Exotics
Gold and crypto: the exotics, reviewed
Beyond the core wrappers sit the exotics: gold and crypto. They behave nothing like each other, and both reward a light touch. Used in small amounts they can sharpen a portfolio; overdone, they can sink one.
Gold: the crisis hedge
Gold pays no income and, over the long run, barely outpaces inflation. On a spreadsheet of average returns it looks pointless. Its value in Quidsmith is not its average, it is when it tends to perform. Gold often rises exactly when the stock market crashes and when inflation spikes, the moments your other assets are hurting most.
That is why a modest slice of gold, held as a fund (tax-free in an ISA, or CGT-exposed in a GIA), can keep you green in a bad year and reduce the odds of a forced sale. It is insurance, not a growth engine. Hold too much and you drag down your long-run return for protection you rarely need.
Coins, bars or a fund?
The Exotics tab offers gold three ways, all tracking the same price:
- A gold ETC (a fund traded like a share) is the cheapest to buy and sell and can sit in your Stocks & Shares ISA, tax-free. It costs a small yearly charge, 0.15% in the game. Outside an ISA a gain is subject to CGT.
- Sovereigns and Britannias are UK legal tender, so a gain on them is free of CGT even outside an ISA. The catch is the dealer's margin: about 6% over the gold price to buy and 2% under it to sell back, so a short hold loses money.
- Gold bars cost less over the gold price (about 3%, and 1% to sell), but a gain is taxable.
Investment gold carries no VAT in the UK. Coins and bars also need somewhere safe: a vault charges about 0.7% a year with insurance, while keeping them at home is free until a burglary, which in the game takes half of it, because contents insurance does not usually cover bullion. None of this is a recommendation to buy gold. It is how the game models the trade-offs.
Crypto: the high-stakes corner
Crypto is the most volatile asset in the game by a wide margin. It is GIA-only, so always exposed to capital gains tax, pays no income, and swings through boom years and multi-year "crypto winters". Worst of all, it carries a small annual chance of a ~90% collapse that can wipe out most of the position in a single turn.
The danger multiplies when crypto meets the rest of the game's mechanics. If an unexpected event forces a liquidation during a crypto winter, you crystallise a deep loss at the worst possible moment. An over-allocated position can end a run.
How much is sensible?
| Asset | Role | Sensible ceiling |
|---|---|---|
| Gold | Crash / inflation hedge | A small slice, held for insurance |
| Crypto | Speculative moonshot | Only what you can lose entirely |
Size these positions so that gold helps on your worst turn and crypto, if it collapses, is survivable. Keep your emergency fund in safe assets so a shock never forces you to sell an exotic at the bottom. A little gold is prudent; a little crypto is entertainment. Neither belongs at the core of a portfolio you are counting on to reach 100.