Treasuries or Gold - must choose

E

ecasene

A client has money to spend and must choose between Treasuries or Gold - this is hypothetical - he/she is adamant and won't consider any other asset classes/markets. It doesn't have to be now but in general, any given moment.

I'm trying to figure out, what would swing one over the other. Any reason why he/she shouldn't or wouldn't split half and half. And is inflation or expectations of inflation a factor?

Just a thinking exercise
 
Interesting, does your recommendation have a time horizon?
Any gold-based ETF ?


What about under more general market conditions, e.g., where there are no strong directional expectations for gold or treasuries..
 
If rates go up, $ will rise and gold will fall big time unless the rise does not lower inflation, which I doubt.

The way things are developing it seems there will be an upward pressure in long term yields which will be accompanied by a short term rise in gold and an eventual correction when the FED will be forced to raise rates to prevent a flight away from tresuries. Time horizon: as usually UNKNOWN.
 
Quote from ecasene:

A client has money to spend and must choose between Treasuries or Gold - this is hypothetical - he/she is adamant and won't consider any other asset classes/markets. It doesn't have to be now but in general, any given moment.

I'm trying to figure out, what would swing one over the other. Any reason why he/she shouldn't or wouldn't split half and half. And is inflation or expectations of inflation a factor?

Just a thinking exercise
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frankly, every prediction for what is best now is just a guess. I was thinking the dollar would plunge during the crisis last year, and instead it went up a lot.

the smartest person is spread widely - some stocks, bonds, gold, international, some real estate/REITs/apt buildings/commercial, some cash, some "commodities", some farmland, etc. etc. And you can do things like dollar averaging into them to get more at lower prices. You can looked for underpriced items.

Tell your "hypothetical client" that you can either make money and safeguard your nest egg by investing wisely, or you can try to be Nostradamus and be blindsided some day.

If he puts all his money into gold for example and it goes to $550 an ounce, would he not wish he did not put all his money into it? If a western govt defaults, and his "safety Treasuries" get pummeled?
 
Every time gold makes the smallest move higher, nearly 90% of the people say to go short or say it has limited upside.

But with every other commodity its alright to see 100% increases like oil from $32 to $75+.


Gold is going to $1200 an ounce by early 2010 and as high as $1500, $2000 is almost a given at this point over the next 3 years.
 
What maturity treasuries?

Nominal treasuries: positive carry, bad in inflationary environments
Gold: negative carry, good in inflationary environments

Pick yer poison...
 
Quote from S2007S:

Gold is going to $1200 an ounce by early 2010 and as high as $1500, $2000 is almost a given at this point over the next 3 years.
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Add one more to "wild guess, but I believe it so it must be true" pile...
 
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