from Gold Core:
Gold has a place in high-net worth individuals portfolios as an insurance policy against systemic risk in the banking system, says Carmignac commodity investor Michael Hulme.
EW: So, we’re here today to talk about commodities. That’s your bag. I thought we’d start with that headline grabbing commodity, gold. Gold has hit the headlines this week because $2.3 billion worth of gold ETFs have been sold as gold hit a five-year low. How much further can gold can go and should we care?
MH: Very interesting question. Yes, gold has certainly lost some of its luster recently and I guess, many people are asking the question, is it foolish to invest in gold?
I think gold still has a place in portfolios. I think gold, in particular, has a place in high net worth individuals portfolios and I think there were several reasons for that.
Gold is really an insurance policy against systemic risk in the financial system now.
While it’s been nearly seven years since the last melt down, given the jitters we’ve seen in China recently and the ongoing concerns about leverage and credit worthiness globally, I still think gold has a role to play as a modicum of insurance policy.
I think that’s compounded by the fact that although we’ve seen a lot of sales of gold, actually if you look at China recently, over the last several years they’ve actually been increasing their stocks of gold and adding to them over time. And I think the prudent investor — while you can make a case for saying gold is actually any worth as much as anyone thinks it should be worth, but the prudent investor might take heed of the fact that what the Chinese are doing.
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