Earlier this year we sent out a trading idea about including some exposure to gold within your portfolio (refer below). In light of the recent tensions between North Korea and the United States – we though it worth touching on this point again. Adding exposure to gold into your portfolio will help to diversify your investments, while also acting as a “safe haven” during economic or political uncertainty. Of all the precious metals, gold is the most popular as an investment, and also has the most effective safe haven and hedging properties.
Gold will at least retain some of its value if other asset classes are falling in value. Most people hold exposure to gold as “insurance” rather than a belief that the global economy will combust. A good rule of thumb would be to have between 3 to 5 per cent of your portfolio in gold, whether that be gold miners or Exchange Traded Funds with an exposure to gold. Remember ETF’s provide a quick and cost effective way to gain exposure to gold, and are also backed by physical gold.
****GOLD – Does your Portfolio Include Exposure to this Precious Metal?****
During times of market distress and uncertainly, investors around the world often flock to the lure of gold which is widely considered to be a “safe haven”. Investments in gold have stood the test of time. For centuries it has been used as a medium of exchange and more recently as a hedge against inflation. Gold is engrained in our society as a symbol of value.
Australia holds around 10% of the world’s gold reserves, coming in third behind only South Africa and the USA. Our rich vein of resources supports the local gold industry and its continued growth. Australian based gold miners also have the added tailwind of the currently weaker Australian dollar, which is trading around US76 cents. As gold is quoted in US dollars, a weaker Australian dollar is good for our gold producers.
There are several listed gold producers on the Australian market, with Newcrest Mining (ASX: NCM) being the largest listed player. There are also a raft of smaller listed companies worth looking at including Evolution Mining (ASX: EVN), Northern Star (ASX: NST), Resolute Mining (ASX:RSG) and Regis Resources (ASX: RRL). Another option is a popular listed EFT – ASX Code: GOLD – which provides investors a return equivalent to movements in the spot gold price without the costs of holding physical gold. Another ETF to consider is the BetaShares Gold Bullion ETF (ASX: QAU) I have attached a brief company profile on each of these companies / ETF’s for you to have a look at.
Diversification is the key to a sound investment strategy and portfolio – and gold is a good ingredient to aid with diversifying your portfolio. Gold should be an important part of a diversified portfolio, as this will reduce the risk and volatility of the overall portfolio.
If you would like to discuss adding some exposure to GOLD into your portfolio, and the benefits that this will bring to your overall portfolio, please don’t hesitate to give me a call any time on 07 5520 8788.NCM
Disclaimer: This strategy is not suitable for all clients. The information provided is for general information only, it does not take into account your particular investment objectives, financial situation or needs. Prior to taking any action or making any investment decision based on the information contained in this email, you should gain professional advice.Any opinion or forecast or recommendations reflect the information, assumptions and judgment as at the time of writing and may later change without notice. iInvest Securities is not responsible for updating any information, advice or opinion in this communication or for correcting or supplementing any information, advice or opinion in this communication for any error, omission or misstatement which may become apparent after its release.
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