http://www.treasury.wa.gov.au/cms/u...re-fund_investmen_framework_nov2012.pdf?n=521 Section 3.3 Given the amendment to the Western Australian Future Fund Bill 2012 to allow the Fund to purchase gold as an investment, this section discusses gold as an asset class and the effect on the Funds risk and return characteristics from potential investments in gold. Figure 1 shows that negative real returns are possible over a period of time. Figure 2 shows that the likelihood of negative annual returns is not dissimilar to the likelihood of positive annual retuns. The possibility of negative returns illustrated by Figures 1 and 2 does not accord with the Fund objective to achieve a return above WATC CoF and therefore gold as an asset does not meet the Funds desired risk tolerance. This is not say that the risk objective of the Fund will always preclude an investment in gold, but rather that , currently, semi-government bonds and highly - rated corporate bonds better suit the Funds stated risk tolerance. As such, it is proposed that any investment in gold is made through TAA decisions as an allowable investment at the discretion of the Fund and its governance structure. -------- Man oh man, I thought WA govt owns Gold Corp (Perth Mint) and knows better. Bonds (especially govt bonds) are in a bubble, and gold price currently has been suppressed. I thought the smart money would move to an asset class that is "low" or undervalue. Didn't they teach them to buy low sell high? It seems like those mobs at the WA Treasury have the herd mentality as well. Perhaps Bron can give them a lesson or two on the value of Gold, the real honest money. I thought having 10% of that seed money in Gold would be a darn smart move.
Not a great vote of support for the WA gold industry! Thanks for the FYI, I'll have a look at the link tomorrow.
Bron, I would have thought that the WA Treasure should consider holding at least 10% in allocated gold or equivalent of gold certs like the PMGOLD. Given that GoldCorp/Perth Mint is owned by the WA govt, I would have thought that they are at least half educated on the value of gold. I hope someone like yourself or someone in Gold Corp can educate these mob at the Treasury. I also wonder how many SWF out there actually hold gold as an asset or investment vehicles.
Not surprising. Governments dont like precious metals, period! Governments would rather money be in bonds and other debt instruments. Precious metals are seen as some blip from history without relevance in today's cyber linked financial world.
If the WA governments didn't like gold then why did they put in an explicit clause saying the future fund could invest in gold? The paper is by a govt dept (bureaucrats), not politicians. It seems to me to be more about the FF being super conservative (they are only holding cash and bonds) and gold is a bit volatile compared to that. However gold has counter cyclical propertise so I think the analysis could have looked a bit deeper into how a portfolio mix with gold would have worked.
I think they should put ALL their money in US Treasury Bonds, EU Bonds, and OZ Bonds. .....and lots of shares in Blue Sky Mines. Nice and safe!
Bron, any chances for you guys at the Gold Corp to give these people at WA Treasury and WA Treasury Corporate a bit of educations and get them to seriously consider Gold as a viable investment/reserve assets? Does Gold Corp comes under the WA Treasury department? Can anyone give someone a bell to tell the mobs at WATC who manage the WA FF not to put all eggs in the Bond basket as Bond is in fact in a bubble right now.... ???
I need to do some work on gold mixed with bonds and cash in a portfolio to see what it does to the overall return. Perth Mint doesn't come under WATC, we report directly to the Premier.
