Gold is Under-owned, Part XXIV


This reinforces one of my main theses, so I’m admittedly biased, but a good data point & related musing on gold from Michael Cembalest of JP Morgan in his latest note: [-]

We hold gold in portfolios, and believe it will continue to rise, until the debasing of money has run its course.  I interviewed Ray Dalio from Bridgewater at a conference we had last week in Paris [c], and among other things, he talked about investor biases reflecting the recent past (the last 20-30 years).  One of these biases is the low ownership of gold; he asked an audience of 200 how many owned gold at 10% or more in their portfolios, and there was only one hand raised.

This brought to mind the chart (below) that we showed earlier in the year on the low gold ownership rate compared to prior periods.   Ray agreed that for generations until the Volcker disinflation which began in the 1980s, investors generally held more investments that functioned as a “store of value”.  Many investors are scrambling to catch up by buying store-of-value assets for the first time since then.   That includes Indian, Russian, Chinese, Japanese and Taiwanese Central Banks whose gold investments are well below 10% of total FX reserves.  Gold is demonstrating some characteristics of a bubble, and exiting at the right time will be important.  But we do not think that day is today. [Emphasis mine]