As Good as Gold Here’s a point to ponder: why is gold so valuable? At first blush, that might seem like a strange question – gold is valuable because … well, it’s always been valuable. Right? True enough. But that doesn’t really answer the deeper question, does it? When you think about it, there’s nothing particularly special about gold. Sure, it looks pretty but, other than its use in wedding rings and other jewellery, it has very little industrial function or utility. It pays no interest or dividends. It’s not really tied to the growing value of a particular company or economy or national currency (at least, not since 1971). In fact, the only thing which makes gold valuable at all seems to be that most everyone in the world agrees that it has value. Whatever you think about this mystery, there’s no denying that anyone who’s invested in gold has done extremely well of late. In the face of mounting trade wars, heightened geopolitical rivalries and massive trade deficits throughout most of the developed world, investors have increasingly turned to the one asset that everyone believes has value. In fact, over the past few years, gold has been one of the top-performing financial assets in the world (see CSANews Issue 135 for more details). If anything, as such conflicts (both political and economic) continue to fester, most analysts and market watchers agree that the reasons for gold’s outperformance seem to be getting stronger. Which raises some important questions: what are the factors driving gold’s run up the investment charts – and how long will they continue? What are the pros and cons of investing in gold and precious metals? And, most important, is now the time to invest in gold and/ or other precious metals? Or has the train already left the building? Given gold’s recent strong performance (and the prospects of similarly strong performance in the years to come), now seems like a good time to answer some of these questions and take a closer look at the role which gold and precious metals can play in your portfolio. By James Dolan What does gold’s recent outperformance mean for your portfolio? 26 | www.snowbirds.org Finance
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