Reuters recently reached out to nine private banks who manage a combined 6 trillion in assets for some of the world’s wealthiest investors. It turns out that every single one of these high net worth money managers have advised clients to increase their gold positions.
Prior to the COVID-19 pandemic, most private banks only recommended that their clients hold a tiny position of gold.
But now, some of them are advising as much as a 10% allocation to the precious metal as unprecedented central bank stimulus has increased the risk of inflation.
With a gain of over 16% so far this year, gold is the best performing asset, second only to Bitcoin.
UBS, the world’s largest wealth manager, said gold could “touch a record high of $2,000 in the event of a second wave of novel coronavirus infections,” like we’re seeing right now.
Kiran Ganesh, in UBS’s chief investment office stated, “With the recent equity rally, people have become more nervous. People are actively seeking out portfolio hedges that might perform well in a range of scenarios.”
John LaForge, the head of real asset strategy at Wells Fargo Investment Institute, said that last year he would field two calls a week for gold. Now, it’s up to two calls a day, an increase of five fold. On a good day, when gold spikes, he’s seeing as many as ten calls.
“I’m now getting as many questions on gold as I do on oil, which says a lot from my perspective,” says LaForge.
Andre Portelli, co-head of investments at Barclays Private Bank, said that some clients had begun acquiring physical gold in early 2020 and that’s only escalated with the spread of COVID-19.
With worldwide central bank bailout stimulus reaching biblical proportions, is it any surprise that the world’s wealthiest investors are seeking refuge in an ultimate inflation hedge like gold?