Asia’s Super Rich Advised to Add More Gold to Portfolios
Gold has been hammered lately, and some advisers are telling their wealthy clients to take advantage of lower prices and add to their stockpile to protect assets against pounding equity markets.
Advisers to Asia’s super rich think their clients should put more of their money into gold, taking advantage of price declines to buy the precious Yellow metal amid volatile global markets and US-China trade tensions, a new report said.
Most advisers in the survey (62%) said their clients should or maybe should increase their weighting in gold, Vs 38% who said they should not. The survey was of 174 private banks, family offices, wealth management advisers and other market experts in Asia.
“Not only does Asia, and especially Singapore, offer a remarkably complete and professional gold market infrastructure, but the current global economic, financial and geopolitical factors could be considered as highly supportive of the rationale to hold and grow the portions of gold in any [high net worth] portfolio,” said the head of precious metals Asia at INTL FCStone
The number of ultra-wealthy in China has grown, with those holding at least 10-M RMB Yuan ($1.5-M) in investible assets booming from 180,000 individuals in Y 2006 to nearly 1.6-M in Y 2016, according to “China Private Wealth Report” by Bain & Company and China Merchants Bank.
Gold has sold off over the past few months as USD interest rates have increased, so there is more opportunity to buy. For clients who do not have an allocation of gold in their portfolios, now is the time to add gold.
Spot gold prices are way off the highs seen in Y 2011, when the precious Yellow metal was trading above 1,820 0z in August, after an impressive climb from early November of 2008, when it was selling for under $750 oz.
It was most recently trading at $1,194.38 oz, on a downward path from $1,347.20 oz in April and essentially at the mark seen in December 2009. It is down more than 8% YTD, in part due to the strength of the USD, which traders are seizing as a safe haven amid the US-China trade dispute.
In February, Hong Kong’s gold exchange announced it was in talks with Singapore, Myanmar and Dubai to establish a gold commodity corridor to promote yuan-denominated products under the mainland’s “Belt and Road Initiative”. It could connect a proposed warehouse in the Qianhai free-trade zone, capable of storing 1,500 tonnes of gold, with commercial users and traders in countries along the belt and road’s trade routes.
According to INTL FCStone, 50% of Asian clients choose to store gold in Singapore and 35% in Hong Kong
Have a terrific week.