Gold will soar: Datt Capital

Gold assets alternative defensive

10 August 2020
| By Chris Dastoor |
image
image
expand image

Gold will continue to soar in a period of sluggish economic growth, as over the past 12 months the price per ounce has risen from US$1,400 (A$1,950) to US$2,075, according to boutique fund manager Datt Capital.

Emanuel Datt, Datt Capital managing director and chief investment officer (CIO), said there was several drivers behind this strong appreciation.

“Gold is an asset class that has survived the test of time in terms of storing value and acting as a 'safe haven',” Datt said.

“It is a durable, portable, and divisible asset that is limited in supply and high in demand for cosmetic and industrial purposes.

“The recent rise in demand, however, has been driven by a confluence of environmental factors, namely: uncertain geopolitical and social environment, record low-interest rates, negative real rates in major fixed income markets, and accommodative monetary policy.”

Because of the low interest rate environment, gold had become a far more attractive investment option.

“When interest rates are higher, for example at 5%, there is a real and tangible opportunity cost involved in holding non-yielding assets such as gold,” Datt said.

“Whereas the effect is diluted significantly in an environment where real rates of return are negative or zero.”

Datt cited Saracen, Newcrest and Evolution as the three Australian Securities Exchange (ASX) stocks which he considered investment grade.

“We believe that the gold price in the short-term will remain firm. This bodes well for Australian production assets especially in a world where we expect the US dollar to remain relatively strong,” Datt said.

“Another factor in play are gold ETFs [exchange traded funds] which are booming with retail investors.

“Professional investors are also taking a keen interest with more looking beyond investing in conventional money market instruments to allocate capital towards gold in a hunt for diversification.”

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

6 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

4 days 11 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 4 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

3 days 9 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 12 hours ago