Gold keeps glittering. But are financial advisors buying?

investmentnews.com:

Jobs remain abundant. Inflation is trending downward. The consumer is still spending. Earnings have been better than expected.

Put it all together and the American economy doesn’t seem half bad. Nope, not bad at all.

Um, so if that’s the case, why are investors piling into a yellow metal that doesn’t pay dividends and can’t be spent at the grocery store? If the economy is indeed headed for a soft landing then why stock up on the hardest of currencies, not to mention the most ancient?

Seriously, does a potential quarter point Fed rate cut in September mean that much to a commodity that even legendary investor Warren Buffett won’t touch?  

(Yeah, you probably figured out by now we’re talking about gold, now trading over $2500 per ounce, up more than 22 percent year-to-date compared to the S&P 500’s still impressive 17 percent return.)

Nick Codola, senior portfolio manager at Brinker Capital Investments, holds some gold in portfolios for clients, generally allocating around 5 to 10 percent to the yellow metal. For most portfolios, he owns it via physical custody ETFs, but for some of his select strategies, he holds it in a combination of physical custody ETFs and gold miners.

In a few income-oriented strategies, he uses covered call gold ETFs which gain their exposure via futures. He also plans to maintain his allocation even as the price of gold keeps hitting new highs.

“Historically, gold and treasury yields have been negatively correlated with each other, gold has had a tremendous run this year. It is a good indication that rate cuts may have been priced into the run-up,” said Codola.

He adds that gold also tends to perform well in more volatile environments, the flash VIX spike earlier this month being a good example.

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