As depressed interest rates encourage investors to look towards the gold safe haven, the Association of Investment Companies (AIC) has asked some investment company managers to comment on their view of the yellow metal.
Catherine Raw, co-manager of BlackRock World Mining Trust plc said that prices were being driven by investment demand on the back of debt and inflation concerns as well as the possibility of further central bank purchases. Things look good for the metal and related shares as long as interest and exchange rates remain broadly unchanged. ‘At the moment, we believe the interest rate and exchange rate environment remain bullish for gold’ she said.
Portfolio manager of City Natural Resources High Yield Trust, Will Smith, said that his company had a long standing ‘overweight’ position in gold with 30% of assets in precious metals. Although he said he expected some pullbacks, things were still ‘valid’ for gold and ‘ …. the chart is not over-extended’.
Francis Johnstone and Trevor Steel, managers of Baker Steel Resources Trust said that they had no plans for any specific holding of physical gold but gold mining companies, which makes up 7% of their portfolio, had a bit further to go before they catch up with the current price of gold. They also intend to increase their mining holdings from the 7% figure up to 10% of the portfolio. On top of this they have 9% of the fund in silver and 27% in platinum (Ivanplats).