Insights on Owning Gold

In a recently published article in Advisor Perspectives, Robert Heubscher interviews First Eagle Investment’s Thomas Kertsos to gather the research analyst’s insights around owning the precious metal. Here are some highlights: Current trends in the gold market: “We see that the Fed communications about rate hikes and election outcomes continue to be significant drivers of the gold price in 2017, exactly as they were in 2016.” Why hasn’t the price of gold increased more since 2008 (given the high degree of “money printing”)?  Because, says Kertsos, real interest rates have increased over the past few years as there has been […]

Copper Better Hedge than Gold

While gold has been the popular inflation hedge over the past ten years, copper was a better bet according to a recent Bloomberg article. “While data show that broad community indexes provided the best bang for the buck during periods of rising costs in the U.S., the red metal stands out. According to the article, for every 1% annual increase in the consumer price index since 1992, copper rose by nearly 18% compared to 5.2% for gold (according to data compiled by Bloomberg). Copper, says Jodie Gunzberg of S&P Dow Jones Indices in a recent interview, is “more sensitive to […]

Gold and Stocks on Different Paths

The inverse relationship between gold and stocks has never been this pronounced, according to an article in this week’s MarketWatch. However, it also references analysts’ opinions that the two may soon “be poised to rise together as both can benefit from low yields.” Motley Fool’s Sean Williams recently wrote that according to FactSet data, the negative correlation between gold futures and the stock market recently hit minus 0.63 (a factor of minus 1.0 would indicate that the assets move in the completely opposite direction from each other). By comparison, the historic average correlation has been minus 0.06. The MarketWatch article […]

Is the Gold Hedge Really Just All Hype?

These days, gold looks particularly shiny to investors who are trying to mitigate risk in an uncertain global economy (so far this year, gold is up 29%). But an article in last week’s Wall Street Journal reports findings of two Harvard researchers who say the precious metal doesn’t deserve the hype. Professor Robert Barro and PhD student Sanjay Misra present new data showing that gold “moves independently from whatever the economy is doing.” The researchers argue that if gold was indeed a bona fide hedge, its price would “shoot up as economic growth and consumption plummet.” However, as the chart […]

Zweig: Gold Is Not All That Glitters

In the summer of 2015, Jason Zweig wrote an article for The Wall Street Journal in which he claims that investing in gold (which was trading at around $1,130 an ounce) was a “leap in the dark.” In a WSJ blog earlier this month, he writes “Gold is up 20% since I ridiculed it; the U.S. stock market, measured by the S&P 500 with dividends reinvested, is up less than 1%.” But that’s not the end of the story. The fact that the price of gold has risen, says Zweig, doesn’t necessarily negate his original position. He argues that an […]

George Soros is Feeding the Bear

In recent years, 85-year-old billionaire George Soros hasn’t done much investing of his own. He has instead focused on public philanthropy and public policy (and is a large contributor to the super PAC backing Hillary Clinton). That changed earlier this year when he began spending more time directing trades at his firm Soros Fund Management LLC, which manages $30 billion for Mr. Soros and his family. Some close to him say that his resurfacing has been triggered by worry about the global economy and subsequent market shifts. This maudlin view has darkened even further over the last 6 months due […]

Soros Beefs Up Hedge against the S&P 500

Soros Fund Management has doubled its put option (the right to sell shares at a specified price) on the SPDR S&P 500 exchange-traded fun (which tracks the benchmark U.S. index), according to an article this week on CNBC. The asset management company founded by billionaire George Soros said it owned an option to sell 2.1 million of the index shares in the first quarter of 2016 (up from an option for 1 million shares held in the fourth quarter of 2015). Since the SEC doesn’t require a fund to disclose all of its positions, it’s unclear whether the fund’s move […]

4 Options to Beat Inflation in the Future

A recent piece in Forbes offers 4 suggestions for beating inflation. After noting that “the present 0% rate [of inflation] blends an upward march of 2% in the cost of services with a collapse in the price of oil,” the article observes that “if commodities rebound over several years, 4% inflation could surface.” To protect against this risk, the article explores 4 options: Treasury Inflation-Protected Securities (TIPS): These offer real protection for the principal invested, but a very low rate of return. Funds that roll over maturing bonds offer more liquidity, but do not provide the same guaranteed protection. Gold: […]

Ritholtz On What To Learn From The Gold Bust

After a huge decade-long runup, gold has tumbled in recent years, pounding portfolios of many gold bugs. “The mania for gold, like all manias preceding this one, is ending badly,” Barry Ritholtz of FusionIQ and The Big Picture blog explains in a Washington Post column. “And while gold may yet establish a comeback, much of the damage has already been wrought.” Ritholtz says the gold bust is a good learning opportunity for investors, however, as it provides several broader lessons. Among them: Beware the narrative (investors get attached to powerful stories even after the facts change); don’t ignore history (no […]

Faber: Big Buying Opportunity In Gold

While gold has tumbled in the past couple days, Marc Faber of the Gloom Boom & Doom Report says he thinks “the bull market in gold is not completed,” and that a major low will occur for gold in the next couple weeks. Faber tells Bloomberg that he thinks gold fundamentals are still intact, and that the recent breakdown “will offer an excellent buying opportunity”. He says traders would be wise to buy gold now because it is oversold, but that long-term investors should wait a bit longer to see if prices fall more after a bounce-back. Faber also says that […]

Eveillard: Gold Still Looks Good

Top value investor Jean-Marie Eveillard says that despite its big gains in recent years, gold “cannot be overvalued” in the current environment. “We have, so far, a minor correction,” Eveillard tells King World News. “Had gold become too popular at close to $1,800? I don’t think so, but the thing about gold, you always have the short-term players, usually with leverage, in the futures market.” Eveillard goes on to say that many haven’t jumped on the gold train — a good sign. “You’ve had the hedge funds over the past few years (in gold) because it had been going up,” […]