Seen across the broader investment horizon, gold bullion and gold ETFs look pretty good. Listed stocks generally have rebounded over the past few months, but remain a long way off highs seen mainly during the former parts of 2008, and latter parts of 2007. The MSCI world equities USD index is around 40% off its highs; broad commodity indices such as the Dow Jones AIG Commodity Index and Reuters/Jefferies CRB continue to sit nearly 50% off highs, indicating that investors are either yet to buy into the broader theme that hard assets – generally – will protect against inevitable inflation, or that commodity pricing beyond gold bullion is yet to gain real upward traction.
The role of gold bullion beyond its uses as ornament and industrial material continue to enchant not only investors in actual and proxy physical gold bullion, but also in listed gold equities. The preparedness of professional investors to be in both camps was recently illustrated by Paulson & Co Inc., which famously scored gains of USD 3.7bn betting against (mainly US) banks in 2007 and 2008. Paulson & Co currently holds around 10% of the SPDR Gold Shares ETF, equal to about 111 tonnes of the physical metal.