HSBC Holdings Plc recently reaffirmed gold’s role as a haven in a study, showing it’s one of the few reliably uncorrelated assets around. The commodity is trading near a six-year high as U.S. real yields decline.
“Precious metals are one of the few pockets of this market offering tremendous value to hedge against extreme monetary policies, bursting asset bubbles, and record global leverage,” Kevin Smith, chief investment officer at Crescat, wrote in a recent investor letter.
He calls precious metals “incredibly undervalued” relative to other assets. Smith is also bullish on miners, which tend to outperform the underlying commodity but which trade at a discount to global equities. The VanEck Vectors Gold Miners ETF is down more than 10% over the past three years compared to a gain of about 30% for the MSCI World.
“A new awareness of global fiat currency debasement polices is now in its early stages,” Smith wrote. “Gold should become a core asset for those who believe in this macro development.”
--With assistance from Eddie van der Walt.
This article was provided by Bloomberg News.