World Gold Council Says Buy Portfolio Insurance

  • Posted Wednesday, July 16, 2014 at 08:29 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and Silver prices were mixed on Wednesday, with Gold higher and hovering near $1,300.00 an ounce in choppy trade, while Silver eased a bit to $20.70 an ounce as the dollar was able to hold onto gains while investors are viewing Fed Chair Janet Yellen's semi-annual monetary policy report to Congress as somewhat bearish.
 
"Despite Yellen defending the Fed's stance to maintain loose monetary policies, the bullion markets seemed to interpret her comments for the possibility of an earlier than anticipated rate hike as Gold-bearish," said HSBC analysts in a note. Gold has shown remarkable resilience by holding up so well just below the $1300 level after $4 billion in sales of paper Gold over two days in what some believe to be a major attempt to spook the market.
 
When the Gold price dipped below the $1,300 level, China, the world's top consumer of Gold, came alive and pushed the price higher, driving local premiums from a discount to $1 an ounce on the Shanghai Gold Exchange (SGE). In the meantime, although short term volatility in Gold is up this week, overall, volatility is near its lows, and that may be why the World Gold Council (WGC), in its latest Investment Commentary, is suggesting that “now is the time to buy portfolio insurance.”
 
The WGC report shows how portfolios with as little as a five percent allocation to Gold, still tend to outperform portfolios that do not contain a Gold component. "Gold can provide much of the same protection as volatility-based vehicles, with the added benefit that Gold investment vehicles are usually cheaper, more liquid, accessible, transparent, and without credit (and often times counterparty) risk." says the WGC.

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Gold 1194.20 1194.90 $4.40 0.37%
Silver 15.91 15.95 $0.15 0.95%
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