Market Update – September 10th
Capital rotation out of tech will be stubborn, in our opinion, but the stealth move taking place in gold assets over the past year may signal the rotation is slowly starting. The media may beginning to notice of the $2,500 gold price as evidenced by an article in Barron’s recently, which included the OCM Gold Atlas Class (OCMAX).
OCM Featured in Barron’s
Barron’s writer Lewis Braham wrote about the recent upward gold move, gold mining stocks, and how to potentially play the rally. See below for our quote in the article;
“Another good option for investors is the OCM Gold fund (OCMAX), whose manager, Gregory Orrell, has 40 years of experience. Orrell sees the lagging performance of the junior miners as part of the normal process of investors rediscovering the sector: “I like to say, ‘The popcorn kernels go off at different temperatures.’ So one of the things that happens is that as the gold price cycle matures, you’ll get the majors [i.e., the largest miners] going up, then the intermediates and juniors. And finally the exploration companies start to make a move.”
Click here to read the full article
Gold Allocation in Portfolio
Incrementum, who publishes the “In Gold We Trust Report”, put together a short report about the ideal gold allocation for a portfolio. We encourage you to read the full report, located here, but this paragraph stood out to us;
”In response to the poor performance of the traditional 60/40 portfolio in 2022, WisdomTree conducted a study on gold as a resilient asset class and its optimal allocation. Using a Monte Carlo simulation with 20,000 scenarios across different 10-year periods, the research found that a gold allocation of 16–19% in a portfolio maximizes risk-adjusted returns.”
Considering investment advisors are more than likely to have 0-2% allocated to gold and gold assets, anything close the Wisdom Tree study would result in a massive rising tide in gold and gold assets, in our opinion.
Gold Is Rising Because of Demand for ‘Fallback Money’
Bloomberg’s John Stepek published a well-written feature on gold, which helped answer the fundamentals of gold’s utility in a portfolio and its’ importance in global finance. Click here to read full article.
We agree with John’s viewpoint below as one of the reasons gold should be considered as an important aspect of a portfolio;
“All of this is why I mostly view gold as portfolio insurance and entirely separate from any of its near relatives as an asset class. Basically, in my view, gold is a “forever” asset — you should have it as part of your core asset allocation and rebalance when you own too much or too little, whereas its offshoots are fair-weather friends.
If you struggle with this idea, look at it this way — central banks own gold and consistently have done so, even at the bottom of the market. If they still view it as an integral part of the monetary system, that’s probably something you should pay attention to.”
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