Blackrock Inc., the world’s largest asset manager, has written a note about gold in which it suggests that this is the “perfect time and place” for gold due to “low and even negative yields, slow growth and potential signs of rising inflation.”
BlackRock has over $4.6 trillion in assets under management and provides guidance to individuals, financial professionals and institutions and the note was written by Russ Koesterich, the Head of Asset Allocation for a leading Blackrock fund.
The blog, ‘Are these the golden days for gold?’ published by Blackrock last week, points out that “gold may continue to shine”:
“Given slow growth, a cautious Federal Reserve and the proliferation of negative sovereign yields in Japan and Europe, U.S. real rates are likely to remain low for the foreseeable future. At the same time, both core inflation and wages have been firming while the inflation drag from last year’s strong dollar and collapse in oil is beginning to fade. This is exactly the type of environment that has historically been most favorable to gold.”
Blackrock believe that the “unusually low level of real interest rates (i.e. after inflation)” now make the asset class of gold a potential remedy:
“All told, this is a serious problem for yield starved investors. Ironically, one potential remedy is to take a second look at an asset class that provides no income: gold.”
In March, BlackRock joined Pacific Investment Management Co. (PIMCO) in recommending inflation linked bonds and gold, warning costs are poised to pick up and there is a growing risk of inflation. “We like inflation-linked bonds and gold as diversifiers” said New York-based BlackRock.
“The strategy tactically invests in multiple inflation-sensitive asset classes, allocating across a broad opportunity set of real assets, including global inflation-linked bonds, commodities, real estate, currencies and gold …
Gold has characteristics of both a commodity that is easily stored for a long period of time and a currency whose supply is limited.”
Amen to that. Maybe Blackrock could advise Ryanair’s Michael O’Leary and investors in Ireland about the changed dynamics in the gold market due to low and negative interest rates.
Blackrock’s note on gold can be read here
Gold and Silver News
Gold holds near 3-1/2 week low on Fed rate hike prospects – Reuters
Gold Holds Four-Day Drop as Fed ‘Procession’ Signals Rate Rise – Bloomberg
European Shares Rise as Investors Weigh Implications of Fed Talk – Bloomberg
Lacking new ideas, G7 to agree on ‘go-your-own-way’ approach – Reuters
Banks Must Defend Libor Lawsuits After Judges Warn of Impact – Bloomberg
Gold Rally is Here to Stay says Lombard Odier (Video) – Morning Star
Silver Shortage Or No Shortage? Renowned Silver Expert David Morgan – Youtube
First Soros… Now Jim Rogers Predicts Trillion-Dollar ‘Biblical’ Crash – Dollar Vigilante
High priest of helicopter money speaks (Daily Reckoning)
A Debt Agenda for the G7 (Project Syndicate)
Read More Here
Gold Prices (LBMA AM)
24 May: USD 1,242.65, EUR 1,111.18 and GBP 852.71 per ounce
23 May: USD 1,250.40, EUR 1,115.84 and GBP 860.89 per ounce
20 May: USD 1,256.50, EUR 1,120.18 and GBP 862.75 per ounce
19 May: USD 1,253.75, EUR 1,117.74 and GBP 857.37 per ounce
18 May: USD 1,270.90, EUR 1,127.21 and GBP 882.05 per ounce
Silver Prices (LBMA)
24 May: USD 16.27, EUR 14.55 and GBP 11.14 per ounce
23 May: USD 16.31, EUR 14.55 and GBP 11.27 per ounce
20 May: USD 16.56, EUR 14.76 and GBP 11.35 per ounce
19 May: USD 16.60, EUR 14.81 and GBP 11.35 per ounce
18 May: USD 17.05, EUR 15.13 and GBP 11.77 per ounce
