The Bristol Blog features news and information about Bristol, Connecticut.
December 19, 2013
Should the city buy gold? Maybe
Taxpayers may soon own a serious pile of gold.
The city's Retirement Board is weighing whether to double down on its investment in gold mining, buy gold itself or just quit the whole gold market entirely.
Thomas "TJ" Barnes, who heads the panel, said that its investment in gold mining hasn't done well over the past two years. He said it's time for the city "get out or double down" depending on what pension overseers think about the future of the gold market.
John Beirne, the city's pension advisor, said China is still buying gold at a stunning rate - hundreds of metric tons annually.
"That's a lot of jewelry," he said. "There's something else behind it."
Overall, Beirne said, there has been "a huge move of gold from the West to the East," but it's hard to know just why China is so interested in acquring so much of the metal.
He said there's no sign the country's slowing down its purchasing.
Barnes said, though, that the city's stake in mining companies is down 38 percent despite rising gold prices.
He said 2 percent of the nearly $600 million is tied up in the gold mining stocks.
"I'm not sold on the mining play," Barnes said. It hasn't panned out, he said.
On the other hand, he said, the market might be near the bottom so it may make sense to buy more rather than getting out.
Beirne said that when gold goes up, gold mining stocks should do even better. He said he would stick it out.
The board agreed to look into it more next month.
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