Last week, the world's largest asset manager (Blackrock) published a communique to their clients posing the question, Are these the golden days for gold? And in the article the institution that manages $4.2 trillion for clients answered it with a resounding yes.
Blackrock is the latest billionaire funds to go positive on gold buying, joining the likes of Stanley Druckenmiller and George Soros who both took large positions in the precious metal in recent weeks.
“Given slow growth, a cautious Federal Reserve and the proliferation of negative sovereign yields in Japan and Europe, U.S. real rates are likely to remain low for the foreseeable future. At the same time, both core inflation and wages have been firming while the inflation drag from last year’s strong dollar and collapse in oil is beginning to fade. This is exactly the type of environment that has historically been most favorable to gold.”
Blackrock believes that the “unusually low level of real interest rates (i.e. after inflation)” now make the asset class of gold a potential remedy: “All told, this is a serious problem for yield starved investors. Ironically, one potential remedy is to take a second look at an asset class that provides no income: gold.” – Blackrock via Zerohedge