by Byron King
Gold is set to benefit from a “perfect storm” of dwindling investment alternatives and greater investor risk, according to the August report of the World Gold Council (WGC).
It says central banks are increasingly pulling out all the stops to stimulate growth, which has driven yields on government bonds to absurdly low levels. Fewer than 40% of government bonds around the world available to average investors have a positive yield, and only 17% yield more than 1%.
Investors have to take on additional risk to generate any sort of meaningful returns. And this search for returns is pushing investors toward gold to balance the risk, according to the WGC:
“In this environment, we believe investors are using gold to hedge portfolio risk as they add more stocks and low-quality bonds to their asset mix.”