Gold Loses Its Luster as an Asset Class

For years it has been the conventional wisdom that gold is a legitimate investment vehicle, useful as a hedge against inflation, currency volatility and geopolitical turmoil. But now that gold is scraping five-year lows, despite the presence of copious turbulence, many experts are questioning that notion.

“The case has weakened for gold as a notable part of a diversified investment portfolio,” says MohamedEl-Erian, chief economic adviser at Allianz.

Gold has failed to benefit from global economic and political turbulence recently, including ongoing俄罗斯和乌克兰之间的紧张局势, conflict throughout the Middle East anddebt crises in Greece and Puerto Rico。鉴于黄金为投资者提供没有收益率，如果它在类似的剧集中没有价值上升，投资者没有许多原因持有它。

To be sure, some bottom-fishers have moved into gold since it hit its five-year low on August 4 of $1,085.10 per ounce. The precious metal has climbed only 5.11 percent since then, despite China’s devaluation of the yuan and the financial market carnage that followed. Gold barely moved amid星期一的市场动荡, trading at $1,159 an ounce, down 40 percent from its September 2011 record high of $1,923. Gold-mining stocks also have plummeted.

Martin Fridson, chief investment officer at New York money manager Lehmann Livian Fridson Advisors, was asked whether gold was ever a legitimate investment vehicle. “People don’t ask that about stocks; that tells you something. The fact you’re asking the question answers itself.” Historical market returns illustrate Fridson’s point. The Standard & Poor’s 500 index returned an average of 9.79 percent a year from 1980 through 2014, and government bonds, according to the Bank of America Merrill Lynch U.S. Treasury and Agency index, returned 7.93 percent. Gold returned just 2.07 percent, however, not even matching the 2.99 percent inflation rate. With the precious metal at a peak in 1980, “you might have thought that was the time to go into gold,” Fridson says. “What kind of investment vehicle was it? As a hedge against inflation, it apparently didn’t do a good job.”

El-Erian says gold did serve as a valuable investment vehicle in the past, “both as a return generator and as a risk mitigator.” But now investors have other options available to serve the same function as gold in their portfolios, he continues. For example, you can short virtually any asset class with an exchange-traded fund.

Besides, investors have another safe haven: Treasuries. “In times of turmoil you used to buy gold; now it’s Treasuries,” says Robert Sinche, global strategist at Amherst Pierpont Securities in New York. “Unlike gold, Treasuries pay a yield. Why wouldn’t you go for that?”

自2008年级金融危机自2008年级金融危机以来普遍存在的灭火 - 和有时通道环境也将金融工具作为投资车辆的效用。“随着世界的努力产生增长，凭借一些通货紧缩的风险，黄金的传统通胀 - 对冲角色一直在减少，”埃莉安说。欧元区经济在第二季度仅增长1.3％，美国消费者价格仅在6月12日攀升0.1％。

Looming interest美联储的利率徒步旅行不会做黄金任何兴趣, because rising rates curb inflation and make fixed-income investments more attractive compared with gold. “If gold can’t perform when global rates are near zero, and if rates increase just a little bit, that’s another reason not to hold gold and other commodities which don’t pay a yield,” Sinche says.

He and others don’t expect the precious metal to offer much value to investors anytime soon, but that doesn’t mean we should write off the asset forever, many say. Bill O’Neill, a veteran Wall Street commodities strategist now at LOGIC Advisors, a Sonoma, California–based firm that counsels on commodity markets, compares gold with stocks. “Just because the stock market goes down 30 percent doesn’t mean stocks aren’t an investment vehicle,” he says. A major currency war could break out, for instance, driving investors to gold, which is sometimes viewed as an alternative to paper currencies.

Fridson sees some merit in O’Neill’s argument. “Gold will have its day again,” he says. “Someone will call for the end of the world again, or there will be inflation.” There are limits, though. “Long term, if you’re talking about an investment, it’s not clear this is the way to build wealth for retirement or future generations,” Fridson says.

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