Is Gold a commodity that investors should hold? Simona Gambarini, associate director of research at ETF Securities during an interview with CNBC provided her insight on this question, stating that investors are moving from gold ETFs into more cyclical commodities because their don’t worry about global risks as much as earlier. The price for Gold has declined by around 10% over the past year, impacting also the ETFs that are following it. SPDR Gold Trust (ETF) (NYSEARCA:GLD) has declined by over 9% over the past year, the same experienced by iShares Gold Trust(ETF) (NYSEARCA:IAU).
Among the cyclical commodities mentioned by Gambarini is Silver or Copper. She also mentioned that investors are looking more positive at the U.S. and global growth and less concerned about the risks.
“Therefore they [investors] are investing in more cyclical assets that might perform better in an environment in which growth is prevailing.”
At the same time, the associate director at ETF Securities considers that currently it is a good time to enter the gold market. Investors still might consider holding gold as insurance for their more risky securities.
“We still think there is a case for gold. You always take insurance when the risks are low and insurance is cheap. And then you hope you have that kind of insurance when you actually need it. So, gold tends to perform well in very inflationary environment, which is not the case at the moment. It might happen when growth picks up in different countries,” Gambarini said.
In conclusion, Gambarini said that cyclical commodities are better investment than Gold. However, investors should still hold gold, not as an asset which is expected to outperform the market, but as an insurance in case things do not turn up as expected.
Watch the full interview below: