Thursday, February 18, 2010
In this item over at Barry's Big Picture blog, Paul Brodsky and Lee Quaintance of QB Partners explain why the world's most enduring ongoing bull market is not understood by the mainstream investment community.
Investing in gold is tough because it challenges the investor to come to terms with the faults of his or her government, and then to act upon them. It requires the admission that there is risk in holding cash. This is counter-intuitive to this generation’s vintage of financial asset investor accustomed to thirty years of a credit build-up alongside declining interest rates.The whole thing is worth reading as it goes a long way in explaining why, despite its wonderful record over the last decade, most investment advisers still have no use for the metal. As for top-ticking the market, keep an eye on Money Magazine because, in my view, you'll know when it's time to get sell your gold when Money Magazine says that you should buy it.
There is certainly much more chatter in the press than in years past surrounding gold, and there certainly is more US retail investment (through ETFs) than there has been. That has been reflected to some degree in its rising price, no doubt. An ounce of gold has risen from about $250 in 1999 to current levels, having moved higher in each year and making it one of the best performing assets over the last ten years. So then, is a person that pays $1,100 an ounce today top-ticking the market by entering a crowded trade that has little upside and great downside? We don’t think so.
On a related note, in case I don't get around to mentioning this in a separate post, the fact that Fidelity Investments sent out a commentary last week that was quite bullish on the yellow metal is another clear sign that the investment industry is starting to come around on the whole idea of making gold an important part of an investment portfolio.
In Gold: Will the Run Continue?, I was half-expecting to read another Money Magazine-style hit job, but they had a chart from Kitco and they talked about the gold ETFs and everything!