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Gold is bigger bubble than tech, says $63bn asset manager

Says price of gold has gotten disconnected from fundamentals.
Image: Bloomberg

Carillon Tower Advisers portfolio specialist Matt Orton is a rare critic when it comes to gold’s meteoric rise this year. He says excitement around the metal has made it a bigger bubble than tech stocks.

Orton, who is “quite bullish” on tech stocks, thinks the price of gold has gotten disconnected from fundamentals. The flow of funds into gold “shows how much enthusiasm and/or speculation has been going into the gold complex,” Orton said in an interview. His firm has more than $63 billion under management and is based in St. Petersburg, Florida.

“Everyone talks about the bubble in technology stocks,” but the tech sector is “rising because a lot of these companies have been able to increase their market shares during Covid,” Orton said. The tech firms also had strong earnings, providing higher visibility to their growth profile, Orton said. Gold’s rally, on the other hand, could “completely derail” once risk factors driving investors to safe havens ease, including lower rates and the weaker U.S. dollar.

Here are other details from the interview:

  • Orton recommends investors hedge their portfolio by diversifying, rather than allocating money into gold. He also thinks investors should keep some cash in “some form of low-duration assets,” which they can redeploy when needed.
  • In terms of “tactical asset allocation,” Orton recommends overweighting equities with appropriate diversifications.
  • Within equities, his preferred sectors are tech and health care. He thinks tech stocks with IT services look interesting as they have underperformed peers and have leverage to the U.S. economy.
  • In health care, stocks in the equipment business are “particularly interesting” as they have exposure to “durable themes” such as chronic disease treatments.
  • Orton’s least-favourite sector is mid- to small-cap financial stocks because they will struggle in the low interest rate environment. He also doesn’t recommend investor exposure to the energy sector.
  • © 2020 Bloomberg

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The tragedy is that The Gold Standard, would have regulated this sort of thing! The other tragedy is that South Africa, once the biggest job creators best and safest gold miners in the world has diminished to be a small player. Once the Oppenheimers decided to call it a day…our gold mining business seemed to collapse from lack of interest.
This is the very time we need to be capitalizing on a bubble or gold bull run….and where are we? …. talking about strikes in the mining sector,thousands unemployed, and no hope of fiscal redemption from our own resources but having to borrow from the IMF and the World Bank. Dear oh dear oh dear!

Gold is a finite resource. Our gold mines have to dig deeper, higher cost.

The economy has gone sideways and we had very bad cases of corruption, mostly in the previous govt. administration.

We knew that to fix the errors of the previous govt. administration was going to take decades to sort out.

End of comments.

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