Investment Portfolios Are Broken And Gold Is the Fix - GraniteShares
(Kitco News) - Investors are turning to gold as an alternative asset since the traditional bonds and stocks recipe is no longer working due to rising global financial market volatility and economic uncertainty, said one fund manager.
In a recent telephone interview with Kitco News Will Rhind, CEO of GraniteShares creators of the low-cost gold-backed exchange-traded fund (NYSE: BAR) said that 2018 was the first year that investors with a traditional 60-40 stock/bond portfolio allocation lost money in 10 years.
Will Rhind, CEO of GraniteShares
“After 2018, investors are now wondering how they are going rebuild their portfolios,” he said. “Investors realize that they now need something in their portfolio that has a low correlation to bonds and stocks and that is where gold comes in.”
The comments come after gold has fallen from last month’s eight-month high. On a positive note, the yellow metal continues to hold above its critical psychological support level of $1,300 an ounce. April gold futures last traded at $1,312.20 an ounce, down 0.47% on the day.
Although gold is struggling to maintain momentum, Rhind said that he doesn’t see a repeat of 2018 for the yellow metal.
He explained that one significant difference between the current market environment and 2018, was that gold faced strong headwinds from the U.S. dollar. He said that the U.S. dollar has peaked with Federal Reserve monetary policy tightening on hold for the foreseeable future. He added that at the same time, weaker economic growth will keep the pressure on global equity markets. He also noted that since the start of the year, gold has kept pace with equity markets, which is something that didn’t happen last year.
“We are not going back to where we were: an environment where investors are complacent on risk,” he said. “There is an acknowledgment that we are nearing the end of the business cycle and we can expect to see lower economic growth and that will be an important driver for gold.”
Rhind said that his firm has seen firsthand the growing interest in gold. GranitShares was one of the fastest growing asset managers in the U.S. last year, as its assets under management expanded by 1,180% and rising more than $500 million.
The surge in the company’s growth came from its gold-backed ETF, which saw its AUM surpass $430 million.
“That is a function of investors looking to protect their portfolios in an environment of low growth and the potential of further disappointment in equity performance,” he said.