“Given easing monetary policy, there is a scenario where financial assets essentially become devalued,” he said.
At Texas Christian University, endowment managers considered buying gold for similar reasons three years ago -- and rejected the idea, said chief investment officer Jim Hille. TCU instead holds oil and gas royalties, which produce income, he said. Gold typically must be sold to lock in gains.
Weathering Decline
“It just doesn’t do anything for your payout needs every year,” he said.
The Fort Worth, Texas, university’s $1.3 billion endowment gained 13 percent in the fiscal year through June 30.
The largest mining companies argue they can weather gold’s decline -- so far, to a price still far higher than the $640 average over 20 years -- by cutting overhead costs, paring exploration and writing down assets acquired during the boom.
Barrick Gold Corp., the world’s biggest gold producer, took $8.7 billion of writedowns and slashed its quarterly dividend 75 percent, lowering what it calls “all-in sustaining costs” to $900 to $975 an ounce for 2013. Gold miners have announced at least $23 billion in writedowns in the past month.
“Companies are pretty good at knuckling down and ultimately reducing costs,” Jamie Sokalsky, CEO of Toronto- based Barrick, said in an Aug. 1 interview. “I don’t think you are going to see massive types of closures.”
‘Not Sustainable’
Nick Holland, the CEO of Gold Fields Ltd., is less sanguine. The company’s South Deep mine is one of the few in South Africa that could survive prices near the year’s lows, in part because it’s largely mechanized and less reliant on labor, Holland said.