As stock markets roar back from the coronavirus-led rout, advisers to the world's wealthy are urging them to hold more gold, questioning the strength of the rally and the long-term impact of global central banks' cash splurge.
ZURICH/LONDON - As stock markets roar back from the coronavirus-led rout, advisers to the world’s wealthy are urging them to hold more gold, questioning the strength of the rally and the long-term impact of global central banks’ cash splurge.
While gold prices have already risen 14% since the start of the year to $1,730 an ounce, many private bankers bet that gold - a hedge for both inflation and deflation - has further to run. “With the recent equity rally, people have become more nervous. People are actively seeking out portfolio hedges that might perform well in a range of scenarios,” said Kiran Ganesh from UBS’s chief investment office.
While queries about gold have increased, very few clients had demanded a wholesale move into gold - something they would have been advised against - the bankers said, adding older clients tended to be the most concerned about inflation risks. Despite the fact that holding gold pays no income, Oliver Gregson, head of the United Kingdom and Ireland at JPMorgan Private Bank said inquiries had gone up as clients increasingly viewed it as “a port in a storm”. He forecast a $1,750 year-end price target.
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