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 […]