Whether or not gold resumes its post-Brexit climb, it’s still a good holding in a time of political uncertainty, wrote James Luke and Mark Lacey, fund managers in metals and equities for London-based asset manager Schroders who advocated owning both bullion and gold equities.
“Even without Brexit, gold had already set out on the first steps of a path back from being a forgotten asset to a core allocation in a deeply uncertain world driven ultimately by negative real interest rates and the dawning realization that any global ‘normalization’ is a long way off,” wrote Luke and Lacey. “Gold remains an under-owned hedge against global central bank credibility and under-appreciated global risks, particularly from China.”
Reik does warn, however, that crises are often used to market gold investments using “dramatic” narratives, so investors should take Brexit-based pitches with a grain of salt.
“Whenever an event like the Brexit vote comes along, gold enthusiasts become more enthusiastic,” Reik says. “They’ve been saying these things for years, and they’ve been zero-for-the-lot up to now. I don’t necessarily subscribe to the view that the world has changed.”