Going for gold

Central bank net sales and purchases in tonnes

Looking ahead, we feel that economic growth will disappoint, particularly given the negative backdrop of demographics and the over indebtedness of the Western world. This disappointment will arguably lead to some level of restructuring, reneging or debt default by governments, as growth struggles to keep up with state spending and obligations. Therefore, an allocation to ‘real’ assets – within a multiple of select asset classes and securities – seems prudent in our opinion. We aren’t alone; gold has been a source of net demand by central banks since 2009. This is expected to continue through 2014.

Suzanne Hutchins, Newton’s Real Return team.

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