by Scott Smith, CIMA®
A couple blog posts back, I mentioned the historic low interest rates occurring in synchrony around the globe and highlighted a few takeaways for investors. In light of this unusual environment where global central banks are following the same strategy of printing money, buying bonds, lowering interest rates, and devaluing their currency, I think it’s a good time to discuss gold and the role it should play in client portfolios. Is Gold a Gleaming Investment?
Our bias will always be owning reasonably-priced productive assets, like stocks, that have the capacity for earnings, dividends, and cash flow growth over the long-term versus a non-productive asset like gold, whose value is derived partially from jewelry demand where it is worn and partially from investment demand where it is stored. Since gold’s value is predominantly in the eyes of its beholder, there is an embedded amount of speculation that accentuates its price volatility.