It is rare to hear a bank advising their customers to buy gold. The yellow metal pays no commission to banks, and is a competitor for savings. So it was refreshing to see the head of trading for the National Bank of Fujairah?s treasury department, Junaid Anwar Khan telling clients to buy gold for portfolio diversification in The National today.
Is gold going mainstream? Well not exactly but JM Keynes ?barbarous relic? is gaining respectability. Mr Khan was actually fairly cautious about gold, and caution used to once be a watchword amongst the better class of banker.
Conservative approach
He rightly points out that a credit event in the eurozone would probably send investors in the opposite direction to gold and into the US dollar: ?High gold prices this year, yes, but the figure of $1,900 or $2,000 or even higher is subject to what happens in Europe and whether, as a result of those events, gold is able to decouple from those events.?
That may or may not happen, in any event concludes Mr Khan: ?With the scenario that?s unfolding on the credit front, it?s vital to have all forms of diversification.?
Not exactly a ringing endorsement for gold or a guaranteed win-win situation but then what is today in current markets? Real assets like gold or property are defensive against inflation and always have a residual value in a market collapse that is not true of equities and defaulting bonds.
No to silver
Then again as you might expect from a cautious banker, silver is still off the agenda: ?The argument that some people have for buying silver is that it?s like a cheap counterpart towards gold. If gold plummets, then silver tends to plummet and vice versa. So those who find gold a bit more expensive have tried to follow the trend by investing in silver. It?s not very prudent because silver has been a lot more volatile than gold.?
True, but focused on the downside. In a rising market for gold then silver is the better buy, and there is not much argument about that. Only when silver prices have surged much higher and gold is on a roll will cautious bankers begin to look at the shiniest of metals as a good buy and that might be the time to think about selling. But you always have first to invest in an asset when it is cheap and unpopular, and that is silver right now.
Posted on 21 July 2012 Categories: Banking & Finance, Gold & Silverdroid 4 ann coulter tom brady sister dad shoots daughters laptop brandon jennings channing tatum the vow review
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