Wednesday, June 30, 2010

How much gold is enough for you?

Frank Talk recently had some interesting comments on the gold as an investment.  He started out by noting that the New York Times recently discussed gold as an investment, and discussing the possibility that this is a worthwhile contrary indicator.
The New York Times dedicated a chunk of last Sunday’s paper to gold as a mainstream investment. In other words, gold is now legit -- no longer can it be dismissed as the asset of choice for fringe types with a cellar full of canned goods and a stash of bullion buried in the backyard.

He's not so sure that's the case now though--at least not yet. 
From a recent research note by UBS: “The sense that some investors only trust a gold holding if they can see it and touch it is a clear indication that some investors are buying gold as a hedge against a full-scale financial crisis and currency debasement.”

In a sense, it's the same argument I hear from my brother.  Real estate is "real," but who knows what stocks (or bonds, dollars, etc.) are really worth.

All in all, I agree with much of what he has to say, but perhaps not with the following:
Some extreme gold bulls are urging investors to move half or even more of their portfolio into gold – we are not in that camp. We consistently suggest that investors consider a maximum 10 percent allocation to gold-related assets – half in bullion or bullion ETFs and the other half in gold stocks or a good gold fund – and that they rebalance each year to capture the swings.

Personally, I am weighted closer to 50% in gold, silver, and related equities.  On the other hand, my income is 100% in dollars, and that is what I'm trying to hedge against.

[ad]

No comments:

Post a Comment