Gold may gain as businesses temper spending and stimulus falls short, John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett's Berkshire Hathaway Inc., wrote in a newsletter.
"There is growing evidence that the rising price of gold is a statement about the discouraging prospects for returns on productive investments," Gilbert said. "We hope that this analysis is wrong. We fear that it is not. ...
"Businesses express caution by not making the investments necessary to improve productivity," Gilbert wrote. It's not "clear that activist central banks can repeal gravity by encouraging investors to take risk anyway. There will be a tendency to higher gold prices until that changes."
If you own a gold fund, you've probably heard about the big gains gold bullion has made this year. You may also be wondering why your gold fund hasn't shared in any of those gains.
The short answer: If you invested in a fund that buys the shares of gold-mining companies -- as many do -- you probably lost money this year. If you bought shares of a fund that buys the metal itself, you made money.
That's not the normal order of things. Typically, gold miners fare better than the metal itself in a bull market for gold. But these are not typical times. ...
The question now: Gold or gold stocks? "Most people are better off owning the metal," says [Tocqueville Gold fund co-manager John] Hathaway. When you own the metal, you don't have to worry about missed earnings or disappointing production results. You only have to worry about whether gold prices will go up or down.
"There is growing evidence that the rising price of gold is a statement about the discouraging prospects for returns on productive investments," Gilbert said. "We hope that this analysis is wrong. We fear that it is not. ...
"Businesses express caution by not making the investments necessary to improve productivity," Gilbert wrote. It's not "clear that activist central banks can repeal gravity by encouraging investors to take risk anyway. There will be a tendency to higher gold prices until that changes."
If you own a gold fund, you've probably heard about the big gains gold bullion has made this year. You may also be wondering why your gold fund hasn't shared in any of those gains.
The short answer: If you invested in a fund that buys the shares of gold-mining companies -- as many do -- you probably lost money this year. If you bought shares of a fund that buys the metal itself, you made money.
That's not the normal order of things. Typically, gold miners fare better than the metal itself in a bull market for gold. But these are not typical times. ...
The question now: Gold or gold stocks? "Most people are better off owning the metal," says [Tocqueville Gold fund co-manager John] Hathaway. When you own the metal, you don't have to worry about missed earnings or disappointing production results. You only have to worry about whether gold prices will go up or down.
More information can be found online at http://www.goldbullionadvisors.com
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