This is a perfect environment for gold to take center stage. Fanatical debasement of moneyby all of the world’s central banks, super-low interest rates and gold mine operation and extractionissues(to a large extent related to the pandemic)should create a fertile ground for this most basic of all money and storesof value to reach its fair value, which we believe is literally multiples ofits current price. In recent months,goldhas gone up in price to some degree, but we think that it is one of the most undervalued investable assetsexisting today. There is nothing else that has its historical and fundamental characteristics,and we think that itis only beginning its inexorable, but 11impossibletotimeand placeboundaries around, uptrend.The fact that it is so under-ownedby institutional investors is astonishing to us in light of the obsessively inflationary policies being pursued by central banks around the world

The potential opportunity setis primarily in credit. Of course,equities thathave fallen 20%, 30%or50% in a very short time can provide substantial upside, but in periodslike this one, we prefer the additional downside protection of carefullyresearched debt. The Holy Grail(which presented itself in size in 2008)is to have credit positions in which we have so much confidence andwhich have so muchconvexity (asymmetric return profiles; much more upside than downside) that hedges are either not needed or can be relatively small.A great example wasauto finance unsecured debt in 2008, which at the bottom was trading at levels thatanticipated many more defaults than at any time in history.Such credit positions fell in priceto many points below our “scientificallyderived”bedrock-bottom prices, but we had a lot of confidence in the ultimate repayment of the debt

While it is near-universally believed that the global, particularly the American, economy was humming on all cylinders before being slugged flat by the virus, we believed that the pre-virusfinancialassets landscape was toward the high end of the riskiness scale. The record-high global leverage, the record-low government-manipulated interest rates, the $20 trillion of purchased bonds and stocks still on the books of the major central banks from the non-stop emergency policies pursued for 10 years after the emergency was over, presented a highly risky and unsound picture. It is on thatterrainthat the virus landed.