CONTRIBUTORS
Anujeet Sareen, CFA
Portfolio Manager
United States
Gold has surged, breaking above $4,000 per ounce and elevating the precious metal into an incredible $30 trillion asset class.
The real gold price in SDR terms measures gold’s value adjusted for inflation and expressed in special drawing rights (the IMF’s global reserve unit), showing gold’s purchasing power across currencies.
The relationship between gold and inflation held up well in the 1970s and 1980s, but much less so in the 2000s.
Gold once made up a much larger share of global foreign exchange (FX) reserves. Today, there’s a sharp divide: former gold-standard economies like the US and Europe hold 75%–80% of reserves in gold, while Asian central banks, which built up reserves in the 2000s, hold only 5%–10%.
The industrial-to-precious metals ratio compares the prices of economically sensitive metals (such as copper, nickel, etc.) with safe-haven metals (like gold and silver), serving as a gauge of global growth sentiment. Today, the ratio sits near levels that have historically marked turning points in the global industrial cycle.
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. Past performance is no guarantee of future results.
Commodity-related investments are subject to additional risks such as commodity index volatility, investor speculation, interest rates, weather, tax and regulatory developments. To the extent the strategy invests in a concentration of certain securities, regions or industries, it is subject to increased volatility. Investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms.
International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.
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