Posts Tagged Gold

CR Capital has been openly conflicted about our position on gold. Here´s why? Because the story is so mixed. Gold is part speculative metal like any other (when is the last time anyone was passionate about the price of thulium) and part back-stopper to hard currencies, especially the dollar. Mainstream professional investors have generally ignored gold the last decades but the financial crisis has renewed the profile of gold, which used to be a love affair for crackpots. Today, gold is effectively seen as the alternative form of legitimacy if hard currency become illegitimate (not a stretch these days). Professional investors are now watching. It is interesting to note that an increasing number of funds hold gold stocks in their top ten. CR Capital is still coy on gold but we acknowledge it´s new status in a more insecure financial marketplace. Some clients insists on using gold as an alternative currency to hard currencies.

The term gold bug is a (sometimes pejorative) term used to describe investors who are very bullish on buying the commodity gold (XAU – ISO 4217).The term was popularized in the 1896 US Presidential Election, when William McKinley supporters took to wearing gold lapel pins, gold neckties, and gold headbands in a demonstration of support for gold against the “silver menace”, though the term’s original use may have been in Edgar Allan Poe’s 1843 story “The Gold-Bug,” about a cryptographic treasure map.

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The Controversial Asset

It’s a quiet Friday morning in Buenos Aires. The markets are calm, the headlines are boring and it feels like the work day will end early. But my phone has been ringing and my email box binging with inquiries about Gold. More of our investors have gold positions than I probably realized and they are not only happy with the performance but are now believers in Gold as a long term investment and want to know why CR Capital Advisors is not.

Money can be made in anything. There are profits in derivatives, in commodities, riding yield curves on bonds, in penny stocks, in whatever. We simply believe that the most predictable way to manage volatility and truly invest by cost averaging into stocks that are at the very center of faster growing economies is the safest way to beat inflation and appreciate capital. We also believe that it is wise to diversify your currency exposure in as many ways as possible. Part of our approach is to be flexible with different clients because investors have different needs and attitudes towards investing. In short, if you do buy gold at least buy it in the manner that we recommend you buy any asset, through “cost averaging” or a little at a time while picking up more on dips. We still find Gold a speculative investment, but if you are buying gold be wary of the mechanism such as “gold” mutual funds and simply don’t buy it in a speculative way (buy, sell, buy, sell).
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International Investment Advisors

I reluctantly talk about Gold. I’ve just never felt comfortable with it as a long term investment because it “feels” like speculating. I’d rather bet on black at the roulette table because at least I know my odds. However, as a result of this financial crisis we have had a lot inquiries. I am aware it has provided an impressive return, but I still consider Gold a speculative investment and as International Investment Advisors, we keep saying No to Gold.

http://www.economist.com/world/international/displaystory.cfm?story_id=14116143