Best performing asset ignored
This asset is considered the best investment of 2016. It’s outperformed the S&P 500 and USD by 19% and 29%, respectively. It is also the only financial asset that is not simultaneously someone else’s liability.
That asset is gold. Up 26% year to date. However, as a percentage of global financial assets, it is near all-time lows.
Gold made up 5% of global financial assets in 1960. Today it is a meagre 0.58%.
If that figure returned to its 1980 figure of 2.74%, that would translate into an additional $2.5 trillion flowing into gold and gold stocks. That’s eight times the current market cap of the entire gold industry, which now stands at $324.4 billion.
With the current uncertainty, NIRP, and ZIRP, gold is once more seen as a hedge against inflation. Since the bear market began in 2011, demand for gold bullion and coins has increased. But investment demand has stayed low, until now.
Investment demand for gold rose 122% from Q1 2015–Q1 2016. Money flowing into Gold ETF’s jumped over 300%.