Capital Intensity Returns

In the first episode of 2026, George Cooper and Gerald Ashley examine the persistent “debasement trade”: fiat money weakening while physical assets surge. They revive the “Savoy Gold Dinner ratio,” a metric from the 1970s/80s created by gold mines fund manager Julian Baring.

In August 1971—days after Nixon closed the gold window—a comparable Savoy Grill dinner cost £5.67 per head. With gold at $40/oz (£16.66/oz at the fixed rate), one ounce bought roughly 3 dinners. At their recent meal on the 7th January: The bill came to £236.32 per head (with modest wine), with gold at $4,460/oz (~£3,303/oz), yielding 14 dinners per ounce—a 4.7× gain in gold’s purchasing power over 54 fiat years. Interestingly in wage terms, the meal’s burden barely budged: 1.4 days of average weekly earnings in 1971 (at £20 a week) vs. 1.6 days today (now at £736 a week). The Savoy has kept pace with labour costs, but gold has vastly outrun inflation as a store of value.

This reflects a wider rotation: investors favour scarce physical assets—industrial metals, fertilizers, shipping, energy—over easily copied digital ones. AI commoditises software moats (e.g., image generation displacing Adobe tools; potential chip-design replication), eroding advantages for asset-light firms. Gold supplants bonds as the prime safe haven amid fiscal stress.

Governments are increasingly close to Hyman Minsky’s “Ponzi stage,” with US debt interest topping $1 trillion yearly, driving money creation that inflates tangible-asset demand. But Bitcoin, despite debasement hype, is stalling - its digital replicability (via substitutes) contrasts with bullion’s scarcity. This episode highlights a return to capital-hungry physical realities over ephemeral software.

View the article on Gerald and George's dinner at the Savoy in The Times:

https://www.thetimes.com/business/companies-markets/article/dine-out-on-gold-how-an-ounce-will-now-buy-lunch-for-14-at-the-savoy-grill-qx8hpb8rh

This episodes book recommendations

Gerald
Does God Play Dice?: The New Mathematics of Chaos by Ian Stewart

George
Genghis Khan and the Making of the Modern World by Jack Weatherford