Gold is a safe bet for investors - Sprott
Gold has produced consistent returns in virtually all currencies year after year, and will continue to hit all-time highs, according to Sprott Asset Management chief executive Eric Sprott.
Sprott said gold has returned over 550 per cent since 2000, but does not believe gold is in a financial bubble. In fact, he believes it is one of the lowest held assets and represents a safe bet for investors.
Referring to the Gold Yearbook 2010 research paper from CPM Group, Sprott said gold represented 5 per cent of global financial assets in 1968. This figure then fell to 0.9 per cent by 1990 and now sits around 0.7 per cent today.
Hinde Capital chief executive Ben Davies argues that for any asset to be in a bubble, it must be over-owned and over-valued.
"Gold accounts for the smallest part - if indeed a part at all - of most investors' portfolios. How can it possibly be in a bubble?" Davies said.
The issue with valuing gold in US dollar (USD) terms is that as inflation increases, gold appears to be more expensive than it really is, Davies said. It is more accurate to value gold in terms of global money supply, he said.
Sprott believes silver represents another safe bet for investors because there is a lack of supply.
"I look at the demand for silver these days and can see it trading to 16-to-1 (ratio to gold) within three to five years," he said.
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