Hold gold and buy miners
I interviewed two important people for you this week – Anthony Bolton and Alistair Darling. Subscribers can read the words of the former here and those of the latter next week. But if you’re a regular reader, you will know by now the kind of questions I ask everyone. Do they expect inflation or deflation? When will China implode? Are fund managers responsible for the outrageous levels of executive pay? What would they do if they got to be a benign dictator to the world for 50 years? And, of course, do they hold any gold?
Darling holds no gold. No surprise there. Bolton was a different matter. He’s a pretty optimistic kind of a guy overall, but he still thinks that the average portfolio should be 10% invested in gold. He sees why it is the “anti currency” (the one that will hold its value if all others fall). He gets why it should be held as an insurance in times like this. And like us, he expects it to have a massive exponential move at some point that will take it to new highs way beyond its current levels.
Right now, he says, you could read the papers and think that everyone owns gold. But while fund managers and savvy retail investors might talk about gold endlessly, not many of them are holding much of it. However, as our policymakers continue to dither in the face of disaster and they become more convinced that it is, as John Stepek puts it, the “only sane investment in an insane world”, they will.
• Read the full editor’s letter here: Hold gold and buy miners.