Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Without a cash underpinning, investment billionaire Howard Marks says that gold doesn’t hold up to any sort of meaningful financial analysis.
Marks, who made the comments early this month during an interview with Business Outlook India, is a founder of Oaktree Capital, an investment management firm with over 700 staff.
Forbes estimates Marks net worth at US$1.4 billion.
During his interview, Marks was asked about his outlook on gold:
There is nothing intelligent to be said about gold. Nobody can tell you the right price for an ounce of gold. People will tell you it should go up or go down. To make any intelligent statements about investments you have to know what the right price is. You can’t do that with an asset like gold, which doesn’t produce any cash flow. So you can buy it out of superstition or ignore it because you are an atheist but you cannot buy it with an analytical foundation.
The point has been made before. Gold is better viewed as an insurance policy against financial calamity, something an investor would never want to collect on.
But using gold as part of one’s investment portfolio is risky, writes Cullen Roche at Pragmatic Capitalist.
“Assets without cash flows cannot be the centerpiece of a portfolio not only because they are difficult to value, but because they cannot be relied upon to protect one’s portfolio against the risk of permanent loss.”
Hat tip, Counterparties. Image of Howard Marks from YouTube interview with AVCJTelevision
