Please click here to view Shane Oliver’s views on the recent rise in the price of gold.
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The gold price has surged to record highs. Key drivers have been central banks increasing their gold reserves, rate cuts, a renewed downtrend in the $US and demand for a hedge against public debt worries and geopolitical threats.
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While gold is short-term overbought, implying the risk of a short-term correction, more upside is likely over the medium-term as a hedge against a falling $US, public debt and geopolitical worries.
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There is a case for gold in investment portfolios, but its speculative nature suggests only a modest exposure and over the very long-term shares have done better than gold.
