With the very concept of privacy under threat in the 2020s, it’s no surprise that it’s a word you’ll hear us mention a lot. We already focus on private equity, private debt and private placement arbitrage. There’s something else I’d like to add to that list – private money.

There are two main drivers for this – one is the relentless debasement of every fiat currency in the world through money printing and deliberatley induced inflation. Don’t believe a word of all this BS about ‘Putin’s inflation’. The Federal Reserve employs hundreds of Harvard MBAs but it seems not one of them realized that if you close down the economy for two years, kill off supply chains and at the same time print up trillions of new dollars, when it all opens up again you are going to have lots more money chasing fewer goods and services. A 10 year old could see that the result would be 40 year highs in inflation.

The second driver is that we live in an increasingly digitized world and an increasingly monitored and controlled world. China shows what happens when this technology is taken to extremes to serve an authoritarian state. The pandemic should have taught you that Western democracies are only a stone’s throw behind the Peoples Republic. Remember Mad Mark Drakeford using number plate recognition to fine people for daring to cross the Severn Bridge and leave Wales? Or President Xi’s friend Justin Trudeau blocking people’s bank accounts and ordering the police to go after anyone making a donation to the Canadian truckers?

As I repeat ad nauseam, the main purpose of building wealth is to give you choices. You can’t have choices without access to uncontrolled money. Central bank digital currencies are as inevitable as the death of physical cash, almost certainly by the end of this decade. The masses will accept the bribe of $100 or £100 to open an account with the central bank, then they’ll really learn what state control is all about.

When I study the profile of our 700 or so members, it’s clear that they are in the top 1% of society. Many are entrepreneurs, some are leading professionals in their field. They share one trait. They didn’t get to that position by doing what everybody else does. They looked at the ways of the world and charted their own path to success. They think for themselves rather than following the crowd.

It’s not an easy road to hoe, and it can lead to tension with family and friends who don’t keep up with their trajectory. They tend to be independent, some would call them mavericks, for me it led to the moniker of Renegade Investor. I have no problem with that name, because it’s clear that even so called Western democracies are no longer defenders of freedom. As an aside, I’m intrigued by Rishi Sunak’s screeching U-turn on attending COP27. Following the treatment of Liz Truss and the strange appointment of Jeremy Hunt as chancellor, my conclusion is that even the UK Prime Minister is not a sovereign individual. Who forced him to change his mind? King Charles? Klaus the puppeteer?

Enough already. Let me climb down from my soap box and talk about practicalities. What do I mean when I refer to private money? There are two main types, gold and bitcoin. I’ll leave cryptos for another day and talk about the gleaming, analogue, timeless thing of beauty that is gold bullion.  There are several ways in which gold can play a part in your portfolio. First, it’s a store of value to maintain your purchasing power – the weaker fiat currencies get the more of them it takes to buy an ounce of gold. Second, you can speculate on the price and even play currencies off against each other because gold performs differently depending on the currency you use to buy and sell it. You will always see the price quoted in dollars but if you look at the price action of gold in sterling it’s been on a steady climb from £700 an ounce in 2014 to around £1575 today. So it’s up more than 100% in 8 years, over a 12% pr annum return.

Third, if you want to leverage the gold price you can invest in the miners or in royalty companies that fund the development of gold mines in return for ongoing revenues when they start production. Miners come with a risk warning because their share prices are volatile so do your research and be careful how much of your portfolio you allocate to them.

I avoid paper gold in ETFs because the whole point of owning gold for me is security so I only own it in two ways. I either take physical delivery of coins, my personal favourite is gold Britannias   because they are legal tender and won’t be subject to capital gains tax when you sell them. The other is allocated gold which you can buy in any amount of money and have it stored in your name in vaults around the world.

Many people look back fondly on the monetary system as it was before August 1971 when you could swap 35 dollars for an ounce of gold in Fort Knox. As Nixon started printing dollars to fund the Vietnam war he abandoned fiscal discipline and we moved from the gold standard to the dollar standard. Half a century later every major economy has debts that can never be repaid and interest payments that are becoming one of the biggest line items on the national budget. That’s why the recent rise in bond yields has been so painful in lifting the cost of government debt even further.

There are those who feel that we might be heading into an environment where gold could make a comeback as a means of creating a trusted multinational currency. Joe Biden’s kneejerk reaction to the Ukraine war was to weaponize the international payments system and prevent Russian banks using the Swift settlements platform. China will have been watching events with interest while the Middle East has ignored Biden’s please and started cutting rather than increasing oil supplies. It smacks of a growing split between the West and the East in everything from energy sources to the internet. So why not an eastern payments system to replace dependence on Swift? And why not a new gold backed currency to remove the dominance of the mighty greenback?

In a recent Money Week article our good friend Dominic Frisby made a credible case for a new currency at least partially backed by gold. In order for this to fly the architects of the currency would need plenty of the yellow metal sitting in their vaults. As a basis of comparison America declares 8,100 tonnes of gold. Between 2006 and 2020 Russia quintupled its holdings to 2,200 tonnes and continues to accumulate. China’s official reserves are just under 2,000 tonnes but this figure I a complete joke. Since the year 2000 China has mined nearly 7,000 tonnes of gold and has laws forbidding its export. It’s also been acquiring resources across Africa and South America linked to its Belt & Road project for which no figures are available. Another 22,000 tonnes has entered China through the Shanghai gold exchange since 2008 and when you add in privately held gold, Frisby suggests that China has a total of over 32,000 tonnes of gold, four times what Uncle Sam holds.

Why does China want to keep this secret? Because to declare this level of reserves would not only send the gold price soaring to where it really should have been for a long time. It would also increase the value of the yuan against the dollar and devalue the $3 trillion of dollar reserves it holds. Needless to say it has been de-dollarising for some time and is likely to be accelerating that policy after the events of 2022.

If you look at the body language between those two great dictators of the modern age, Xi and Putin, it’s clear that the relationship falls well short of total trust. If they are united in wanting to wage financial war on the west, perhaps a digital yuan backed by gold could be the perfect vehicle? If such a chain of events was to happen, the impact on the value of gold could be exponential. It would be really bad for the dollar, which is currently so strong that it is causing real pain to countries with dollar based debts, especially emerging markets. They might not need much persuading to turn eastwards for future financing, further hastening the demise of the American Empire.

Is this all the daydream of demented gold bugs? Perhaps. But I already have enough reasons to hold gold to preserve wealth in this Age of Uncertainty. The price action that such development might trigger would simply be the icing on the cake.

Wealth means choice. Choice requires independence. Independence needs privacy. Including private money, for which nothing compares to the 5,000 year track record of good old gold.

I’ll see you next time.