he two extremes
http://www.wsj.com/articles/SB10001424053111904491704576575051077746110
“We haven’t seen [low] valuations like these since 2008,” says Joe
Foster, gold strategist at Van Eck Global. But financially, gold miners
have “never been in better shape.” Van Eck’s Market Vectors Gold Miners
exchange-traded fund holds 30 mining stocks.
http://blogs.wsj.com/moneybeat/2015/07/17/lets-be-honest-about-gold-its-a-pet-rock/
Since June 2014, investors have yanked $3 billion out of funds
investing in precious metals, estimates Morningstar, the
financial-research firm; total assets at precious-metal funds have
shrunk 20% in 12 months.
You don’t want to be one of these people, spending years telling
reality that it is wrong. There is a case to be made for owning gold,
but it speaks in a whisper, not in the shouts of doomsday so customary
among gold bugs.
Because gold, unlike stocks, bonds, real estate and other financial
assets, generates no income, valuing it is all but impossible. “It’s
intrinsically worthless or intrinsically priceless,” says Paul Brodsky, a
former hedge-fund manager who now is a strategist at Macro Allocation,
an investment-research and consulting firm in New York. “You can build a
financial model to value it, but every input is going to be your
imagination.”
Gold is two things, neither of which is easy to price: a commodity and a currency.
Several big gold-mining companies—among them, Barrick Gold and Newmont
Mining —are trading around 14 times their earnings over the past four
quarters, virtually matching the Standard & Poor’s 500-stock index
at 14.5 times earnings. Even with gold at record highs, the shares of
gold miners are trading at an industrywide average of roughly 18 times
earnings, at 2.4 times “book” or asset value (versus 2.0 times for the
overall stock market) and at one of the lowest ratios on record to the
price of the metal itself.
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