“Don’t Get Caught Up in Optimism.”
- Headline from CNBC.com which you couldn’t really make up.
“Fund managers reconsider their holdings in gold” is a
recent headline from TheWealthNet.
It cites a report from Standard & Poor’s Fund Services, whom one hopes are
more accurate in their assessments of managed fund quality than their
colleagues in the credit ratings business. High prices for the metal have
apparently if not unsurprisingly led some fund managers to reduce their gold
holdings. A team at Barings is mentioned for being disappointed that the gold
price has been highly correlated to that of other risk assets, as if investment
management were somehow an exercise in the choreography of statistical waltzes
rather than an exercise involving the defence and growth of capital. Managers
at Union Investment are mentioned for having considered investing in gold but
having concluded that “the recent rise of the gold price is not backed by solid
fundamentals” (what form of universal currency depreciation would incline them to buy ?). A team at
Legal & General apparently believe that gold price appreciation has been
driven primarily by low interest rates and ample liquidity, and that “on some
technical indicators it looks overbought” (compared to what ? – for more on
which, see below).
To read more,
Download What's the colour of money, Part II
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