Singapore – UBS Global Wealth Management have advised investors across the globe to invest in precious metals to hedge against economic uncertainty.
Kelvin Tay, the firm’s regional chief investment officer, said: “We like gold, because we think that gold is likely to actually hit about $2,000 per ounce by the end of the year.
“And gold has certain hedges to it. In (the) event of uncertainty over the U.S. election and the Covid-19 pandemic, gold is a very, very good hedge. And its recent weakness represents a great entry point for investors.”
Gold has exploded to record numbers this year and is closing in on $2,000 per ounce whilst it currently sits at $1,913.00 on Thursday.
The precious metal did reach $2,000 in August before dipping back to $1,880 per ounce in September.
Tay also pointed out that the low-interest-rate environment makes this precious metal is also attractive.
The opportunity cost of holding gold would be “quite low” if the interest rates remain low as the Federal Reserve predicts.
According to Mark Haefele, UBS chief investment officer, Federal Reserve’s economic recovery support pledging to retain interest rates near zero until 2023 — would make gold to continue to rally.
And Tay also recommended that investors put some money into Chinese government bonds as they are set to be included in major index provider FTSE Russell’s World Government Bond Index. The inclusion, from October 2021, is set to bring billions of dollars of inflows into China.
Tay pointed out that Chinese government bond yields, at 2.5%, are higher than other regions, compared to U.S. yields at 0.6% and European yields at largely negative levels.
“This is really high returns for a very good quality government with very strong balance sheets,” he said.
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