We’ve witnessed gold up almost 5 percent this week after the disappointing jobs number last Friday.
Hitting the news wires yesterday was a story about billionaire George Soros getting back in the gold market. Soros Fund Management, which manages $30 billion for Mr. Soros and his family, sold equities and bought gold and mining shares. Mr. Soros indicates that he sees a bleak outlook for the global economy, and has directed some of his companies’ investments into the metals arena due to his concerns about political issues in China and Europe.
We also wake up this morning to see the gold ETF hitting a new high for 2016 at 1918 tons, approximately
61.3 million ounces held.
So this morning I once again turn to the financial advisors to get their take on the continued investment by their clients into the gold ETFs. I found this interesting, but not surprising. The majority of this type of investor is the baby boomer generation and collectively they are looking for better yields on their investments. (Who isn’t?) Their first choice of investments for these folks are bank CDs which unfortunately are paying almost nothing. So where else do they turn looking for better returns? Most have been investing in Blue Chip stocks and are now seeing corporate earnings fall off, so some have decided to diversify a portion of their holdings into gold. Collectively their concerns are about the upcoming presidential election and a U.S. Congress that can’t agree on anything.
So with all the economic and political turmoil they read about around the world, gold shines the brightest to most ETF investors.
Now, my hope is that this rally will translate into more investors turning to physical gold and silver metal instead of investing in the ETF funds.
After all, in the event of a global recession, what would you rather have in YOUR safe deposit box? Physical gold or a piece of paper?
You know my answer.
Author Name: Walter Pehowich
Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.