Also, while there is an increased number of private buyers of gold, the number of gold sellers also rose, by 108% according to BullionVault, as existing investors took advantage of the profits to hand.
The funds mentioned may have shown phenomenal returns in a short space of time but a list of the most volatile funds in the same IA sector have a familiar ring to them – MFM Junior Gold with a volatility of 59.3%, WAY Charteris Gold & Precious Metals (50.4%) and as above Investec Global Gold (49%). The household name BlackRock Gold & General has provided returns of -4.5% over 12 months, and is up 46% so far this year, with a volatility of 43.7%.
So looking forwards is gold a safe haven? There are compelling arguments that it is.
Paul Burton, a mining research analyst at QuotedData argues: “In the first three months of 2016, investors have had opportunities to make phenomenal returns on gold shares. If the gold price is really steadying itself for a major bull run, then there will undoubtedly be further opportunities as many gold shares still have a long way to go to reach pre-bear market levels.”
Michal Howell, the managing director at CrossBorder Capital is even more bullish, describing gold as “our high conviction trade for 2016”, adding that he expects gold to test $2,000 an ounce by the middle of next year.
I just don’t buy it – the metal or the argument. It is far too early to say whether gold or anything else for that matter is a safe haven investment and long-term prediction on short-term trends is a dangerous game to play, especially with other people’s money.
It may well continue to rise during the course of the year, but are private client portfolios ready to turn to gold for safety? I think not.
