GOLD made simple

PIMCO on Gold.

• For more than a millennium, gold has broadly managed to maintain its real value, even as various currency regimes have come and gone.
• The supply of gold is constrained, and we see demand increasing consistent with global economic growth on a per capita basis.
• Given current valuations and central bank policies,  we believe investors should consider including gold and other precious metals in a diversified investment portfolio.

When it comes to investing in gold, investors often see the world in black and white. Some people have a deep, almost religious conviction that gold is a useless, barbarous relic with no yield; it’s an asset no rational investor would ever want. Others love it, seeing it as the only asset that can offer protection from the coming financial catastrophe, which is always just around the corner.

Our views are more nuanced and, we believe, provide a balanced framework for assessing value. Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies.

We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio. The supply of gold is constrained, and we see demand increasing consistent with global economic growth on a per capita basis. Regarding inflation in particular, we feel that the Federal Reserve’s decision to begin a third round of quantitative easing makes gold even more attractive.

Full article here.