Called the Iran War in 2024. He Named Two More.
In August 2024, eighteen months before the first Tomahawk hit Iran, Palantir CEO Alex Karp told the New York Times which wars America was going to fight.
From the Comments
One of the things I’ve come to appreciate most about writing here is the conversation that happens in the comments. Here are five recent ones that stood out, for different reasons. Each links back to the piece it appeared on, so you can click through if you’re interested in the context.
Thanks again to everyone who left a comment recently. I read all of them, even the ones I don’t get a chance to reply to individually. Over the coming days, I’ll try to catch up on the questions and the longer threads.
Regards,
Lau Vegys
And we appreciate and enjoy all your posts, Lau.
"there’s no guarantee of the same outcome today"... but it's within an infinitesimal distance to 100% that it will happen again. The universe hasn't changed - gold is truth and governments are corrupt. Merlin has not figured out alchemy at a cost less than mining and processing, so I am betting everything that gold will march higher.
And a second truth - those who invest on margin will get burned ONCE in their lives. Getting a margin call is no fun. I encourage everyone to avoid it.