INTL FCStone Inc. has announced that its London-based subsidiary, INTL FCStone Ltd’s Precious Metals Division, in partnership with research firm Hubbis, has released a report on the Appeal of the Physical Gold Market. The study looks at the outlook for gold, its rise as a hedging strategy for high net worth (HNW) portfolios, Asia’s evolving gold market, and the impact of technology on the precious metal sector.
Since the global financial crisis of 2008, gold’s momentum as an investment strategy exploded in Asia as many HNW investors became increasingly wary of the financial system. That demand is steadily increasing both in Asia and globally, with the annual volume of gold bought by investors increasing by 235 percent over the last three decades according to the World Gold Council. Central bank demand has also turned a corner since the financial crisis with central banks purchasing 3,287 tonnes from 2010-2016.
Commenting on the report, Martin Huxley, head of precious metals for Asia at INTL FCStone, said, “Asia has all the ingredients to mix up the perfect cocktail of growth opportunity in the gold and precious metals service industry as it contains the perfect balance of economic prosperity and spending power. We are seeing increased demand from HNW individuals and families when it comes to purchasing and holding gold in Asia – particularly in Hong Kong and Singapore given their political and economic stability. About a decade ago we recognized gold’s migration from West to East and have been expanding our capabilities to rapidly meet this burgeoning consumer demand.”
In January, Hubbis conducted a survey of 174 private banks, family offices, wealth management advisers, and other market experts whose insights were refined and consolidated into the gold study. The report looks at several different topics, including:
- The Outlook for Gold – The immediate outlook for gold in 2018 is predicated on key factors such as interest rates in the US and Europe and valuations of the equity and bond markets. As there are plenty of divergent opinions, 2018 is a continuation of the reflation trade that the world saw in 2017. G7 interest rates and volatility are more likely to increase, especially during the second half of 2018.
- The Case for Gold in Asia’s HNW Portfolios – Gold has an immensely long track record in terms of preservation of wealth. It provides a hedge against inflation, geopolitical risks, natural disasters, and other crises. Some private banks and wealth advisers advise that their HNW clients hold as much as 5-10% of any portfolio in gold.
- Asia’s Evolving Gold Market Infrastructure – Asia is a thriving hub for bullion production with more than 26 registered LBMA gold refineries across the region. Its precious metals market infrastructure has both expanded and improved quite dramatically in recent times. With the growth in Asian infrastructure, buying and storing precious metals has become far simpler, cheaper, and more efficient.
- Moving Precious Metals into the Modern World – The rapid rise in the gold market’s infrastructure in Asia over the past decade is now being followed by advancements in technology—such as web-based platforms—aimed at making the purchasing and storage of gold more accessible. These platforms can provide customers with free, direct, and real-time access to precious metals inventory around the world and can automate and accelerate interaction with customers to improve market access and efficiency.
- Why Investors Should Consider Bringing Bullion into their Portfolio – A safe haven asset, bullion will always maintain value due to its limited supply and intrinsic value. As it stands, the demand for investment gold like bullion keeps growing, driven by rapidly evolving Asian economies, persistent Central Bank buying, and the growing HNW individuals segment.
The full report is available for download on INTL’s website here: FULL REPORT