GOING WITH GOLD

Gold is revered within mythologies, legends, cultures and races through history. It has been utilised in various fields such as art, jewellery, medicine and dentistry. Men are obsessed with it as an object of status and wealth.

HOW DOES GOLD ENHANCE YOUR PORTFOLIO?

From an investing point of view, Gold becomes a safe haven asset during potential market corrections arising from financial crises or geopolitical tensions. It also serves as a hedge against inflation caused by excessive printing of monies from developed countries, apparent over the last few years.

The reasons above, coupled with the current volatility in global markets, presents the attractiveness of including Gold in your investment portfolio.

This was evident during the recent UK referendum, or “Brexit”, where Britain voted on its decision to retain its European Union membership. When the vote ended with Britain deciding to exit the European Union, world stock markets tumbled and the British pound fell. Negative sentiment spread like wildfire.

Yet, Gold price increased by nearly 4% on the same day.

By the end of the week, Gold had appreciated by about 8%! This is in stark contrast to some of the major indices shown in the chart below:

Performance of SPDR Gold, Dow Jones Index and S&P 500

Performance of SPDR Gold

Past performance is not indicative of its future performance.

We are delighted that you have taken our advice to leverage on Gold Exchange-Traded Funds (ETF) to gain exposure to the asset class since 2014.  Over the last 2 years, we have progressively increased your Gold ETF holdings to prepare for the after-effects of a global equity correction, led by a U.S. equity decline.

We remain convinced that current U.S. equity prices are overinflated and any unexpected bad news can bring about a correction.

The global reaction from Brexit alone reinforces the potential of Gold being able to deliver short- and medium-term price appreciation during times of adversity.

WHAT’S NEXT?

Our current allocation of having 50% in Capital Preservation assets such as Gold and Cash helps you profit from such market corrections. Concurrently, your portfolio is also positioned to help you take advantage of Chinese and Oil equities at attractive prices for your longer-term goals.

One might say that the current market climate is similar to that of winter, where things are cold and gloomy. However, one can stay warm by building a fire with wood. Gold is akin to wood during winter; and as the cold season looms, it would be wise for you to stock up on wood to enjoy the warmth from the fire.

Enjoy the seasons.

 

Source

1 http://finance.yahoo.com/ Yahoo Finance

 

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