Thursday, January 29, 2015

Gold Is Higher Yielding Than These "Safe" Assets?!

I've said it once, and I'll say it again:
Gundlach is a brilliant man. Not only does he look badass with that sexy goatee, he is a great manager and I think he is one of the few no-nonsense, no-bullshit people around in the industry. He doesn't give views to conform, he gives his views straight up, whether you like it or not. Perhaps that is why he has been such a fantastic manager. I don't agree with everything that he says (long USD trade), but when it comes to bonds, this man knows his shit and I give him the benefit of doubt.

Check out that baller!

Remember how one of the best points against Gold was that it has zero yield? Well, as Gundlach correctly points out, Gold (and all other precious metals for that matter) is higher yielding than quite a number of bonds from Japan and Germany, but the most notably the Swiss bonds.

Now with Swiss bonds are yielding negative returns up to 12 years out, I think that makes the argument that Gold is a zero yield asset a moot point. I rather remain status quo, than to slowly lose money!

If Jeff Gundlach is buying Gold, I feel a lot more comforted with my hoard.

Of course, what one person says doesn't mean anything in this market made up of millions of individuals. It is just comforting to know that someone else is in the same trade as you, ya know?

Personally, I feel bonds are insanely broken, especially the bonds in Europe. Seeing the difference in rates, I see it entirely possible for US rates to head lower. However, that is not a trade that I am willing to make. The risk-to-reward does not seem appropriate.

How does negative bond yields even work? Things don't make sense anymore. I suppose that is what happens when you have central banks around the world trying to control the markets. Something is bound to get broken. I would not go near negative rate bonds with a 5 foot pole. Cash is just fine for me, thanks.

Sorry guys, I also know that recently I've been posting a lot of gold and precious metals related articles and many of you just aren't into it. I don't make the news or the markets, I just write what are the most interesting things that I see. Just to let me reiterate my view, I think precious metals are basing out here and I think equities look very precarious to me.


  1. Hey GMGH,

    Your blog is interesting, unlike mine which is only about S-Reits. Haha.

    Always good to hear another blogger's opinion on asset classes that I'm not researching on.

    1. Hey SRSI,

      My mind is a crazy place that wanders all over! I glad my post gave you some exposure to the world of gold and negative interest bonds, haha.

      I think you are a Sector Specialist, while I'm just a jack of all trades, master of none, haha. I really enjoy your REIT analysis though. Every time I read, I feel like buying, ahaha!

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