Seldom has there been an asset class so despised by investment professionals and the modern banking establishment as gold. It does not provide a yield. Its supply is limited by forces outside of our control, and there is no clear formula upon which investors can readily rely to calculate its value. It is, therefore, common practice by said investment pros to rebuke gold’s potential as a sound investment by relying on the widely held misperception that it performs well during periods of inflation and poorly during periods of deflation. It is also an ironic feature of such a tangible asset that its valuation carries with it so many characteristics of the intangible, and herein lies the problem for the institutional investor.
In a recent article penned by Alexander Green, investment director of The Oxford Club, the esteemed stock picker makes his case for why he has turned bearish on the yellow metal for the past two years, after being bullish on gold since 2003.