Mutual fund manager Michael Cuggino’s bullish stance on gold has helped his Permanent Portfolio fund earn Morningstar’s top five-star rating. And he continues to favor the precious metal.
“There's still a focus on looser monetary policy by central banks here and around the world,” he tells Money magazine. “That's keeping real interest rates low to negative, always a bullish sign for gold.”
The precious metal also benefits from a favorable supply/demand equation, Cuggino says. Emerging markets and investors seeking diversification are increasing their exposure to gold, while supply isn’t rising much.
|(Associated Press photo)
“Gold is coming of age as a legitimate asset,” he says. “Today ETFs [exchange-traded funds] that invest in bullion, such as SPDR Gold Shares, offer an easy way in.”
After hitting a record high above $1,900 an ounce in August, gold has slid about 10 percent. But that move hasn’t dented Cuggino’s enthusiasm.
“I don't believe anything has fundamentally changed with respect to the long-term investment view toward gold,” he says. “Investors can buy gold on sell-offs like those we recently experienced.”
Investment luminaries Byron Wien, vice chairman of Blackstone Advisory Partners, and James Grant, publisher of Grant’s Interest Rate Observer, agree with Cuggino.
They too see loose monetary policy buoying gold. “The money supply will be expanded in the major currencies in the developed world, and investors will seek the protection of hard assets: Something real, and gold is perceived as real,” Wien tells The New York Times.
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