Original Title: "Revisiting the Matter of Gold: A Character Analogy That Encompasses All Narratives Behind Gold"

Written by: Xiao Xiaopao

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

I have always felt that there is a character in film and television that can encapsulate all the narratives behind gold. This character should have a sense of history, a tumultuous fate, dramatic ups and downs, a complex personality, and multiple reversals, while also being woven throughout the long narrative of the entire drama.

So, who does it resemble? This thought lingered in my mind for a long time, and I never found a character that fit perfectly. Until this weekend, when I had some free time and decided to rewatch "Game of Thrones," I suddenly realized—

Lord Varys, the Spider, is an excellent analogy!

01

The core character of Varys is: he claims to serve the "realm," rather than any specific king or family. His power is rooted in information, secrets, and a network operating in the shadows, rather than overt 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 shifts and order disruptions, 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 character? Multifaceted, full of reversals, with a strong sense of the times, constantly changing its "role" and position in different macro stages.

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

It has been downgraded from a protagonist to a key supporting role: not the king (the dollar), nor the powerful lords (tech stocks/risk assets), but that ancient, ever-present intelligence chief, whose true loyalty is not to any king, but to the continuity and stability of the "realm" itself—namely, the credit foundation of the global financial system.

Usually staying in the corner, with few camera shots, but whenever a critical plot point arises, it can suddenly reappear and steal the scene—during times of risk aversion, when combating inflation, when the dollar is unstable, during geopolitical conflicts, when market faith in "central bank omnipotence" fluctuates, during central banks' covert buying and selling, and regarding the concept of "psychological anchors" itself—gold carries a multitude of narrative labels, each of which the market takes turns amplifying at different stages.

If we understand gold as such a character, we will find that its role in the macro narrative is not merely a single risk-hedging tool, nor a simple inflation-hedging asset, but plays a crucial role that is sometimes hidden and sometimes prominent in the deeper storyline of "credit—order—confidence."

If gold is such a character, then understanding it is certainly more important than trading it.

02

This analogy is indeed useful. Rethinking gold through the chubby and wise face of Varys seems to make it easier.

Now, let’s have Lord Varys star in the historical drama of gold since 1971:

Act One (1971–1980, 10-Year Bull Market): The Realm in Turmoil, Coming to the Forefront

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

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

In 1974, inflation began to spread like wildfire in King's Landing, and the price of gold surged to $680 by early 1980.

Act Two (1980–2002, 20-Year Bear Market): Strongman Rule, Retreating to the Shadows

In 1980, Volcker became the chairman of the Federal Reserve, and the Lannister Volcker quickly extinguished the inflation wildfire with iron-fisted policies (significant interest rate hikes), restoring the authority of the king (the dollar). In the face of high interest rates, the "non-yielding ancient asset" gold became less attractive, leading to a three-year bear market, with the price of gold falling from $680 to $320. In 1997, the realm experienced a long period of peace and prosperity (the tech stock bull market), and the wealth and power of the lords (risk assets) surged dramatically.

In a kingdom with strong power and order, the role of the intelligence chief Varys (gold) was greatly diminished. When everyone believed in the king's omnipotence, no one needed Varys to assess the situation. He returned to the cellar and secret passages, almost forgotten.

By 2002, the price of gold had dropped to $260, marking a long "gold is dead" period of twenty years.

Act Three (2003–2012, 10-Year Bull Market): Internal Strife in the Realm, The Last Refuge

Starting in 2003, a decade of low interest rates and low inflation allowed the realm 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.

Varys's presence began to resurface, and the price of gold entered a ten-year bull market. As the foundation of the realm's credit wavered, investors seeking safety and central banks starting to accumulate gold—more and more people began to rely on Varys's information to protect themselves. At the peak of the liquidity crisis in 2008, some fund managers even used gold as a last resort for settlement. A few years later, when the U.S. imposed SWIFT sanctions, Iran began using gold in its import and export business—in the chaos of King's Landing, only Varys's network could still convey reliable information and provide refuge.

During this ten-year bull market, the price of gold rose from $330 per ounce to $1,760.

Act Four (2013–2018, 5-Year Volatility): A Brief Respite, Watching the Changes

After the crisis, central banks around the world used unprecedented measures (QE) to stabilize the situation. People once again developed the illusion of "central bank omnipotence," believing that the new power structure had solidified. The gold market experienced significant volatility, dropping from $1,650 to $1,060 and then rising to $1,350.

Varys became cautious again. He saw the fragility of the new order, but the timing was not yet right. He maintained his presence in the court while avoiding any conspicuous actions. The price of gold fluctuated within a range, and Varys watched the changes.

Act Five (2019–Present): Multiple Kings, Under Currents, A Double-Edged Game

In 2019, the price of gold rose from $1,300 to $1,900, then continued to fluctuate.

This fluctuation continued until early 2024, as the story entered its final chapter. The realm no longer had a single center; the Dragon Queen of the Eastern Continent (the rise of China), geopolitical conflicts in the North, and multiple forces emerged. The authority of the king (the dollar) faced dual challenges from within (fiscal deficits) and without (de-dollarization). The understanding of the king began to change dramatically, and various lords started seeking new objects of loyalty. Gold surged from $2,000 to $4,000.

Varys's intelligence network was no longer just about gathering information; it began to secretly transfer assets and establish parallel alliances. Central banks around the world purchased large amounts of gold, and for the first time, global central bank gold holdings exceeded U.S. Treasury bonds—hidden gold reserves, a disintegrating global order, an irresponsible leader, and the weaponization of strategic resources—gold prices began to decouple from traditional indicators (real interest rates, the dollar). Varys was secretly laying the groundwork in the shadows.

The current rise in gold prices perfectly embodies Varys's ultimate philosophy—caring not about the short-term strength of the current king (the dollar), but about the potential collapse risks that the entire "realm" (global financial system) may face in the future due to power struggles. Preparing for the arrival of that "winter," for a future that may not have a single king, establishing a final refuge and value consensus.

That's enough for now; I can't write anymore.

So, what does Varys have to do with ordinary people?

From 1971 to today, gold has repeatedly switched roles in the spotlight and shadows, with macro narratives cycling through, turning into an electric fan. But as long as humanity continues to doubt power and question credit, there will always be someone wanting to stash a few pieces of yellow metal under the bed.

Therefore, in a financial world that is always in turmoil and occasionally reverses, you cannot become rich because of it, nor can you gain freedom because of it. But leaving a small portion of your position for Varys (as Ray Dalio suggests, about 10%) should not be a mistake.

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