Research library

Our analysis illustrates that adding between 2% and 10% in gold to a hypothetical US pension fund average portfolio over the past decade would have resulted in higher risk-adjusted returns.

The global bullion banking industry is large and well-established with annual revenues estimated at more than US$1.5bn. The market includes both international banks and smaller local players.

The first half of 2019 proved quite eventful for financial markets. Stocks retraced their Q4 2018 losses by the end of April only to pullback again in May.

Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio...

Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment.

Gold has fallen to a 20-month low amid sharp EM currency depreciation. At these levels, we believe the gold price may bounce back. Consumer demand is likely to be supportive in H2. And short positioning may quickly reverse should one of the many current macroeconomic risks materialise, increasing investment demand.

In recent years, buy-and-hold investors such as pension funds, endowments, insurance companies, and sovereign wealth funds (SWFs) have gradually increased their investments in alternative assets to diversify their portfolios and boost returns. ‘Alternatives’ make up 23% of SWF portfolios and 24% of global pension funds, up from single digits in 2000.

Natalie Dempster, Managing Director, Central Banks & Public Policy at the World Gold Council in conversation with Will Jackson-Moore, Global Private Equity & Sovereign Investment Fund Leader at PwC on gold and alternative asset classes for Sovereign Wealth Funds.

Some commentators went as far as to claim cryptocurrencies could replace gold. Cryptocurrencies may become an established part of the financial system. But, in our view, gold is very different from cryptocurrencies.

Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio.