Economic storm clouds are gathering and investors are scrambling to push their assets into gold, according to global analysts.
This week the World Gold Council (WGC) has said it sees a “perfect storm” of economic uncertainty.
"Many analysts are interpreting weak Japanese Government Bond demand as a signal that investors are starting to lose confidence in the effectiveness of unconventional monetary policies, following increasingly desperate bids by the world’s central banks to reflate the global economy.
“In this environment, we believe investors are using gold to hedge portfolio risk as they add more stocks," a spokesman from the WGC said.
Already this year gold has outperformed many other commodities – the precious metal has surged generally by 29% since the start of the year. Gold is now outperforming many other commodities.
The WGC has said that central banks are adding more bonds to their balance sheets – this mean they are limiting the amount available to investors.
Should investors put all their money into gold? The answer is no.
We can’t stress enough that investing in gold should be part of an investment portfolio, making up no more than 10-15% of a portfolio.
We have seen some investors wanting a quick return on investment by buying gold and selling it back quickly, particularly after Brexit.
Although gold prices have increased – and they are expected to rise again – we would advise against this strategy. Gold prices can fluctuate but that said historically over time the precious metal has traditionally performed well.
Gold should be thought of for the medium to long-term and more like an insurance policy.
We do expect to see more demand for gold especially from new investors. It is worth noting that Gold Investments has made it easier to buy gold online in particular, whatever the budget.
How long will the ‘perfect storm clouds’ gold storms last? The WGC is predicting it could last quite a while longer. We would echo this and cannot see this changing whilst there is still so much economic uncertainty.
To talk about your gold options, why not arrange a chat with our knowledgeable team? Tel: 020 7283 7752 | [email protected]
We also have offices near Bank in the City.
Main image by ‘cjohnson7 ‘ – Creative Commons Licence.