During the past two years, precious metals have been an increasingly popular choice among all investors. One area that has been in particular demand is gold.
At the end of 2008, practically every investment sector had taken a beating. No matter whether investors’ holdings were in technology, health care, financial services, or some other sector chances are their portfolios lost money. However, gold was one of the few sectors to generate positive returns in 2008. Although the price of gold has been fluctuating lately, many small and large institutional investors still have an interest in gold.
In 2009, investors began to focus intently on gold as it continued to rally. Many investors wanted an inflation hedge and gold proved to be a smart choice. A recent article stated, “Gold has gained some new status in 2009 with more and more investors putting their money on gold. In 2009, gold price surged 24.6% to close at $1,096 per ounce after breaking through the $1,000 psychological resistance level.”1
BHA has been asking investors for their opinions on gold-related funds for the past year. Many believe that the sector will continue to see strong returns despite recent price drops. A private bank in Portugal recently expressed that it will continue to keep an eye on the gold sector. It believes that markets will remain unstable and that there will be a second round of “turbulence” similar to what we witnessed in 2008. Therefore, it expects gold-focused funds to be attractive since they did so well when markets crashed in 2008.
Gold has always been considered a stable investment in all types of markets—a view its performance in 2008 and 2009 confirmed. Because of this, BHA believes investors will continue to seek out gold-focused funds.
1. CommodityOnline, “For 9 years, no stopping gold,” January 25, 2010, http://www.commodityonline.com [...] 25081-3-1.html.
