Gold’s Investment Attributes
by Charles Rotblut, CFA and Thomas Winmill
Thomas Winmill manages the Midas Fund, a gold sector mutual fund. We talked recently about investing in gold.
—Charles Rotblut, CFA
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Charles Rotblut (CR): What role does gold play in a typical individual investor’s portfolio?
Thomas Winmill (TW): Gold has certain industrial attributes that make it desirable: It doesn’t tarnish, it’s very malleable, and it can be spun into very fine wires and flattened into very fine films. But most of the gold that has ever been mined is basically in bullion form, where it just sits around and “stores value” for governments, individuals, and institutions across the world.
I would say that its main investment role is to appreciate in currency terms. In other words, although currencies historically have depreciated as governments produce them in excess of the economy’s growth rate, hard assets such as land and gold have tended to maintain their value in constant currency terms. So that’s an important role for gold over long periods, because it has limited mining production and can’t be spun into existence the way a government can spin additional currency into existence.
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Thomas Winmill manages the Midas Fund (MIDSX) and is chairman of the investment policy committee for the Midas Perpetual Portfolio fund (MPERX).
Discussion
Yes this was very helpful in understanding the investment role of gold and the factors influencing the value of gold mining stocks. Thanks
posted over 2 years ago by John from Oregon
Absolutely no talks about how to SELL the gold for what you paid for it, or, for a profit.....Nor does anyone discuss how to store gold safely......
posted over 2 years ago by Clarence from Oregon
I liked the discussion about allocation and gold relative to other metals. I would like to know about buying gold bullion or coins and then how to sell them as well.
posted over 2 years ago by Bruce from Tennessee
Very helpful article on gold investment issues. Would appreciate AAII coverage of the pratical issues concerning purchase, storage and sale of bullion and coins.
posted over 2 years ago by Elliott from Maryland
Fantastic Article! I use a Texas Instruments BA II Plus to do all my 'net present value' and other financial calcs. This guy knows what he is talking about!
One interesting tidbit: Seth Klarman filed a 13F revealing that he had purchased shares in ANV for Baupost during Q1 of 2011.
John Perry, MD, MBA
posted about 1 year ago by John from Pennsylvania
The carrying cost of a gold bullion backed ETF like GLD are inconsequential to the portfolio insurance benefits. In today's era of debased currencies, highly correlated asset classes, daily risk-on / risk-off nonsense that leave the individual investor gasping for air. Holding 5% in gold is like having a can of mace to use against the central banks.
posted about 1 year ago by Joseph from Minnesota
The information from Mr.Winmill was very informative for me.Information on storage and selling of precious coins would be even more enlightening.
posted about 1 year ago by Benjamin from Missouri
Gold is MONEY. The American dollar is just a piece of paper...like all currencies. Goverments always have and always will print IOU nothings. The US government has two choices to solve the current and on going USA debt crisis:
1. default or
2. keep printing pieces of paper...fiat money
Guess which one they will choose.
I also cannot tell you what gold will be worth six years from now or even next week. But I can confidently and safely tell you the worth of dollars in your wallet will be stolen from you even as you sleep. Protect your money from the goverment. Study its history and BUY GOLD.
posted about 1 year ago by David from Florida
