Gold and silver for top StanChart clients
Posted on 20 May 2009 with no comments from readers
Standard Chartered is including gold and silver as one of four main recommendations to its private banking clients, according to a presentation by chief investment strategist, Lim Say Boon, in Dubai today.
The UK’s second largest bank by market capitalization has been winning clients in a flight to quality from its crashing rivals, and this global trend has also been evident in the Middle East.
Clients are being recommended to purchase gold and silver on price pull backs as the precious metals have a low correlation to traditional asset classes. The bank will recommend on different ways to invest in the metals.
Portfolio strategy
Meanwhile, the relatively new regional private bank is telling clients to switch away from the US dollar in the second half of this year, buy commodities like oil, diversify into high quality corporate and emerging market sovereign debt, and cost-average their stock investments.
However, Mr. Boon cautioned clients against chasing stock markets at this stage after the big rally from the March 6th low. He thought financial markets might be getting ahead of the economic news which is still ‘terrible’, such as the 15 per cent slump in Japanese GDP announced today.
‘March may have been the bottom for stock markets but markets do not move in a straight line. We are advising clients to buy on further weakness but not to chase the market up,’ he said.
Not the Great Depression
His view is that the current financial crisis is ‘not the same size’ as the Great Depression of the 1930s and that the challenges are very different to the 1970s Oil Shock when interest rates of 20 per cent compared with near zero rates now.
‘We can see major Japanese manufacturers trading below book value,’ he noted . ‘We can see that investment grade debt spreads will narrow. And when the economy recovers, perhaps in a year, oil will cost much more.’
However, Mr Boon agrees that there is presently a disjunct between renewed confidence by investors and the true condition of the global economy and its recovery prospects. Between those two factors lies scope for considerable investor disappointment, and more than enough reason to hedge a portfolio with precious metals.
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By Paul Farrow
Last Updated: 9:51AM BST 20 May 2009
Total demand for gold in Q1′09 rose 38pc year on year to 1,016 tonnes, representing a 36pc rise in value terms to US$29.7bn.
According to figures published today by World Gold Council (WGC) in its Q1′09 Gold Demand Trends report, identifiable investment demand for gold, which includes exchange traded funds, (ETFs) and bars and coins, was the major source of growth in the quarter, reaching 596 tonnes, up 248pc on Q1′08.
Gold at $940 tonight – and top gold stocks like Seabridge Gold up 8% and silver also advancing, Pan American Silver up 5%.
Looks like a night to remember for precious metals – onwards to $1,000 gold…
If I ever bought gold, I would but the Canadian Maple Leaf coin for several reasons. First, it is such a high quality striking that, in my opinion, it is more difficult for counterfeiters to duplicate. If paper money becomes virtually worthless, counterfeiting of coins will become a problem. Second, it is virtually pure gold, which makes it easier to transport if you have to surreptitiously flee over a border on foot across rough terrain. Canada will probably always allow sale of their gold coins within their country, so conversion to cash would be less of a problem than conversion of a gold coin of another country. Because of the invasion of Iraq, Canada is now more trusted and respected than the USA. Their paper money will be trusted and accepted in other English speaking countries. And, sad to say, I trust the Canadian Government’s word that the coin is pure gold, more than I trust Washington’s. I never thought that I would live to say that, but after watching Washington give trillions of tax dollars to the Wall Street banksters, many of whom, walked away with hundreds of millions after causing this mess, I’ve finally learned what Washington is all about – protecting the wealth of the super-rich, no matter what it takes, or what long term damage it does to the Country.