I recently wrote an article in the International Alternative Investment Review (I.A.I. Review). The I.A.A review describes the services it provides; “delivers news you won’t read anywhere else about events in the business and financial community worldwide and the best ideas and themes in the alternative assets sector.
I.A.I Review focuses on the fastest growing segments within this dynamic sector, including family office, private equity, hedge funds, philanthropy and property. The readership includes: Hedge fund managers, Fund of fund operators, High net worth individuals, Private bankers, Law firms, Head of family offices, Trustees and Investment directors”.
The article I wrote discussed gold as an alternate investment. The article was submited only a few months ago when gold was at $1200/oz. Today, gold is trading at over $1400/oz. While I may be wrong about gold, I see signs of a bubble. However, since gold has no intrinsic value I would not take either side of the trade.
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
Benjamin Graham in The Intelligent Investor talks about the era when FDR banned gold ownership. To paraphrase Graham it is good thing that FDR did! Graham was stating that gold is a bad investment and is speculative in nature and therefore it is better for people not to own it (Jeremy Siegel in his best-seller Stocks for the Long Run shows that gold has basically matched inflation from 1800-2000 (although it must be noted much of this time period we were on the gold standard)). As Graham states in his other famous book Security Analysis “An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” Gold according to this definition would not be an investment and is therefore speculative. It puzzles me as some phenomenal value investors such as David Einhorn are bullish on gold.
With that I will quote a brief excerpt from my article below follwed by a link to the longer article (to see the full article you need to subscribe)
Also the cover to the magazine can be found below.
Gold is one of the most popular, and ancient forms of investments. While the price of gold has experienced drastic swings since the time it has been used, it has always been worth something.
In modern times gold is considered an alternate asset class that should be part of one’s portfolio (or so we have been told by conventional wisdom). Today with gold at an all time high of over $1200, the price of gold is quoted frequently in the financial press. Many companies are propping up and hyping up the attractiveness of gold promising investors high returns. In my area (New York), one cannot turn on the radio without hearing a commercial from one of these companies. In addition, with bond yields at record lows, and stock prices at high levels according to several different valuation metrics, gold is being looked at as an alternative to a plain vanilla stock/bond portfolio.
However, is gold really a good alternative investment?
Full article https://www.iaireview.org/#more-4538