All that Glitters is Gold
Since gold’s first discovery, it has symbolised wealth and guaranteed power. Its brilliance, beauty and durability has caused obsession in mankind and nations throughout time.
Recent market volatility has prompted many investors to revisit their portfolio structure and question whether it may be better to cash in or sit out falls in the market.
I’m a firm believer that there are always opportunities available for investors. Where the opportunities lie is the key question.
Gold as a safe haven
The recent volatility caused by the credit crunch has highlighted one of gold’s most alluring attributes; its role as a safe haven and the tendency for gold and gold mining stock prices to perform well when other asset classes such as fixed interest, property and shares are in decline.
Since the recent credit crisis, with the exception of oil, gold has emerged as the strongest asset class
The intrinsic value of gold provides risk diversification for prudent investors because its worth is not governed by the economic policies of a particular country and its value cannot be undermined by inflation.
Because of its stability, gold prices often rise in times of market volatility or political unrest as investors and investment managers seek out some stability.
The increasing political tensions, between the US and the middle east in the aftermath of 9-11, increasing volatility in the world stockmarkets and most recently the sub-prime credit crisis have all contributed to a rise in the price of gold
Jewellery is by far the biggest demand for gold, it consistently accounts for around 70% of total demand.
In the past three and a half years the price of gold has more than doubled
Demand is set to increase
Given the rising wealth of the emerging economies and that the Asian and Middle Eastern economies alone account for two thirds of gold jewellery buying, the long term outlook for gold continues to look good.
Demand for gold is now outstripping supply and there’s a real concern as to where the gold is going to come from. The overall world gold mine production has stagnated and experts suggest that a price in excess of US$1,000/oz would be needed in order to stabilise or reverse this trend. (Currently as this article is written, gold is sitting at just over US$850/oz)
Manager: Richard Davies
Longer term, we would not be surprised if gold prices breached the US$1,000/oz level.
After all, if you adjust the last peak of US$850/oz for inflation, this is the equivalent of around US$2,300/oz today.
Mining with excellence
We believe that one of the best ways to add gold to your portfolio is through the BlackRock Merrill Lynch International Gold Fund which primarily invests in gold mining stocks throughout the world.
We believe BlackRock’s investment team is of the highest quality. The International Gold Fund is managed by BlackRock’s highly regarded Resources team, based in London.
Richard Davies who heads the resources team, is portfolio manager for all of the Merrill Lynch gold funds, including the International Gold Fund and has been with the natural resources team since joining Merrill Lynch (before it merged with BlackRock) in 1994. Prior to this he worked as a geologist, holding a degree in geology and a masters in mineral exploration.
We feel that one of the key differentiators in the management team is their wealth of mining experience and geological qualifications with a number of the research team holding mining related tertiary qualifications.
Summary
With over US$45bn under management, BlackRock are the largest manager of publicly available natural resources sector funds in the world. Their sheer size alone allows them unsurpassed access to company management and investment research giving them what we feel to be a distinct advantage over their competitors and an excellent investment opportunity in gold mining stocks.
HOW TO APPLY
Download online: Probably the easiest way to apply is by downloading a copy of the PDS direct from our website www.fundsfocus.com.au/latestoffers
By post: You can request to apply for the ML Int. Gold Fund either by calling us on 1300 559 869 or alternatively request a hard copy by post using the above link
Comment: