If all narratives behind gold are treated as character analogies

Original Title: “Re-examining the Matter of Gold: A Role Analogy that Encapsulates All Narratives Behind Gold”

Written by: Xiao Xiaopao

There are many people in the world who are hard to fully understand: rich in inner thoughts, unpredictable, multifaceted, and complex. For example, my mom. If assets in the financial world can be likened to people, gold should belong to this category.

I have always felt that there is a film and television character that can encapsulate all the narratives behind gold. They should have a sense of history, experience ups and downs, possess a complex personality with multiple reversals, and be able to weave throughout the long narrative of the entire epic.

So who does it really resemble? This thought has been in my mind for a long time, and I haven't found a character that fits perfectly. Until this weekend, when I had some free time and decided to rewatch “Game of Thrones”, I suddenly realized—

The Spider Lord Varys is an excellent analogy!

01

The core character of Varys is: he claims to serve the “realm” rather than a specific king or family. His power is rooted in information, secrets, and networks operating in the shadows, rather than direct military or economic strength; his influence fluctuates with the stability of the “realm”—when the realm is calm, he can retreat into the background as if he has disappeared; but at critical moments of power transition and order disruption, he can suddenly become a key variable that influences the situation. He has been both a guardian of order and, for decades, ignored and even underestimated.

Isn't gold also such a complex role? Multifaceted, reversible, with a strong sense of the times, constantly changing its “part” and position in different macro stages.

Since the decoupling of the US dollar from gold in 1971, the world has entered the grand era of “fiat currency + floating exchange rates.” The role of gold in this entire drama has become difficult to define:

It has been downgraded from the main character to a key supporting role: not the king (USD), nor the powerful and wealthy Lords (tech stocks/risk assets), but that ancient, never fully out-of-the-game intelligence chief, whose true allegiance is not to any reigning king, but to the continuity and stability of the “kingdom itself”—that is, the credit foundation of the global financial system.

Usually staying in the corner, not much in the spotlight, but whenever a critical moment arises, it always manages to suddenly return and steal the scene for a while—during times of risk aversion, when combating inflation, when the dollar is unstable, during geopolitical conflicts, when the market's faith in “central bank omnipotence” shifts, during the secretive accumulation and reduction of holdings by various central banks, and regarding the concept of “psychological anchors” itself—gold carries a heap of narrative labels, each of which is magnified by the market at different stages.

If we understand gold as a persona like this, we will find that its role in the macro narrative is not merely that of a safe-haven asset or a simple hedge against inflation, but rather it plays a crucial, albeit sometimes hidden, role in the deeper thread of “credit-order-confidence” during critical moments.

If gold were such a persona, then understanding it would certainly be more important than trading it.

02

This analogy is really useful. Rethinking gold with the plump and wise face of Professor Walis seems to have become easier.

Now let's invite Professor Varis to perform the historical drama of gold since 1971:

Act One (1971–1980, 10-Year Bull Market): Kingdom in Turmoil, Coming to the Fore

On August 15, 1971, Nixon's shock occurred, the Bretton Woods system collapsed, and the kingdom fell into unprecedented chaos.

When the old order collapsed, the formerly behind-the-scenes Valyrian (gold) suddenly became crucial. The value of currency lost the backing of the Iron Throne, and the price of gold became a reliable indicator of the true level of chaos in the kingdoms. People turned to Valyrian's intelligence reports, and the price of gold quickly rose from $35 to $180 by the end of 1974.

In 1974, the wildfire of inflation began to spread in King's Landing, and the price of gold soared to 680 dollars in early 1980.

Act Two (1980–2002, 20-Year Bear Market): Strongman Iron Fist, Retreating Behind the Scenes

In 1980, Volcker became the Chairman of the Federal Reserve, and Lannister Volcker quickly extinguished the wildfire of inflation with his iron-fisted policies (massive interest rate hikes), restoring the authority of the king (the dollar). Faced with high interest rates, the “non-yielding ancient asset” gold became less attractive, leading to a three-year bear market where the gold price plummeted from $680 to $320. In 1997, the kingdom welcomed a long period of peace and prosperity (the tech stock bull market), with the wealth and power of the great lords (risk assets) rapidly expanding.

