Why I’m selling some gold
I am selling some of my gold. Regular readers will know that I’ve held gold in one way or another since 2001 when it first became obvious that money was too cheap and that the markets were becoming grotesquely distorted as a result.
I kept holding it all the way through the subsequent building of the credit bubble, the crash in 2008, and through the beginning of the long deleveraging period since then. I’m still holding every bit I have ever bought. So why sell some now?
Several reasons. First, it now makes up too much of my portfolio: it started as a small percentage, but its huge price rise over the last decade means that my financial future is now almost entirely dependent on the price of gold. That makes me nervous – so I have to cut my holding.
Second, it isn’t obviously cheap any more. Back in 2001, gold was cheap relative to everything from the price of oil to the price of extracting the stuff. There didn’t appear to be much downside in it, so it made sense to hold it as a speculative investment. That’s not the case anymore – and that means there is more risk in holding it than there was. It’s also getting too popular – I am asked on the radio and TV to make the case for gold far, far too often for any of our comfort.
• Read the full editor’s letter here: Why I’m selling some gold.