Want to Invest like Ron Paul? Buy Gold
Three words seem to sum up Ron Paul's perspective when it comes to investing: gold, gold, and gold.
Marketplace featured a story Thursday on Ron Paul's investment strategy of buying gold. Marketplace's Bob Moon interviewed Jason Zweig, an investing columnist from the Wall Street Journal. On the topic of Ron Paul's investment preferences, Zweig admitted, "It's one of the most unusual portfolios I've ever seen. It's certainly the most unusual portfolio on Capitol Hill."
According to Zweig, Paul is putting his money in gold, "almost all of it". Zweig stated that Paul has "pretty much made an all-in bet on the one thing that he does believe in". In this way, Zweig affirmed that Paul is putting his money where his mouth is. Those who follow Ron Paul may remember last July when Paul asked Federal Reserve Chairman Ben Bernanke whether gold is money. Whereas Bernanke replied that gold is not money, it would seem that Paul's investment choices reveal the Congressman's opinions on the matter.
Commenting on Paul's portfolio, Zweig mentioned how he didn't think that Paul had lost any money in the last two or three years. Zweig: "I have no doubt that [Paul's] portfolio has outperformed the stock market as a whole over the past few years." Zweig later suggested that Paul's investment strategy is due to the fact that Paul foresees inflation and a collapse of the US dollar. Even so, Zweig admitted, "There are a lot of other bad things that could happen to the American economy, too, and this kind of portfolio won't protect against those."
In terms of actual investment paths Zweig wrote that "21% of Rep. Paul's holdings are in real estate and roughly 14% in cash." Zweig: "The remainder of Rep. Paul's portfolio -- fully 64% of his assets -- is entirely in gold and silver mining stocks."
Back in August, my Benzinga colleague Scott Rubin discussed whether Ron Paul can be considered a master investor. Rubin cited an article from Barron's written by Jim McTague discussing how "Paul's investment strategy is a financial planner's nightmare". McTague: "Paul's portfolio amounts to a super bearish bet against the US economy." Even so, as bullish on gold as Paul appears, according to McTague, "Paul's financial disclosures reveal no holdings of physical gold, gold coins, or gold equivalents like certain exchange-traded gold funds, which is confounding". McTague continued in that after a bit of research, a previous financial-disclosure form revealed Paul's holding "semi-numismatic" coins "worth between $100,001 and $250,000. But from 2003 onward, they were never mentioned again." Thus, Paul's investment strategy seems to center more on miners and less on physical gold and/or ETFs.
Ron Paul is not the only one who has been bullish on gold lately. Mad Money's Jim Cramer recently wrote a story for TheStreet.com on why investors should not give up on gold. Even further, Cramer discussed early in December on TheStreet.com how gold is the best trade for a possible recovery in Europe. While discussing the prospect of deflation with TheStreet.com's Alix Steel, Cramer stated that, "People are saying, 'Jim, are you backing away from gold?' Gold's up 17 percent. I'm not backing away from gold. I've been consistently in favor of gold since the show began almost eight years ago. I'm not deviating."
In terms of actual investments, Cramer said in November that investors should look at gold bullion and the SPDR Gold Shares ETF, "which is probably the easiest way to go for the gold".
Gold is currently trading at $1,609 per ounce, with a gain of over $200 in the past year. Obviously, in this type of volatile trading environment, information is key. Thus, it helps to know how big names are approaching the market. For more information on market chatter and market-moving rumors, remember to check out Benzinga's Real-Time Rumors.
Traders who believe that gold will rise despite fears of deflation might want to consider the following trades:
- Go long on SPDR Gold Trust ETF (NYSE: GLD) and iShares Gold Trust ETF (NYSE: IAU). Also check out buying gold coins and bars.
Traders who believe that the price of gold will decline may consider alternate positions:
- Short the abovementioned ETFS or look into holding cash as an investment strategy.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
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