Summit Notebook
Exclusive outtakes from industry leaders
Fear factor driving gold higher
“Gold is not an investment. It doesn’t pay you interest and it doesn’t increase wealth,” complained one investment advisor recently as he perused exploding client demand for the yellow metal.
“It’s just a cautious asset for scared investors,” he grumbled as he waved a chart showing prices had once again hit an all-time high.
Some anecdotal evidence suggests he may have a point.
Bankers at this week’s Reuters Private Banking Summit said investors were loading up on gold to the tune of some 7 to 10 percent of their portfolios.
The traditional motive of hedging against inflation was conspicuous by its absence.
The wealthy were buying gold because they were worried by the possibility of deflation, by a collapsing dollar or by the threat of prolonged financial turmoil.
Many were getting exposure through gold-backed exchange traded funds or gold stocks related stocks.
That’s rich. I meant the wine.
What do gold and wine have in common?
Price.
Well, too high of a high price, according to Jeffrey Rubin, director of research at Birinyi Associates, the stock market research and money management firm.
Rubin told the Reuters Investment Outlook Summit on Tuesday that he thought gold prices were “certainly a little frothy” at current levels and that he would rather be a buyer of the gold miners such as Newmont Mining Corp, Barrick Gold Corp, or Freeport-McMoRan Copper and Gold Inc. Gold hit an all-time high above $1,250 an ounce on Tuesday as investors piled in due to fears that European credit contagion could lead to a double-dip recession.
Rubin isn’t expecting a double-dip U.S. recession, saying the chances are slim. He also felt stock prices were likely near a bottom. Not so for the price of a wine? A good year is already priced in, so to speak.
In the spirit of austerity, we asked Rubin what personal spending he might curtail. For a wine collector with a 1,500 bottle collection, the answer was bitter.
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Audio – The family jewels
This week’s annual Reuters Global Mining and Steel Summit has been a pretty rich event.
Oh, the guests have been stellar, for sure, but there’s also been a lot of talk about gold and jewelry and the prospect that maybe someday this lousy economy will turn around.
For Peter Marrone, chief executive of Yamana Gold, customers’ willingness to buy jewelry is an important consideration in providing outlook for his company.
But even with times so tough, jewelry sales are an inexact science, he warned. And overall gold demand is less a matter of whether someone is willing to shell out a couple hundred dollars on a new necklace and more based on investors looking for safe-haven investments in times when other investments are far shakier.
Marrone was one of the featured speakers at the summit, which continues through Thursday in New York, London and Sydney. The Summit program is in its fifth year, and in 2009 will include top-level executives from industries and sectors including everything from Infrastructure; to Global technology; to Investing in India, China, Japan and Russia; to Islamic Banking.
The Summits continue next week at the annual Global Food and Agriculture Summit with guests in the U.S. and Asia from March 16-19; and the Funds Summit in Luxembourg on March 17-18.
Investors hoarding gold?
This week we’ve brought you interviews with some of the world’s best-known mining and steel companies. One thing that we’ve heard over and over again is: gold is king. Industry watchers say thinking of gold as an investment is not a bad idea. Check out Conway Gittens’ story:
Audio – Kinross in the ‘Sweet Spot’
In the M&A world, this is where you want to be.
Kinross Gold’s CEO Tye Burt said at the Reuters Global Mining and Steel Summit on Wednesday that as far as mergers and acquisitions go, his company is in a pretty good place — there are more deals hitting his desk, sellers are getting more motivated and Kinross, the third-largest of the Canadian gold miners, has the cash to do a little shopping.
While Burt did not expect to be party to one of those huge mega-deals, he did indicate the company was keeping its options open — and was listening for bargains.
Burt was one of the featured speakers at the summit, which continues through Thursday in New York, London and Sydney. The Summit program is in its fifth year, and in 2009 will include top-level executives from industries and sectors including everything from Infrastructure; to Global technology; to Investing in India, China, Japan and Russia; to Food and Beverages.
The Summits continue next week at the annual Global Food and Agriculture Summit with guests in the U.S. and Asia from March 16-19; and the Funds Summit in Luxembourg on March 17-18.
Investment advisor made this statement in the article: “If we did have a global financial meltdown, what do these people think they could actually do with the gold,” said the investment advisor.
This is why I handle my own investments. Compare yield in gold to yield in stocks for the past 10 years. Gold made 10%-15% more than stocks and didn’t decrease in purchasing power. In the economic climate that we have now gold is safety and it makes wealth for the investor.