Wednesday, September 30, 2009
Gold is a Reasonable Investment: GW
It's an excellent compendium of links, articles and opinion on Gold. Some points:
- Gold, considered a hedge against inflation, does well in deflationary environments too. And if the environment involves devaluing currencies it goes up - like the purchasing power of gold did during the Great Depression and in the last 10 years.
- There's some evidence that while gold loses some sheen in the early part of a deflationary period, it climbs in the later part; the Yen-Gold chart is provided.
- Short term interest rates near 0% are good for gold.
- Government distrust - of the type happening in the US (we in India have never trusted our governments) - is positive for Gold.
- It's the currency-of-last-resort, so panics induce buying.
- China will buy dips and effectively put a floor on gold prices.
Labels: Gold
3 Comments:
Personally I have 10% in Gold Miners, 10% in Gilt funds, 40% in Indian Equities and 40% in Dynamic Bond Funds. The first one to take care of Inflation including Hyper Inflation, Second one deflation and the rest for normal times. I do annual rebalancing.
This strategy has provided me with limited losses even during bad periods like we had last year.
MK
Silver has worked nicely as per textbook this year. Gold/Silver ratio normalizing.
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