VanEck Reasserts the Case for Gold as It Hits All-Time Highs
03 August 2020
We have been bullish on gold since last summer, and the case for investing in gold has not been this compelling in years. Gold prices have reached all-time highs in recent days, surpassing the previous high set in September 2011, and current price trends suggest a longer, sustained rally in gold, similar to the 2001-2008 secular rally.
The persistence of negative real rates and supply and demand dynamics appear in favor of the metal moving forward. Gold continues to be a scarce commodity, and the fact that there have been no significant new gold discoveries since 2016 only adds to its supply pressure. Demand for gold, however, has continued to rise as investors have sought exposure and central banks have added to their gold reserves.
Investors have long been attracted to gold’s many potential benefits. It has historically improved portfolio diversification, acted as an inflation hedge, and proven a safe haven asset in times of market uncertainty. But some may be surprised by its impressive total return since the turn of the century, proving gold’s appreciation potential.
Gold Outperformance (1/1/2000 – 30/6/2020)
Source: Morningstar. US Stocks represented by S&P 500 Index; US Bonds represented by Bloomberg Barclays US Aggregate Bond Index; Gold Bullion represented by LBMA PM Gold Price; US Treasuries represented by the Bloomberg Barclays US 1-3 Year Treasury Bond Index. Past performance is not indicative of future results. Indices are not securities in which investments can be made. An index’s performance is not illustrative of a fund’s performance.
Investors can consider both a physical gold bullion investment as well as exposure to gold via companies that search for and extract gold from the ground, or gold miners. Both are affected by changes in the price of gold but offer different risk/reward profiles. Gold bullion has displayed a lower volatility profile historically and forms the basis for the price of gold. Gold miners, while a historically more volatile investment offering greater upside and downside, have reemerged from a period of management turnover and fiscal/corporate restructuring and are now better positioned to return value to shareholders in our view.
Important Disclosure
This is a marketing communication. Please refer to the prospectus of the UCITS and to the KID before making any final investment decisions.
This information originates from VanEck (Europe) GmbH, which has been appointed as distributor of VanEck products in Europe by the Management Company VanEck Asset Management B.V., incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM). VanEck (Europe) GmbH with registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, is a financial services provider regulated by the Federal Financial Supervisory Authority in Germany (BaFin).
The information is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice VanEck (Europe) GmbH, VanEck Switzerland AG, VanEck Securities UK Limited and their associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of VanEck. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results. Information provided by third party sources is believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Brokerage or transaction fees may apply.
All performance information is based on historical data and does not predict future returns. Investing is subject to risk, including the possible loss of principal.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck.
© VanEck (Europe) GmbH / VanEck Asset Management B.V.
