By Chan Jian Ming
Singapore: Post-Brexit, gold continues to hold on to gains despite a recovery in risky assets like equities. The precious metal, which is seen as a safe haven asset, has risen 25% this year and trades close to US$1,330 per ounce – a level last seen in July 2014. So should investors jump in or stay pat?
“Gold remains an under owned hedge against global central bank credibility and under-appreciated global risks, particularly from China,” say Mark Lacey and James Luke, fund managers at UK-based Schroders, in a Thursday report. “Within the gold investment universe, gold equities in particular offer a compelling investment case and we believe are likely to outperform the gold price in coming years.”
Five open-ended equity funds available for sale in Singapore offer direct exposure to gold stocks (see table below). These funds have gained 82% on average this year, easily outperforming spot gold. The funds are led by the $381 million Investec GSF Glbl Gold A Acc USD fund, up 86.4%; the $114 million Deutsche Noor Precious Metals Secs A fund, up 85.9%; and the $248 million Franklin Gold & PM A Acc USD fund, up 84.6%.
Apart from gold, other safe haven assets include the Swiss franc and Japanese yen. But central bank intervention could cap their gains, according to the World Gold Council. This makes gold unique as it does not carry “intervention risk”.