Holding on ... Long-term
investors are keeping gold as a defensive asset, says Danny Laidler
Danny Laidler, head of ETF Securities in Australia and New Zealand, says the recent drop in the gold price can be attributed to short-term technical investors who will sell gold when it reaches a certain price.
investors, especially those who are investing their own money, are still holding gold as a defensive asset," he
As evidence, Laidler
says net outflows from its gold exchange-traded products (ETPs) since the start of the year is $40 million from total assets under management of $550 million.
Net outflow refers to the average amount of money invested and withdrawn from these products.
"This supports our understanding that short-term technical investors have sold out, but long-term investors are still holding gold," he
According to Laidler
, despite the drop in the gold price the reason why people want to invest in gold ETPs has not changed.
"Devalued currencies, US and Japanese quantitative easing and the European Central Bank's recent rate cut mean investors still want to hold gold," he
Another reason why people still think gold is attractive is because its performance is uncorrelated to other asset classes such as equities.
"Gold protects portfolios from market shocks," he