Bill Gross says investors should favour gold

Money manager Bill Gross says investors should favour gold and real estate while avoiding most stocks and bonds trading at inflated prices.
"I don't like bonds; I don't like most stocks; I don't like private equity," Gross, who runs the $US1.5 billion Janus Global Unconstrained Bond Fund, wrote in his monthly investment outlook on Wednesday. "Real assets such as land, gold and tangible plant and equipment at a discount are favoured asset categories."
The things that look good to buy are what central bankers haven't been purchasing, Gross said in an interview on Wednesday.
"Central banks have not bought a lot of gold," he said. "They have not bought real estate to this point."
The 72-year-old manager has been reiterating cautious views as markets rally.
"Sovereign bond yields at record lows aren't worth the risk and are therefore not top of my shopping list right now; it's too risky," Gross said in a statement released on Tuesday by Old Mutual Global Investors. "Low yields mean bonds are especially vulnerable because a small increase can bring a large decline in price."
In his August outlook for Janus Capital Group, Gross said the financial system won't break down immediately. The time will come "when investable assets pose too much risk for too little return."
Low interest rates already hurt returns for banks, insurance companies, pension funds and individual savers, according to Gross. Central banks haven't figured out an end game for their efforts to stimulate economies by buying sovereign debt and other investments that are failing to prove effective.
"Central bank 'promises' of eventually selling the debt back into the private market are just that -- promises/promises that can never be kept," he wrote.