With the gold price reacting more like "any other commodity" recently, rising and falling with the risk-on/risk-off sentiment and the expectation of QEIII, the debate has sharpened on the reasons for holding it.
Proponents see it as a reliable store of value, especially in troubled economic times. They also note that future supply will be limited and uncertain, while future demand will keep rising.
Sceptics abound, however, and they include icon investors like Warren Buffett and Donald Yacktman. Essentially they note that there will never be any earnings from physical gold, only the uncertain possibility of capital gain.
Two contributors on Seeking Alpha have been debating the point, and their debate is instructive.
Tyler Greene is the sceptic; his latest point is that gold is "the worst inflation hedge ever".
Shaun Connell is the defender; he thinks Greene has it wrong.
Both however seem to agree on one point - gold is a fear asset. But for differing reasons.
For Greene, gold is a poor store of value, and a poor inflation hedge.
Connell disagrees, and says its use is amplified as a 'currency failure' hedge. It's the asset of choice if you think the world's economy has a bleak future and there is a realistic chance of a breakdown of civil society, he says.
Why should New Zealand investors hold gold? We seek your reasons in the comment stream below.
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