Central banks around the world have effectively taken interest rates to zero. With less opportunity for yield across fixed income assets, investors will likely continue to shift exposure to risks through their asset allocation portfolios. “The current environment,” says the Zurich-based World Gold Council (WGC), “has made gold increasingly relevant as a strategic asset. The reasons for investing in gold as a strategic investment asset, especially during times of upheaval, are manifold: Gold started the year on a positive note, breaking above $1,900/oz. Last year, says the WGC, it was one of the best- performing assets, returning investors an impressive 25%. The market dynamics and perceptions of gold within an institutional investment portfolio have changed over the past two decades, reflecting increased wealth in China, India and Brazil, and a growing middle class in many emerging markets, including in Africa. Its role as a safe-haven asset means it comes into its own during times of high risk. This dynamic, as the WGC contends, is likely to continue, given ongoing political and economic uncertainty, persistently low interest rates and economic concerns surrounding equity and bond markets.
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