This is what Roubini wrote in 2009:In inflation tail risk virtual gold (ETF GLD) beats physical gold. But in global financial crisis 2.0 physical gold in safe vault beats GLD
Investors should thus be wary of getting the gold bug and being stuck with this barbarous relic. The recent swings in gold price—up 10 percent one month, down 10 percent the next—prove the point that gold has little intrinsic value and that most of its price movements are based on beliefs and bubbles. As an insurance policy against the tail risk of eventual inflation, it may be useful to hold a small amount of gold in one’s portfolio, but stocking up portfolios with a fiat currency that has marginal practical use, a zero nominal interest rate, high storage costs, and the price of which is subject to volatile whims and bubbles is totally irrational. If you want to hedge against inflation, stock up on Spam or other canned food or buy futures on commodities that have more physical uses and consumer demand..
Roubini is a very intelligent idiot with tenure, and endowment and books to sell. Oh, and he's insufferably arrogant and, b/c he's a Keynesian, quite frequently wrong about everything.
ReplyDeleteTa,
Have you seen the reply,though, by piotrusz7 on twitter.
ReplyDeleteKeynesians, always late to the party... If they knew how the economy works they might have a chance. But they dont.
ReplyDeleteJanuary 2009 gold price $800.00. Need we say more about economic professors?
ReplyDeleteWhat a stooge. This Project Syndicate effort is an ominous threat. They are going after mindshare.
ReplyDeleteCall me a conspiracy theorist....but when such a firm Keynesian calls for investing in physical gold something is afoot....
ReplyDeleteThe big financial players (Morgan Stanley has had this in the works already I think) are probably going to make a play on gold. In the long run though, it shouldn't matter... Conspiracy, though. Hopefully not. I hope our federal government stays away from gold.
ReplyDeleteHe's not saying "buy gold". He's saying holding physical gold during a crisis is better than holding a gold-backed ETF. That doesn't say anything about whether he thinks being long gold right now is good or bad.
ReplyDeleteAs Doug Casey says, we know the bubble's nearing its peak when the WSJ front page sports a picture of a golden bull tearing through the stock pages.
ReplyDelete