Professor Roubini Gives 6 Reasons for Why Gold is a Bad Investment

Is it true that Gold is one of the safe haven investment?? Gold is now in a bear market, a multi-year bear market, Professor Roubini gives six reasons (he himself helpfully counts them down for us) for why gold is a bad investment. Many people think that gold is one of the safe haven investment, Investors should have a "very modest" share of gold in their portfolios, as a hedge against extreme risks, which, the good professor assures us, are almost so negligibly small that they are "irrational fears", really, but beyond that there is little reason to bother with gold.

So here is the details Roubini's case against gold:

1)   Gold is only useful in extreme economic scenarios (such as 2008/2009) but even then its price is highly volatile (and so it was in 2008/2009).

2)   Gold is only useful when there is risk of rising inflation. Despite unprecedented policy measures, such as multiple rounds of QE, there is no inflation, according to Roubini.

3)   Gold produces no running income and will thus be at a disadvantage in a recovering economy when equities and bonds do better.

4)   Gold does best when interest rates are low or negative but the present recovery – recovery, again!

5)   Fears of sovereign default have been driving people into gold but now the greater risk is that struggling sovereigns may sell their gold holdings.

6)   In large parts the gold bull market was the work of, wait for this, "extreme" political conservatives, of the "far-right fringe" and conspiracy theorists. That hype is now coming undone. According to Roubini, gold is not simply another asset but an indicator of political extremism, of an unhealthy mistrust of the established order. Roubini: "These fanatics also believe that a return to the gold standard is inevitable as hyperinflation ensues from central banks' 'debasement' of paper money."

Well.. Professor Roubini is extremist itself, some part is very true, I agreed