Blackrock Executive Says Gold Now Less Effective Hedge Against Inflation – Markets and Prices Bitcoin News

A portfolio manager and member of Blackrock’s Global Allocation Fund says gold is now a less effective hedge against inflation as well as the movement of other assets like stocks. In comments that seem to undermine the precious metal’s known status, Russ Koesterich claims that “gold’s ability to hedge against inflation was somewhat exaggerated”.

Gold is less reliable over most investment horizons

While Koesterich still knows the status of gold as a “long-term appropriate store of value”, he is of the opinion that “it is less reliable over most investment horizons”. Koesterich’s Blackrock firm, which has nearly $ 9 trillion in assets under management, appears to have already responded to this new knowledge. As reported by Bitcoin.com News, Blackrock has started investing in BTC.

For years, one report noted, gold has been viewed as part of a multi-asset portfolio “that can help offset shifts in other holdings, particularly stocks.” But as this Blackrock manager points out, gold is not currently “working.” good as a hedge against stock movements or inflation risks even though it was against the dollar “.

Falling gold ETF volumes

To support Koesterich’s claims, the report uses the precious metal’s recent performance versus USD and US stocks. The report, which uses March 11 data, states:

Spot gold traded at $ 1,735.16 an ounce at 9:35 a.m. in London, down more than 8% this year, while an indicator for the US currency is up 1.8%. Among the stock benchmarks, the S&P 500 Index gained almost 4% in 2021.

Additionally, the report notes that the decline in gold in 2021 was accompanied by a “steady decline in holdings of gold-backed exchange-traded funds.” According to the report, “global ETF volumes have plummeted to their lowest level since June, losing about 150 tons so far in 2021.”

Meanwhile, the portfolio manager points out possible headwinds for the commodity when setting his forecasts for the precious metal. Koesterich points to the reasons for the negative forecast on “more incentives and an improvement in vaccine distribution (which suggest the possibility of an economic upswing”). CoNitsch coincidentally shares its view of the outlook for gold with ABN Amro Bank, which warned in January that “gold has peaked and will fall”.

Do you agree with Koesterich’s views on gold? Let us know what you think in the comments section below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

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