A viewpoint on gold The Fund continues to invest in gold, based on our view that aggressive monetary policy should cause investors to prefer owning a hard currency — such as gold — rather than fiat currencies that are susceptible to a loss of value. We also think the cost of production generally should provide a floor for the gold price. That’s because as the price of gold falls below the cost of production, miners would halt production, rationing demand for existing supplies until prices rise enough for profitable production to resume. It is possible that we have witnessed the turning point for monetary policy, but we are not convinced that there has been a change. While the discussion has turned to tapering stimulus measures, the actions of the majority of monetary and fiscal policy leaders indicate that they believe the remedy for economic weakness is loose monetary policy, lower interest rates and aggressive policy action, such as the quantitative easing that has taken place around the world in the past few years. We thus continue to invest in gold as a hedge against possible policy mistakes in the future.
Posted on: Tue, 03 Sep 2013 05:18:25 +0000
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