In a recent dialogue exploring the collision of traditional finance and future technology, a top Wall Street strategist, Tom Lee, outlined a bold "black swan" scenario: the global financial system could be upended by Elon Musk rather than the Federal Reserve.
As the co-founder and head of research at Fundstrat, Tom Lee offered profound insights into gold as an asset. He believes gold not only possesses the "Lindy effect"—meaning its continued existence suggests longer future longevity—but also carries significant "demographic" characteristics. Furthermore, he pointed to an extreme tail risk: the world's wealthiest individual, Elon Musk, might discover a new asteroid rich in gold, effectively transforming him into the world's central bank.
Tom Lee suggests that gold's popularity is largely driven by demographics. Fundstrat's research found that investment preferences often skip a generation. For example, recreational vehicle (RV) sales tend to peak every 50 years, with the last strong period occurring in the 1950s. "He summarized that children typically dislike what their parents prefer but gravitate towards what their grandparents favored." Gold was a key investment for the Baby Boomer generation, while Generation X shifted towards hedge funds and alternative investments.
Currently, the market size of gold is comparable to the stock market. Data shows the total value of all gold ever mined is between $29 trillion and $34 trillion, while the combined market capitalization of the U.S. stock market's "Magnificent Seven" tech giants is approximately $21 trillion. Tom Lee humorously added, "Incidentally, all the gold in the world would just about fill an Olympic-sized swimming pool."
Black Swan Scenario Tom Lee highlighted a core risk for gold: changes in extraction costs and incentives. He estimates that the amount of gold still underground is a million times greater than what has been mined, though most is currently inaccessible. If the price of gold becomes excessively high, it could create distorted incentives, potentially even leading tech giants to directly enter the mining industry, as digging for gold might become more profitable than any other business.
Another key risk originates from space. The origin of gold is linked to meteorite impacts on Earth, implying that space exploration companies could discover more gold in space. Tom Lee told the audience, "SpaceX might execute a Mars mission and collide with a gold-rich asteroid. If Musk were to control that gold, he would become the new central bank."
However, according to Fundstrat's research, the price of gold may have already peaked. Historical data indicates that when gold's market value reaches 150% of the stock market's value, a correction typically follows. On January 30th, the gold price fell by 9%; historically, there have only been three instances of a single-day drop exceeding 9%, and each of those marked a price top.
The "Big Short" Fear Trade Michael Lewis, author of "The Big Short," revealed at the event that, through a connection with an established fund manager friend, he also holds a significant gold position. "When I own gold, I think I'm long fear," Lewis said. "It's a trade on 'the end of the world'." Although he has long advocated for passive index fund investing, three years ago he purchased a substantial amount of gold due to concerns about global currency devaluation and political instability.
Lewis mentioned that his friend showed him historical examples of how Roman emperors debased their currency by reducing the silver content in coins, which strongly convinced him. "I see the current political situation as very unstable," Lewis admitted, stating that due to global anxieties, he does not plan to reduce his holdings. "I don't think being 'long fear' is a bad thing right now."
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