Despite recent price turbulence, fundamental drivers remain unchanged.
Supply and demand pressures support gold’s upward trajectory. Fundamental drivers of gold demand remain unchanged while supply is constrained by low discovery rates, rising costs, declining grades and jurisdictional risk.
Is Gold a Currency or a Commodity?
Gold is a great way to diversify a portfolio due to its low correlation to most other asset classes including equities, bonds and the U.S. dollar. Unlike other commodities, gold tends to retain its value during recessionary and deflationary periods. Gold is also a historic safe haven, acting as a hedge against domestic currency depreciation as well as falls in equity and credit markets.
Gold’s performance historically and over the last few decades vindicates its status as a valuable diversifier, surging relative to other investment classes. We believe it will continue to do so because gold is more than a mere commodity, it is a currency.
|31-Jul-16||YTD||1 year||5 year||10 year||15 year|
|MSCI World Index||1721.79||3.5%||-2.5%||31.8%||29.7%||61.0%|
|10 Year T-Note||1.458||-35.7%||-33.9%||-48.0%||-70.8%||-71.1%|
|30 Year T-Bond||2.18||-27.6%||-50.2%||-64.7%||-69.7%||-73.5%|
|Percent Change 15 year|
|Gold in USD||408.1%|
|Gold in Euros||297.8%|
|Gold in Indian Rupees||617.2%|
|Gold in Pound Sterling||448.1%|
|Gold in Australian Dollar||238.6%|
|Gold in Swiss Franc||185.0%|
|Gold in South African Rand||756.1%|
Source: As of July 31 2016, NASDAQ OMX.