Gold’s Investment Attributes
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).