Hang on to your gold

Gold has slipped to a two-month low of around $1,220 an ounce. But hang on to some, just in case.

Andrew Van Sickle
By
published
in Features

Goldhas slipped to a two-month low of around $1,220 an ounce, and may tread water for now. Global demand slipped by 16% year-on-year in the first quarter, largely because investors have stopped pouring money into gold-backed exchange-traded funds, according to the World Gold Council. Last year, investment demand in the January-March period reached record levels amid jitters over the Brexit vote and the US election.

In the first quarter of this year, China's appetite for bars and coins breached 100 tonnes for only the fourth time on record. But the geopolitical backdrop has settled down, which will temper investors' appetite for safe havens, while confidence in the US has increased. With further rate rises looming, gold becomes less appealing because it offers no yield.

Yet investors should keep around 5%-10% of their portfolio in gold. The risk of a political upset potentially sinking the euro is not off the table. Donald Trump's protectionist instincts and the possibility of a sharp jump in inflation as central banks fall behind the curve are further reasons for holding gold as a form of insurance.

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Andrew Van Sickle
Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.

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