Written by: Alex Watkins and Josef Licsauer | Hargreaves Lansdown
- Gold offers diversification for investment portfolios
- In times of market stress, gold has historically performed well
- 2023 has started with a market rally, but the economic outlook is clouded
Looking for a “precious” present for your loved one? Hargreaves Lansdown investment analysts highlight their picks for gold exposure this Valentine’s Day.
Alex: Roses are red, gold shines bright, buy a gold ETC to track the spot price overnight. Gold is often associated with luxury, wealth and romance, which makes it a popular gift choice for Valentine’s Day. We often gift gold jewellery to our loved ones but what about some love for your investments?
Investing in gold can be achieved in several ways, one of those is via Exchange Traded Commodities (ETC). These investments provide an easy and convenient way to gain exposure to the gold market without having to store or manage the physical bullion. One option? The iShares Physical Gold ETC. This investment tracks the gold spot price, which is the current price in the marketplace at which a given security, commodity or currency can be bought or sold for immediate delivery.
This ETC only accepts gold that meets the London Bullion Market Association (LBMA) Good Delivery rules and the LBMA’s Responsible Sourcing Programme, making sure that 100% of the gold bullion backing the ETC is responsibly sourced. With an ongoing charge of 0.12%, it’s also competitively priced in the market versus its competitors. Exposure to the metal is an attractive option for those who want to diversify their portfolios or who believe that the price of gold will rise in the future.”
John: “Evy Hambro's been at the helm of BlackRock Gold & General for more than a decade and boasts more than 25 years of industry experience. He's got the support of an experienced, well-resourced team, which includes co-manager Tom Holl. The aim is to grow investors’ money over the long term by investing primarily in gold mining companies from across the globe. The managers will also invest in companies that mine other commodities, such as silver or diamonds.
Overall, Hambro is confident in his long-term outlook for the gold price, expecting rising incomes in emerging markets to fuel demand for gold products, such as jewellery, while the absence of large gold discoveries could constrain supply and lead to a rising gold price. We think this fund is a reasonable choice for exposure to gold and companies sensitive to the gold price. But its exposure to smaller companies and emerging markets makes it higher risk.
Hambro also runs BlackRock World Mining, which is a specialist trust that can invest in any mining and metal company around the world but unlike the open-end fund can also invests in a range of physical precious metals, including copper, gold, nickel, silver, platinum and aluminium.
A smaller portion of the trust is dedicated to bonds, debentures (a type of bond or debt instrument) and certain royalties. The managers attempt to identify the biggest trends or themes in the industry to help work out areas of opportunity in the market. Some of the more recent trends, electric vehicles and transition to clean energy for example, saw the managers increase their investments in certain precious metals.”
Related: Gold Is Finally Proving Its Mettle