Falling Interest Rates Lead to Irrational Investments, So Gold Must Be in Every Portfolio


All US financial markets are closed Monday in observance of Labor Day

Investors should allocate about 10% of their assets in physical gold, Mark Mobius, who manages about $4-B in assets, told the Reuters Global Markets Forum in an interview Saturday.

Mr. Mobius, who is in Mumbai to promote his book “Invest for Good,” also said cryptocurrencies would gain in favor.

He also said, “It will become easier and cheaper for companies to borrow for expansion and acquisitions. This will drive growth for a number of countries and companies. Of course, the rise of Zero or negative interest rates holds risks since the allocation of capital will no longer be rational, but driven by central bank policies. Such an environment in the short term leads to euphoria and growth, but over time will lead to recklessness and an eventual crash.”

In the meantime, “As long as the music is playing we have to dance!”

Our view on Gold…

We believe that investors should allocate 10-15% of their assets in physical gold.

The reason is that gold maintains its status as Money, a currency that has stood the test of time. There is a growing realization that the supply of fiat or paper money is growing at a rapid pace not only because of central bank activities to drive down interest rates by printing more money but also because of the rapid and inexorable rise of cryptocurrencies.

No one really knows how much cryptocurrency has been created. There is a whole generation of people who have faith in the Internet and cryptocurrencies.

They are beginning to realize that fiat currencies like USD and EUR really do not have anything behind them except the faith of the public.

Given the increasing credibility and faith in cryptocurrencies, they will gain in favor as a currency, but there will always be some doubt and the need for gold as a safe-haven.

Have a terrific Labor Day holiday.