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The Case for Precious Metals: What Role Should Gold and Silver Play in Your Portfolio? By Michael S. Finer and Gary M. Coon Major League Investments, Inc. June 7, 2012As Ralph Waldo Emerson wrote, "The desire of gold is not for gold. It is for the means of freedomand benefit." Emersons keen observation that since ancient times people have bought gold not simplyto own gold, but for what gold represents, certainly rings true for todays investment managers.Historically, gold has served both as a safe harbor during economic downturns and as a valuablehedge against inflation. Therefore, over the long-term, gold can be an effective tool for wealthpreservation.And yet, because gold has no earnings and does not pay dividends, an investment in gold is oftencategorized as "dead money." This traditional knock has particular merit in todays low interest rateenvironment. As Warren Buffett, one of the great investors of our time and a famous critic of gold,once quipped, "[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, diganother hole, bury it again and pay people to stand around guarding it. It has no utility. Anyonewatching from Mars would be scratching their head."So, after a decade-long run-up in price, no actual earnings, no yield or other way to return cash toinvestors, you might wonder whether its still possible to make money in gold. With respect to goldpositions, our robust technical analysis generally leads us to subscribe to the 13 ½ month cycles thattechnician Tom McClellan espouses. This cycle suggested as of the end of May 2012 that gold wasforming a bottoming pattern in the mid $1530 to $1570 range. Complementing technical timingconsiderations, factors like currency stability, geostrategic/political context, and demand for preciousmetals drive our investment decisions.Of course, gold is a complicated measure of value because gold also reflects the currency that it is
opinion reflect the judgment of the authors as of the date of publication and are subject to change.Information presented does not involve the rendering of personalized investment advice and shouldnot be viewed as an offer to buy or sell, or a solicitation of any offer to buy or sell the investmentsmentioned herein. Different types of investments involve varying degrees of risk, and there can be noassurance that any specific investment or strategy will be suitable or profitable for a clients portfolio.All investment strategies have the potential for profit or loss. Major League Investments, Inc. isregistered as an investment advisor and only transacts business in states where it is properlyregistered, or is excluded or exempted from registration requirements. Registration as an investmentadvisor does not constitute an endorsement of the firm by securities regulators nor does it indicate thatthe advisor has attained a particular level of skill or ability. Major League Investments, Inc. 530 Loring Ave Suite 302, Salem, MA 01970 Phone: 978-740-1011 email@example.comIRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in thiscommunication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for thepurpose of avoiding tax penalties that may be imposed non the recipient or any other taxpayer, or (ii) in promoting,marketing, or recommending to another party a partnership or other entity, investment, arrangement or other transactionaddressed herein.