In a discussion examining the intersection of traditional finance and cutting-edge technology, top Wall Street strategist Tom Lee outlined a bold “black swan” scenario where the global financial system is disrupted not by the Federal Reserve, but by Elon Musk.
During a live recording of SoFi’s The Important Part podcast at WNYC, the Fundstrat co-founder and head of research shared his insights on the asset with animated expression, captivating the audience and eliciting smiles and laughter from fellow panelist Michael Lewis, author of The Big Short, and podcast host Liz Thomas, head of investment strategy at SoFi. Lee noted that gold is not only a “Lindy effect” asset but also a “demographic” story tied to nostalgia, in his view. Beyond that, he highlighted a “black swan” tail risk involving Musk, the world’s wealthiest individual, discovering a new asteroid and assuming the role of the global central banker.
Lee views gold as “probably a demographic story,” pointing out that Fundstrat conducts extensive demographic research and has found that “preferences skip a generation.” For example, RV (recreational vehicle) sales peak every 50 years. He noted that RV sales surged during the pandemic, with the last comparable boom occurring in the 1950s, the heyday of I Love Lucy.
“Kids don’t buy what their parents like,” he said, “but they buy what their grandparents like.” And gold, he concluded, was “really a major investment for baby boomers,” whereas Gen [missing text] turned to hedge funds and alternative assets.
Lee stated gold’s size is comparable to the stock market, supported by data showing gold’s total “above ground” [missing text], which aligns with the Magnificent 7’s [missing text].
“By the way,” he added, “all the gold in the world could fit in a single swimming pool.”
Lewis remarked that his palms were beginning to sweat “just imagining” this idea. “Saliva starts pooling in your mouth,” he said.
Lee continued, explaining gold is a “Lindy effect” asset: something accepted as a store of value because it has been agreed upon as such for centuries. What could disrupt this? That’s where Musk enters the picture.
Gold’s black swan scenarios
One key risk for gold relates to its above-ground supply.
“There’s a million times more gold underground than above ground today,” Lee estimated, gesturing to [missing text]. If gold becomes too expensive, he argued, it would create perverse incentives. “Like, the Magnificent 7 would literally enter the gold mining business, right? Because digging for gold might as well be more valuable than anything else.”
Another key risk, he added, is gold’s “extraterrestrial” origin, referencing its formation from [missing text]. This suggests space companies could discover more gold in space, he said. “[Missing text] might launch a mission to Mars and encounter a gold asteroid,” Lee told the audience. “And if Elon Musk… were to own all that gold, he would become the new central bank.”
When asked about synthetic gold, Lee agreed that was a third risk: alchemy.
Regardless, Lee noted, gold has likely “topped,” based on Fundstrat research. The firm analyzed 100 years of gold-to-stock market capitalization data and found it typically peaks at 150% before declining. Observing a 9% drop on January 30, Fundstrat identified only three prior instances of gold falling more than 9% in a single day—all marking peaks.
“So I don’t know, but if history is a guide, it’s probably topped,” he said.
Then Lewis shared how he profitably entered the gold trade through an old poker friend from New Orleans.
The old poker friend
“When I own it, I think I’m long fear,” Lewis said of the yellow metal. “It’s an Armageddon trade.”
Lewis revealed that despite advocating for passive index fund investing, he built a large gold position after a conversation with a former poker buddy turned fund manager. He lost contact with the friend for years before reconnecting while reporting The Big Short. Lewis recalled seeing his friend’s collection of ancient Roman coins.
“He showed me how emperors debased their currency over time, with silver content dwindling more and more. Then he made a compelling case for buying gold,” he remembered. “It was so persuasive. I don’t usually do that—I don’t buy gold; it’s irrational. But I couldn’t shake the idea.”
Finally, three years ago, Lewis said, he “bought a significant amount of gold.”
“And it’s just kept rising, rising, rising,” Lewis noted, adding he felt guilty and wasn’t advising others to follow suit, but he invested the profits back into his friend’s fund.
“What he’s doing—and he’s far more knowledgeable about this than I am—is buying gold mining stocks,” he added. “It’s a cheaper way to gain exposure to gold.”
Lewis cited the “unstable political climate” and widespread global anxiety as his main reasons for holding the metal.
“I don’t see any reason not to be afraid,” Lewis admitted. “And I think fear is a worthwhile thing to be long on right now.”