In a kingdom with great power and order, the role of the Master of Whisperers, Varys (the Gold), has been significantly diminished. When everyone believes that the king's hand is omnipotent, no one needs Varys to assess the situation anymore. He has retreated to the cellars and secret passages, almost forgotten by all.

In 2002, gold prices fell back to $260, marking a twenty-year period of “gold is dead.”

Act Three (2003–2012, 10-Year Bull Market): Domestic Chaos in the Kingdom, Final Sanctuary

Starting from 2003, a decade of low interest rates and low inflation allowed the kingdom to maintain a facade of prosperity through borrowing and financial magic (low interest rates, credit expansion), while internal decay became increasingly severe, ultimately culminating in the financial tsunami of 2008. The king's credit (sovereign credit) faced unprecedented scrutiny.

The presence of Varis is starting to resurface, and gold prices have entered a decade-long bull market. The foundation of kingdom credit is shaking, and investors seeking safe havens, as well as central banks beginning to increase their gold holdings—more and more people are starting to rely on Varis's information to protect themselves. At the peak of the liquidity crisis in 2008, some fund managers even used gold as a last means of settlement. A few years later, after the U.S. imposed SWIFT sanctions, Iran began using gold in its import and export business—in the chaos of domination, only Varis's network could still convey reliable information and provide shelter.

In a decade-long bull market, the gold price rose from 330 USD per ounce to 1760 USD.

Act IV (2013–2018, 5 years of volatility): A brief respite, observing the changes.

After the crisis, central banks around the world used unprecedented measures (QE) to temporarily stabilize the situation. People once again developed the illusion of “central banks being all-powerful,” believing that the new power structure had been solidified. The gold market has been highly volatile, dropping from $1650 to $1060 and then rising to $1350.

Varys became cautious again. He saw the fragility of the new order, but the time was not yet ripe. He maintained a presence in the court while avoiding any conspicuous actions. With gold prices fluctuating within a range, Varys watched the changes.

Act Five (2019 - Present): Multiple Kings in Power, Undercurrents Flowing, Double-Faced Game

In 2019, gold prices rose from 1300 dollars to 1900 dollars, and then continued to fluctuate.

The story continues to fluctuate until early 2024, entering its final chapter. The kingdom no longer has a single center, with the Dragon Queen of the Eastern Continent (the rise of China) and geopolitical conflicts in the North, multiple forces are emerging. The authority of the King (the US dollar) faces dual challenges from within (fiscal deficit) and outside (de-dollarization). The understanding of the King begins to shake things up, and various lords start looking for new objects of loyalty. Gold rises from 2000 all the way to 4000.

Varis's intelligence network is no longer just about gathering information, but has begun to secretly transfer assets and establish parallel alliances. Central banks around the world are purchasing large amounts of gold, and for the first time, global central bank gold holdings have exceeded U.S. Treasury bonds—covert gold reserves, a disintegrating global order, a superpower no longer taking responsibility, and the weaponization of strategic resources—gold prices are beginning to decouple from traditional indicators (real interest rates, the dollar). Varis is secretly laying out plans in the shadows.

The current rise in gold prices perfectly embodies the ultimate philosophy of Varis—it's not about the short-term strength of the current king (the dollar), but rather the risk of collapse that the entire “kingdom” (global financial system) may face in the future due to power struggles. Establishing a final refuge and value consensus for the arrival of that “winter,” for a future that may not have a singular king.

Alright, let's stop here, I can't write anymore.

What does Walis have to do with us ordinary people?

From 1971 to today, gold has repeatedly switched roles on and off stage, with macro narratives turning into a cycle, now resembling an electric fan. But as long as humans continue to doubt power and question credit, there will always be someone wanting to stash a few pieces of yellow metal under the bed.

So in a financial world that is constantly in turmoil and occasionally reverses, you cannot become rich because of it, nor can you achieve freedom because of it. However, leaving a small portion of your position for Varis (as teacher Dalio suggests, 10%) should not be a mistake.