We do not think global inflationary pressures are a short-term threat, nor do we have a strong view on a weaker dollar.
Gold pays no interest and/or no dividends, which makes it impossible to value against securities that produce earnings, distribute dividends or any interest-bearing instrument.
In the past few months, the following arguments have convinced us to increase exposure to gold in our global and domestic portfolios:
In December last year, 52 percent of the central banks examined by Fitch were in a monetary tightening phase and only 3 percent were easing. Deterioration in global growth prospects, rising uncertainty about the future direction of trade policy, and a slowdown in global manufacturing and trade have now contributed to a widespread shift in central bank policy. These shifts to cut interest rates and capital market reaction have moved $16 trillion (R243trn) of government debt into negative yield territory.