Debunking The Notion That Gold Is A Crowded Trade

It's already been debunked several times, but this post at Daily Markets excerpts a thorough one by Paul Brodsky. The excerpter, Jordan Roy-Byrne, had this to say as an introduction:

I have been harping about this for quite a while. Gold is hardly a crowded trade. Only 0.7% of global assets are invested in Gold.

Now consider that fact and consider that Gold is 10 years into a bull market, has been up every year and has yet to go parabolic. At $1250, Gold would be up 5x from its low. Oil rose nearly 15x in 10 years. The Nasdaq was up about 17x from its 1990 low to its 2000 top. Gold in the 1970s rose 25x!!!

The suggestion is that, had gold been a crowded trade, it would have been a lot more owned due to its outperformance of the U.S. stock market. However, the only institutional investors that seem to have more than a marginal interest are hedge funds.

Gievn that Brodsky believes that gold is relatively undervalued, his conclusion isn't that surprising:

At current valuations the gold market is a tiny speck in relation to where perceived global wealth is being housed. The fundamental issue is one of ratios and relative future value. Our bet is that the gold-to-everything-else spread will narrow substantially. We are indifferent to whether gold rises to $10,000/oz. while the DJIA stays at 10,000 or gold stays at $1,100 while stocks and bonds crater....

Unfortunately, perhaps, gold seems to be condemned to alternative-investment status. One of the earmarks of gold going into a bubble in the past was it becoming mainstreamed.