Page 24 - Investment Outlook

Gold
Gold has been the best asset class so far this year.
During the market sell off in March some so called safe haven assets did not behave quite as one might have expected. At first, gold funds fell in value as mining equity was dragged down with the rest of the overall equity market, only to massively rebound once the price of gold started to rise. Gold fell from US$1,687 per ounce in early March to US$1,472 per ounce on 17th March, a fall of 12.7%. Since then and on the back of the economic fallout of
the coronavirus crisis, it has risen to US$1732 per ounce, a gain of 17.66% from the low of 17th March. Gold has been the best asset class so far this year and the performance of the Blackrock Gold and General fund illustrates this well.
The gross performance of the Blackrock Gold and General Fund is illustrated below over 1 month ending firstly on the 27th March and secondly on the 12th May.
Blackrock Gold and General Fund -8.53% +30.59%
Holdings in a gold miners fund like the Blackrock Gold and General, can magnify the rise in the price of gold and therefore during rising gold markets fares particularly well. However, in falling gold markets losses are magnified. By their very nature
gold miners’ funds are volatile. Gold’s attraction has increased as interest rates are exceptionally low and the economy weak. Gold is a defensive asset but is not always supportive of positive investment returns. We are expecting gold prices to continue to rise on the back of demand, but we are not increasing our portfolio holdings above 2% as there are less volatile defensive investments available.
It is against this unprecedented background that we make our investment recommendations
26th May 2020
ESTATE CAPITAL INVESTMENT OUTLOOK 23
EDITION 33 Summer & Autumn 2020