We hope that you have a safe and enjoyable Memorial Day weekend. We feel grateful and humbled by the sacrifices of so many men and women on behalf of our country. Please remember that the markets and our office will be closed on Monday in observance of the holiday.
On a different note, many of you know that we have generally not been strong advocates for investing heavily in gold. Unlike stocks and bonds, gold is difficult to evaluate because it does not produce earnings, cash flow, or income. Like other commodities, its value is primarily driven by supply, demand, and investor sentiment.
Gold has been a strong-performing asset in recent years, driven in part by inflation concerns, geopolitical uncertainty, and rising worries about government spending. However, gold also carries unique risks. Unlike stocks or bonds, it does not generate dividends or interest income, and its price can experience sharp swings in response to changing macroeconomic conditions. Given its volatility and lack of income generation, gold may be less suitable for more conservative investors who rely on portfolio income.
This piece from Capital Group shares views from 3 highly experienced money managers, and they don’t agree about the long-term direction for gold. This disagreement is instructive.
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One of the biggest challenges in investing is distinguishing between a good asset and a good investment at a particular price.
Gold can absolutely have a role within a diversified portfolio, especially as a hedge against inflation, currency instability, or geopolitical risk. But unlike a stock or a bond, its long-term return depends heavily on what the next buyer is willing to pay for it. That price is not driven by expected earnings, cash flow, or other measures of value. That makes gold psychologically attractive during uncertain times, but also difficult to value with confidence.
For many long-term investors, we continue to believe traditional investment assets remain the strongest foundation for long-term growth potential. At the same time, thoughtful diversification matters, especially during periods when uncertainty feels elevated.
As with all investment decisions, we must remember that past performance is not predictive of future results.
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This is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any investment product. Diversification does not assure a profit or protect against loss in declining markets and cannot guarantee that any objective or goal will be achieved. Investments are subject to risk, including loss of principal. The precious metals, rare coin, and rare currency markets are speculative, unregulated, and volatile, and prices for these items may rise or fall over time. These investments may not be suitable for all investors and there is no guarantee that any investment will be able to sell for a profit in the future.
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Some other interesting things:
- According to Clever, college graduates expect to make $80,000 in their first year out of college. This is $24k more than the actual average salary. They have similarly rosy expectations for mid-career earnings, $145k predicted vs $95k actual average.
- You can watch the entire Ken Burns’ documentary, The American Revolution, for free on all PBS apps between May 25 and July 17: https://www.pbs.org/kenburns/the-american-revolution/
- Pancreatic cancer is one of the deadliest forms of the disease, but there is reason for optimism.