Gold staged a spectacular rally in the first quarter of this year, rising 17% in US dollar terms – its best performance in almost three decades. The return on gold significantly outperformed other major stock, bond and commodity indices.
We believe that these factors will continue to support both investment and central bank demand in the coming quarters. Combined with an analysis from past bull-bear cycles, this suggests that we may be entering a new bull market for gold.
We have entered a new and unprecedented phase in monetary policy. Central banks in Europe and Japan have now implemented Negative Interest Rate Policies (NIRP). Investors, including central bank managers, should assess the implications of holding bonds with negative return expectations on portfolio composition and risk management.
Our analysis shows that Investors may benefit from increasing their gold holdings up to 2.5 times, depending on the asset mix, even under conservative assumptions for gold. In addition, we expect that demand for gold as a portfolio asset may structurally increase due to NIRP.
The World Gold Council’s leading industry publication on gold demand trends, analysed by both sector and geography for the fourth quarter and full year 2015.
The latest edition of our Investment Commentary reviews gold’s performance during 2015 and examines the factors that may influence gold in 2016.
The gold price declined in 2015 in US dollar terms – but not in all currencies. In our view, the effect that US rates have had on the gold price is overdone and may take a back seat in 2016.
Amid expensive stock valuations and high market risks, gold’s role as a portfolio diversifier and tail risk hedge is particularly relevant.
The World Gold Council has conducted a study to assess the current state of hallmarking in India.
Our intention was threefold:
- To evaluate the existing hallmarking system
- To stimulate debate around how best to strengthen hallmarking processes
- To demonstrate the benefits of an effective hallmarking infrastructure.
Gold has unique properties as an asset class. The diversity of gold-backed and gold-related products means that gold can be used to enhance a wide variety of individual investment strategies and risk tolerances.
Our analysis shows that gold can be used in portfolios to protect global purchasing power, reduce portfolio volatility and minimise losses during periods of market shock.
It can serve as a high-quality, liquid asset when selling other assets would cause losses.