{"id":16571,"date":"2019-08-28T09:15:27","date_gmt":"2019-08-28T13:15:27","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/in-a-negative-yield-world-is-gold-ready-for-a-comeback-134862"},"modified":"2019-08-28T09:15:27","modified_gmt":"2019-08-28T13:15:27","slug":"in-a-negative-yield-world-is-gold-ready-for-a-comeback","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2019\/08\/28\/in-a-negative-yield-world-is-gold-ready-for-a-comeback\/","title":{"rendered":"In a negative yield world, is gold ready for a comeback?"},"content":{"rendered":"\n
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Gold Bars 1000 grams. Concept of wealth and reserve.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n

Martha Porado <\/span> | August 28, 2019 <\/p>\n

During the past decade\u2019s bull market, gold has been largely off the radar for institutional investors. But as key bond yields turn negative, among other recessionary signals, chatter about the commodity is heating up.<\/p>\n

\u201cAll precious metals have no correlation to the rest of the marketplace so that tends to be why gold and precious metals get looked at as a haven asset when markets get wonky,\u201d says Stan Kiang, director of strategic accounts at Aberdeen Standard Investments Inc.<\/p>\n

Most large corporate and public plans will have exposure to gold within their commodity holdings, which are usually between zero and 10 per cent of the portfolio, he says. However, if markets take a serious tumble, gold may look more attractive.<\/p>\n

Read: BCI to oppose proposed Goldcorp, Newmont Mining merger<\/a><\/strong><\/p>\n

\u201cI would see pensions or institutional investors using the [exchange-traded funds] available in the marketplace because they\u2019re a quick, cheap access to that tactical play that they want to make,\u201d says Kiang. \u201cAnd I think we\u2019ve seen that this year with flows into ETFs. That generally tells you there\u2019s some nervousness out there, just from what we\u2019ve seen of flows into products like gold.\u201d<\/p>\n

The run-up in the precious metal over the past few months indicates a certain amount of fear in the markets, he adds. With those price increases, investors may think they\u2019ve already missed the boat on making an allocation at an attractive level, but Kiang says there\u2019s plenty of noise in the markets pushing more investors that way. Whether it be ongoing uncertainty about Brexit, central bank policies or trade tensions between the U.S. and China, a lot of factors are pointing towards gold still being in the early stages of a run.<\/p>\n

Read: What Bitcoin investors can learn from the rise and fall of gold, dot-com companies<\/a><\/strong><\/p>\n

As far as where investors will cut, equity holdings will likely have to come down a peg, he says. \u201cI think equities, obviously, have been more than a decade into this bull run. That\u2019s where people are feeling most nervous. I think that\u2019s probably where you\u2019re going to see the allocation shift.\u201d<\/p>\n

As negative yielding fixed income is receiving major attention from markets, an asset like gold could be all the more attractive, says Greg Taylor, chief investment officer at Purpose Investments Inc.<\/p>\n

\u201cPeople have said they don\u2019t really like gold because it costs you something to store it,\u201d says Taylor. \u201cYou\u2019ve got to get a vault, you have to rent that out and who wants to do that? But when you\u2019re looking [at] a negative yielding world, and you\u2019ve got US$16 trillion in bonds that are negative yielding, that\u2019s costing you money to store that. And in that world, gold actually looks pretty attractive.<\/p>\n

Read: Are institutional investors moving into cryptocurrency?<\/a><\/strong><\/p>\n

\u201cIt\u2019s a good offset to central banks that look to be offering another quantitative easing or another stimulus program. For investors that want to have something that isn\u2019t manipulated by the central banks, gold could be showing up again.\u201d<\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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