Real-time thoughts & analysis of the markets, economy & more...
Co-founder & CEO of AllenWargent property market & hedge fund advisory.
Check us out here www.allenwargent.com - to invest in Sydney/Brisbane property or for media/public speaking requests email email@example.com
Pete Wargent blogspot
Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.
"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.
"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.
"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.
"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.
Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email firstname.lastname@example.org
Tuesday, 6 August 2013
Is gold a gulag?
Is gold what institutional investors have unfortunately taken to referring to as a 'gulag'?
Sure, it's seen a little bounce back above US$1,300/oz since its June lows, but its still miles off its peaks, when fans of gold were desperately arguing that the price was not a bubble.
The long term outlook may not be so bad for gold, but there are definitely risks in the short-term.
The risk remains in part because gold production has reportedly not fallen in spite of the lower prices.
Constructing gold mines might be a capital-intensive business, but once up and running the cash costs are relatively low given the high spot price of the mineral.
Therefore, prices would probably need to fall some way further before levels of production drop off.
Some fund managers used fantastically complex models to determine that it may be worth having 2% of a portfolio in gold as a speculative punt, for precious metals have the potential to jump in price sharply making it worthwhile for funds to maintain a little exposure.
I guess I can't argue against that logic - 2% of a portfolio as a speculative gamble, although I'd rather invest in gold-mining companies or ETFs than the physical commodity.
But to base an entire portfolio around holding a metal such as gold or silver is not smart.
Not only does gold not pay a dividend in the manner of equities products, it also incurs storage and insurance costs.
So while gold might do better than a share portfolio in any given year, over the long-term gold will struggle to match the performance of a quality share portfolio.
I thought the first half of Robert Kiyosaki's book Rich Dad Poor Dad was great, explaining how a balance sheet and an income statement work in a simple manner. But his favourite choice of investments (US real estate and silver) have not fared so well.
Better to follow Warren Buffett's lead - wonderful profit-making and dividend-paying companies are a better investment than a lump of metal any day.