Almost half of investors who don’t yet hold gold plan to add the yellow metal to their portfolios, while those who do intend to increase their holdings in response to challenges arising from the post-pandemic landscape according to a new survey conducted by Greenwich Associates and the World Gold Council.
One of the key reasons for this shift to gold is inflation, the report’s executive summary reveals. Greenwich Associates head of investment management Andrew McCollum writes, “The results from the study show that, in addition to the now decade-old quest to meet return targets in a low-yield environment, institutional investors face a new set of challenges as they position portfolios for the post-COVID-19 period. Among the most important: the need to protect their portfolios from mounting inflationary risks.”
With gold serving multiple functions within the investment portfolio, the report findings note, “The need for all three of these features—inflation protection, portfolio diversification and risk-adjusted return enhancement—should sustain institutional demand for gold as investors rethink, rebalance and reset portfolio strategies in the wake of an unprecedented economic shutdown.”
With data from the report confirming that gold delivers a 15% return on average when inflation exceeds 3%, the case for buying now is clear.
