Here’s why gold might die out as an investment
Published: Aug 15, 2018 9:23 a.m. ET
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Critical information for the U.S. trading day
Dimension Films/Courtesy Everett Collection
Gold’s action hasn’t been that glittering lately.
By
VICTOR
REKLAITIS
MARKETS WRITER
Mr. Market is struggling to move on from Turkey worries, and Macy’s disappointing results are a drag as well.
While the Turkish lira TRYUSD, +4.5269% is continuing to recover, Recep Erdogan & Co. are ramping up their tariffs on American goods. Turkey’s leaders describe today’s move as “retaliation for the conscious economic attacks by the United States.”
But this geopolitical angst hasn’t been doing that much for gold GLD, -0.95% , which is trading around levels last seen in January 2017. And that brings us to our call of the day from A Wealth of Common Sense’s Ben Carlson, who suggests that the safety play’s future isn’t so bright.
“I don’t think you can rule out the possibility that gold’s GCU8, -1.02% value to society could be called into question in the decades ahead,” Carlson writes at his blog.
What’s the problem? He points to the disruption-minded tech sector and suggests that post-boomer generations might not take as much of a shine to the metal.
“Isn’t it possible faith in gold could potentially die out with the older generations?” asks Carlson, who is Ritholtz Wealth Management’s director of institutional asset management. “Doesn’t technology present a massive risk to gold’s standing as a store of value going forward?”
The idea could be that Silicon Valley is providing other vehicles for hoarders.
Read more: Rising angst around global politics doesn’t move gold like it used to
Yet he isn’t gaga over cryptocurrencies such as bitcoin BTCUSD, +4.45% , which has been called “digital gold.” His take on cryptos: “It’s going too far in the other direction to assume bitcoin or something similar will completely replace gold.”
Don’t miss: Bullion bulls — this app turns gold into a digital currency
Carlson also expects resistance to his musings: “Cue the hate mail from the gold bugs.” And he does throw the metal’s fans some bones.
“I understand some of the reasoning behind the fact that people still put a lot of faith in the yellow rock — it’s survived as a store of value for thousands of years and can act as an uncorrelated asset,” he writes.
Counterpoint: The case for a gold play as the metal loses its shine
Also see: Meet “green gold” — and the stock for betting on it
Gold falls to levels seen more than a year and a half ago.
Key market gauges
Futures for the Dow YMU8, -1.13% , S&P 500 ESU8, -1.10% and Nasdaq-100 NQU8, -1.40% are trading lower, after the Dow DJIA, -1.06% , S&P SPX, -1.09% and Nasdaq Composite COMP, -1.46% closed solidly higher yesterday.
Europe SXXP, -1.19% is falling, and Asia finished mixed. Oil CLU8, -1.82% is lower, while the dollar index DXY, +0.26% is slightly higher. Bitcoin BTCUSD, +4.45% is trading around $6,300.
See the Market Snapshot column for the latest action.
The chart
Jeff Hirsch
The current bull run began in February 2016 and has to run until 2023 to set records, Hirsch reckons.
“Hold the champagne! This is not the longest bull market on record or since WWII, as the current buzz on The Street would have you believe,” writes Stock Trader’s Almanac editor Jeff Hirsch as he provides our chart of the day.
See: The bull market is set to become the longest in history
Investors should consider using Ned Davis Research definitions for such things, Hirsch says in a post at his Almanac Trader blog. By that shop’s rules, a bull market requires a 30% rise in the Dow Jones Industrial Average after 50 calendar days, or a 13% rise after 155 calendar days.
That has Hirsch declaring: “Using Ned Davis rules, the longest bull began on Oct. 11, 1990, and ran for 2,836 calendar days until July 17, 1998. The current bull that began on Feb. 11, 2016, would have to run until Nov. 17, 2023, to beat it.”
Read more: Is this bull market really 9 years old?
The buzz
Warren Buffett’s Berkshire Hathaway BRK.A, -0.43% has been buying more Apple AAPL, -0.50% , and George Soros & Co. like Facebook FB, -1.35% and Twitter TWTR, -2.76% .
Macy’s M, -12.03% sales missed expectations ahead of the opening bell, and Cisco CSCO, -1.78% and NetApp NTAP, -0.65% are due to report after the close.
See: Cisco earnings — Duo acquisition is nice, but what have you done for us lately?
A $9.2 billion all-stock deal: Diamondback Energy FANG, -9.10% — owner of the coveted FANG ticker — has agreed to buy Energen Corp. EGN, +5.43%
Have you been baffled by Ford F, -0.99% lately? Jim Hackett, the auto maker’s new CEO, has a style that’s baffling to many, says a Wall Street Journal report.
Are you ready for some data? Retail sales, the Empire State survey and readings on productivity and costs hit before the open, along with a report on industrial production. Once trading is underway, watch for releases on business inventories and a housing market index.
Check out: MarketWatch’s Economic Calendar
“Experience hard work at a good, early age” — Reddit co-founder (and husband of Serena Williams) Alexis Ohanian talks with MarketWatch.
The death toll has risen to “at least 35” for that highway bridge’s collapse in Genoa, and Italian Deputy Prime Minister Matteo Salvini is trying to blame the EU.
The quote
“He doesn’t speak to people. I think he had some problems; he lost his father and at the same time lost his brother in two months, but I don’t know how recently.” — An unnamed acquaintance talks to The Times of London about Salih Khater, who has been named as the suspect in yesterday’s attack by the U.K. Houses of Parliament.
Khater is reportedly a 29-year-old British citizen originally from Sudan. A car crashed into barriers outside the Houses of Parliament yesterday morning in the suspected terrorist attack, injuring several people. President Trump sounded off on the development, tweeting that “these animals are crazy and must be dealt with through toughness and strength!”
Random reads
“It’s like being a movie star,” says Gail Wise, the first Ford Mustang owner.
Electric flight is coming, but the batteries are too heavy for now.
Benches cleared in the Giants-Dodgers game, with Puig at the center of it.
Advice from Scottish librarians:
National Library of Scotland
?
@natlibscot
Remember this
If you're feeling low
Read a book
Your low will go#WednesdayWisdom
4:01 AM - Aug 15, 2018
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