Written by Mark O’Byrne
Schroders is one of the leading investment managers in the world. It is a global asset management company, founded in 1804 and based in the UK. The company employs over 4,100 people worldwide across 37 offices in 27 different countries around Europe, America, Asia, Africa and the Middle East and manages ove £400 billion in assets.
By David Thorpe of What Investment
James Luke, Commodities fund manager at Schroders, believes now is a good time to invest in gold and silver.
Gold bars at bullion dealers Goldcore, in London, U.K. in 2010 Photographer: Chris Ratcliffe/Bloomberg
He said, ‘The primary reason for investing in commodities, and especially gold and silver, should always be as an inflation hedge. Given the printing of money by the world’s central banks through quantitative easing, there is every reason to argue that higher inflation is coming in the future.
Gold and silver investments in particular remain very under-owned. Some investors fear the prospect of an increasing base interest rate in the US is reason alone to avoid these types of investments.
However, although past performance is not a reliable indicator of future results, the gold price has tended to rise from the beginning to the end of Federal Reserve (Fed) hiking cycles. In the last four instances when the Fed embarked on a hiking cycle, in three of the four instances gold saw +10 per cent to +20 per cent returns from beginning to end.’
He continued, ‘The environment for gold investments remains positive. In the background, global record debt burdens have not magically vanished. These make global growth highly sensitive to any real increase in interest rates and the cost of servicing these debts.
This is a key reason to expect that central banks will be highly wary of raising interest rates too quickly and that real interest rates (a key driver of gold prices) should continue to remain very low and have the possibility of being negative as inflation accelerates.’