Irascible and capricious, Donald Trump would trigger a series of geopolitical crises and give gold, widely viewed as a safe haven, a boost or so many investors assumed. Yet "remarkably, after all the excitement" since he won the presidency, says John Authers in the Financial Times, gold "is almost exactly where it was on election day". It has slipped by 5% or so from January's 17-month high and now costs about $1,300 an ounce.
This is partly because investors have got used to "violence, political turmoil and uncertainty", Brian Larose of ICAP Technical Analysis told Barron's. Trump's bark has also so far at least proved worse than his bite, so the markets have become inured to his tendency to pick fights.
Meanwhile, gold is an asset that thrives on bad news, so robust worldwide growth, and the gradual increase in long- and short-term interest rates, undermine its appeal: gold offers no yield. The strengthening dollar hasn't helped either. Gold is priced in dollars so a stronger greenback makes it more expensive for holders of other currencies.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Investors should nonetheless continue to hold 5%-10% of their portfolios in gold. It is an insurance policy against a jump in inflation which may not be far away, given how tight labour markets are in the US and Britain because it maintains its value. And with the euro crisis flaring up again, the world has gained another potential geopolitical flashpoint.
-
Reeves told scrapping pension salary sacrifice would cost average earner £377 a yearMPs – including chancellor Rachel Reeves – have received a letter warning of the dangers in reducing or removing salary sacrifice schemes for pension contributions, a plan under consideration by HMRC.
-
Equity release jumps 4% amid growing inheritance tax concerns and sticky inflationThe amount of money withdrawn by equity release has increased, but the total number of plans has fallen
