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 about 1 year 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 about 1 year 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 about 1 year 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 about 1 year ago by E 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 8 months ago by John from Pennsylvania
