When To Buy Gold

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Dear investor,

There’s an old iron rule on Wall Street: retail investors rarely lead a trend - they arrive just as the party ends.

And once again, gold is proving the rule right.

If you’ve spent any time on social media lately, you’ve probably seen the headlines: gold has hit an all-time high. The explanations are endless - inflation fears, central bank buying, geopolitical tensions - enough material to fill a book. But none of that really helps you decide what to do next.

If you’re thinking about buying or selling gold, what truly matters is understanding when the odds are in your favor.

Gold can’t be valued the way you’d analyze a stock - it doesn’t generate cash flow or earnings. But there is another way to think about its “fair value”. It’s a simple, practical approach - and it’s worked reliably for me over the years.

My buying decision depends on the All-In Sustaining Cost (AISC) which is the gold industry’s key measure of how much it truly costs to produce one ounce of gold and keep a mine running over time.

In simple terms, AISC represents the total ongoing cost required to sustain current production levels.

That includes the capital needed to maintain equipment, replace worn-out machinery, and develop new parts of the mine. It also covers corporate overhead, environmental management, and reclamation obligations - all the things that ensure production can continue sustainably.

The AISC number is usually reported on a “per ounce” basis. So if a mining company says its AISC is $1,400 per ounce, that means it costs the company about $1,400 to produce and sustain every ounce of gold it sells.

Therefore the logical move would be to buy physical gold when its price is near its global production cost.

Why?

Because the production cost acts as a natural floor for the gold price over time.When prices drop too close to (or below) miners’ all-in sustaining costs (AISC), supply tightens - which tends to stabilize or push prices back up.

Gold rarely stays long below the global average cost of production - it’s economically unsustainable because many mines become unprofitable.

Their production slows and supply drops.

See it as value investing, but for gold. For stocks, you buy below intrinsic value. For gold, the production cost is a proxy for intrinsic value.

When you look at the last decade:

| Year | Avg. Gold Price | Est. Global AISC |

| ---------- | -------------------| -------------------- |

| 2015 | $1,150 | $1,050

| 2018 | $1,250 | $950

| 2020 | $1,770 | $1,050

| 2023 | $1,940 | $1,250

| 2025 | $4,000 | $1,500

Each time gold got near its AISC, it marked a multi-year buying opportunity.

Inflation, energy, and wages all push AISC up, therefore the “floor” also rises - gold’s cost curve trends upward long-term.

Therefore accumulating physical gold when the market price approaches or dips near global production cost is a sound, contrarian, and historically profitable strategy.

It’s essentially:

• Low downside (economic floor near cost)

• Long-term upside (as costs and inflation rise)

You’re buying an inflation-anchored asset near its replacement cost - the commodity equivalent of buying a quality business near book value.

Use this framework in case you want to add gold to your portfolio in the future.

Until the next issue.

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Disclaimer: This analysis is not advice to buy or sell this or any stock; it is just pointing out an objective observation of unique patterns that developed from my research. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice.

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