The other argument centres on the persistent rock-bottom interest rates around the world, a weak pound and the fact that there are plenty of geopolitical risks still lining up, such as the US and French elections. These and so-called ‘black swans’ could yet propel the gold price higher.
“Halfway through the year is always a good time to reflect on how sectors and funds have performed and there are really two stories to 2016 thus far; gold and sterling weakness,” said Ben Yearsley, investment director at Wealth Club. “Gold funds top the six month performance tables from an individual fund perspective with the top five funds all gold ones.”
“Gold has benefited from the strength of the US dollar versus sterling and also a flight to safety and an increase in the gold price,” he continued. “Since the start of the year gold has clearly been the asset class to have been invested in, benefitting from an increase in the gold price on the back of heightened uncertainty and also sterling’s weakness. Sectors and markets often get written off, however this year’s performance shows that even the most unloved sectors have their time in the sun.”
It will be interesting to see whether chasing a pot of gold turns out to be a wise move or a fool’s errand over the second half of 2016.
