By Ruth Sullivan
Published: December 12 2010 08:43 | Last updated: December 12 2010 08:43
Investors have turned to precious metals, particularly gold, traditionally seen as a safe haven, as concerns grow over eurozone sovereign debt, widespread economic uncertainty and currency falls.
“In times of uncertainty and austerity nothing glitters quite like gold,” says Paul Duncombe, head of multi-asset investment solutions at Schroders.
The World Gold Council expects gold demand in 2010 to exceed that of last year, driven by investment demand as a result of concern over quantitative easing, currency conflict and inflation, in addition to strong demand for jewellery in China and India, and a revival in the use of gold by the industrial sector.
“The rediscovery of gold as both a currency and a monetary asset has been brought into sharp focus,” says Marcus Grubb, investment managing director at the council.
Investment into physical gold rose to $14.6bn in the first nine months of 2010, up from $8bn in the same period a year ago, according to the council. This comes largely from retail investors buying bullion but also from both institutional and retail investors gaining exposure to the precious metal through physically backed gold exchange traded funds.
Schroders has been “investing more in gold [across multi-asset funds] this year, using it to hedge against risky assets such as equities that can fall in an uncertain economic environment, and also as a hedge against developed market currencies as their value falls, using gold as a quasi-currency”, says Mr Duncombe.
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