Gold Not the Best Bet for the Long Haul: Analyst
Investors continue to pile into gold exchange traded funds, amid persistent worries about the European debt crisis and uncertainty over whether U.S. lawmakers will come to an agreement in time to raise the federal debt ceiling and prevent default.
Gold exchange traded funds (ETFs) have tracked gold futuresprices to all-time highs. SPDR Gold Shares , the largest U.S. gold exchange traded fund with more than $60 billion in assets, is up 11.7 percent in the last month, and has more than doubled in the last year. iShares Comex Gold Trust and ETFS Gold Trust are also trading near record levels.
But some analysts say gold-related assets may not be the best bet for the long haul. Chong Yoon-Chou of Aberdeen Asset Management told CNBC he is skeptical of any long-term strategy associated with gold.
"The problem is that gold is not a productive asset," Yoon-Chong said, noting that while "everyone is parking there" at these levels "you kind of have a feeling there is a bubble."
He said that more investors are rushing to gold as a hedge against uncertainty until the debt ceiling is raised in the U.S.
Yoon-Chong believes investing in gold is fine for the short-term, however, “when people start thinking it is time to take money out again, it is again, 'Who is the first to run out of that asset?' "
Analysts are also cautioning that big gold mining stocks—which have also benefited from gold's record run—may be too pricey. Jay Taylor, president and CEO of Taylor Hard Money Advisors, recently told CNBC that big mining company stocks are not a bargain with gold trading at these levels, and suggested investors seek out smaller rivals. (Click here for his recommendations.)
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Disclosure information was not available for Chong Yoon-Chou or Jay Taylor.