Used throughout history to preserve and display wealth, gold has stood the test of time and today is as coveted and precious as it was a thousand years ago. With governments unleashing ultra-loose monetary policies and trillion-dollar deficits, investors have increasingly fewer options to protect and preserve their wealth.
The importance of gold is echoed by new research with 150 European pension funds with a combined AUM of $213 billion, which reveals the majority are expecting to increase their allocation to gold, thanks to ease of access to the asset class and its diversification and hedging properties.
The study, which was carried out by Global Palladium Fund (GPF), the provider of industrial and precious metal Exchange Traded Commodities (ETCs), shows that 75% of pension funds are expecting to increase their allocation to gold over the next 12 months, compared to just 5% who expect to underweight the metal.
It is getting easier to invest in gold
For those pension funds expecting to increase their exposure to gold, 75% said that the most important reason was that it has become easier and less expensive to invest in thanks to more gold ETPs on the market, and 73% said that it offers increasingly attractive diversification benefits for investors.
This was followed by 71% who said that gold is a good hedge as the US Dollar falls in value and as an inflation hedge (67%). Just 13% said that it was due to the rising price of gold due to improving fundamentals.
$2000 gold price market is considered realistic
Currently trading around the $1,800 per ounce mark, over half of European pension funds are positive about the performance of gold, with 58% expecting it to end the year between $2001 and $2,250 per ounce, compared to 25% expect gold to end the year between $1751 and $2000 per ounce.
Alexander Stoyanov, Chief Executive Officer of GPF said: “Our research highlights the increasing importance of gold as institutional investors seek to diversify their portfolios. Global Palladium Fund’s physically-backed gold ETC which tracks the spot prices offers investors convenient low-cost access to the precious metal.”
The Global Palladium Fund (GPF), established by MMC Norilsk Nickel, the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper, has launched six physically-backed metal ETCs this year – copper, nickel, silver, gold, platinum and palladium, with listings on LSE, Deutsche Börse, Borsa Italiana and SIX.
Targeting family offices, wealth managers, institutional and other similar professional investors, the ETCs track the spot price of the metals and have some of the lowest charges on the market, with total expense ratios (TER) ranging from 0.145% to 0.20%.
The metals backing the ETCs are sourced from producers and metal suppliers which have confirmed their compliance with the Sustainable Development Goals of the UN 2030 Agenda and other global initiatives in sustainable development and responsible mining. GPF is the only major ETC issuer to make such a pledge.
To strengthen ETC investor security, GPF uses IBM’s Hyperledger Blockchain in the custody chain of the metal. This is in addition to the traditional processes used by the custodian, enhancing the transparency and accountability of the issuer. By recording bar and cathode information on the blockchain, it provides clear ownership and an immutable custody chain for investors using the ETCs.