Old Fashioned Girdres& Nylon

gold belongs in Porftolio

Last week Gold -3.7% under pressure. Business media ( FT) immediately thought about the upcoming big price fall.
I notice short-term market movements is not too strong, because I will just dizzy. More relevant is the observation of long-term trends.

1. gold as jewelry
   long term, strong growth in emerging countries to increased Demand for jewelry (and gold) run.
   
   
2. is used gold as a store of value
   While gold for this purpose for 5000 years, it is our currency only since a few decades, at best, for 100 to 200 years. The gold may be increased only with difficulty (with a lot of shovel work); euro, dollar and yen, but at a touch.
   The increased likelihood that Japan, USA and Europe will be removing the debt by inflation, fired the gold price in recent months.

to evaluate gold is a bit difficult because it does not generate cash flow (cash flow models usually require). In accordance with comments on inflation may, however, a model
be constructed by the (negative) correlation with real interest rates (interest rate = nominal - inflation) is used.

As you can see, is the model reality quite well off. Due to the rise in inflation will fall, the real interest rate, which pushes the price of gold up.


A portfolio should therefore include a substantial gold position of 10%. This should be complemented by gold mining shares. The details of the distribution but must be determined for tax purposes (used in the USA physical Gold disadvantage being in Germany treated advantageous). should