Merrill Lynch States Some Wealthiest Clients Insisting On Delivery Of Physical Gold
- Thread starter ByLoSellHi
- Start date
Interesting isn't it. Every asset allocation recommendation I read for 2009 now lists gold with a minimum of 5%, better 10%, ideally 20+%. "Every portfolio MUST have gold", "get lots of physical gold in your bank deposit box", "everything looks bullish for gold" they say...
Gold has become the most pumped investment for 2009. Sounds like snakeoil to me.
I'll buy gold for my kids when it either hits $400 and/or nobody recommends it as a quasi risk-free investment.
tradersboredom
Guest
take delivery and put the gold in their own bank vault.
Quote from ByLoSellHi:
http://www.telegraph.co.uk/finance/...ays-rich-turning-to-gold-bars-for-safety.html
Merrill Lynch says rich turning to gold bars for safety
By Ambrose Evans-Pritchard
Last Updated: 10:32AM GMT 09 Jan 2009
Rich investors are spurning gold exchange traded funds in favour of krugerrands
Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or "paper" proxies.
Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. "People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs," he said, referring to exchange trade funds listed in London, New York, and other bourses.
"They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands," he said.
Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June.
The metal should do well whatever happens. If deflation sets in and rocks the economic system it will serve as a safe-haven, but if massive monetary stimulus gains traction and sets off inflation once again it will also come into its own as a store of value. "It's win-win either way," said Mr Dugan.
He added that deflation may prove the greater risk in coming months. "It's very difficult to get the deflation psychology out of the human brain once prices start falling. People stop buying things because they think it will be cheaper if they wait."
Merrill expects global inflation to hover near zero, with rates of minus 1pc in the industrial economies. This means that yields on AAA sovereign bonds now at 3pc will offer a real return of 4pc a year, which is stellar in this grim climate. "Don't start selling your government bonds," Mr Dugan said, dismissing talk of a bond bubble as misguided.
He warned that the eurozone was likely to come under strain this year as slump deepens. "There is going to be friction as governments in the south start talking politically about coming out of the euro. I don't see the tensions in Greece as a one-off. It is a sign of social strain in countries that have lost competitiveness".
The fact everyone is talking up gold is a sign.
However, it also means its probably going to run a bit.
There is a great analyisis online, i am going to dig it up.
Which shows that gold is a terrible investment over time.
And its a poor inflation hedge versus other items.
Its only good when you buy and sell at the right time.
When I find it I will post in a seperate thread.
I think 5%-10% gold is more than enough. If you anticipate a currency collapse, like Argetina then the better hedge it to get
your money out of that currency period and out of that country.
Also, there is enormous supply because of the slack demand from heavy gold consuming countries like India.
But in times like this its the 3G'conomics
-Gold, Guns, and God!
However, it also means its probably going to run a bit.
There is a great analyisis online, i am going to dig it up.
Which shows that gold is a terrible investment over time.
And its a poor inflation hedge versus other items.
Its only good when you buy and sell at the right time.
When I find it I will post in a seperate thread.
I think 5%-10% gold is more than enough. If you anticipate a currency collapse, like Argetina then the better hedge it to get
your money out of that currency period and out of that country.
Also, there is enormous supply because of the slack demand from heavy gold consuming countries like India.
But in times like this its the 3G'conomics
-Gold, Guns, and God!
This is an old saw; if you can read a chart and manage your purchases by the cycles you'll be fine.
If you're emotionally buying coins and bullion retail, get a snorkel.
If your pyramiding contracts and buying gold/silver/platinum/paladium stocks on the way down because the newsletter experts say the dollar is dead and the world is about to end----get a grip and get your ass back on track.
If you're emotionally buying coins and bullion retail, get a snorkel.
If your pyramiding contracts and buying gold/silver/platinum/paladium stocks on the way down because the newsletter experts say the dollar is dead and the world is about to end----get a grip and get your ass back on track.
First, gold has done pretty well over the past 80 years, rising from $32/oz to the mid 800s.
Then consider this was during a period of an expanding economy for an economic superpower. Of course stocks did well for this period, and there we few fixed income defaults, so other investments may have matched or slightly surpassed gold.
Gold does much better comparatively in times when the fortunes of a nation fall instead of rise. Ask the Argentines or the citizens of Imperial Germany.