Gold has No Intrinsic Value

While gold’s meteoric rise has led to an almost cultish following, it is important for long-term investors to remain cognisant of the facts: gold has no fundamental value

J.P. Morgan Asset Management 31 January, 2014 | 3:34PM

This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Dr David Kelly, Global Strategist for J.P. Morgan explains why gold investors need to be realistic.

Despite a ‘lost decade’ for equities in the 2000s, it is worth noting that investors benefited from being invested in one asset class over that time period: gold. While gold’s meteoric rise has led to an almost cultish following, it is important for long-term investors to remain cognisant of the facts. Gold does not have a fundamental intrinsic value, and does not provide any cash flow, a right to future earnings or a promise of repayment at a later date. Furthermore, it has little economic use and is not tied to global consumption.

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About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.

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