eFinance Group, a global gold trading company, expects their gold portfolio to outperform other commodities in 2019 due to various factors including a possible cyclic economic downturn, and as most people know, when capital markets are in turmoil, gold often performs relatively well as investors seek out safe-haven investments.
A quick look at gold prices relative to stock prices during the bear market associated with the 2007 to 2009 recession provides a telling example.
Between Nov. 30, 2007, and June 1, 2009, the S&P 500 index fell 36%. The price of gold, on the other hand, rose 25%, gold had outperformed stocks by more than 60 percentage points. This was the most recent example of a material and prolonged stock downturn, but it’s also a particularly dramatic one because, at the time, there were very real concerns about the viability of the global financial system.
A more recent example was in early 2016 during China’s lackluster economic growth and weak energy prices, which saw stocks to get off to their worst start to a year in history. However, the demand for gold during that time had skyrocketed.
Michael Williams, Chief Executive Officer and Co-Founder of eFinance Group, comments, “The firm have been deeply involved with gold for more than 2 decades, and it’s been an admittedly quiet time in the industry during recent years. However, EFG has been consolidating our resources during this period in anticipation of what our experts and I expect to be a booming 2019 and 2020.”
As a tangible asset, gold is able to maintain its purchasing power to a far greater degree than any paper currency. A hundred years ago, an ounce of gold or $20 in the paper currency could be used to purchase a quality suit. Today, that same ounce of gold can be used to buy a nice suit, but it will cost more than $20 in the paper currency due to inflation.
Putting every investment dollar into a single asset class like stocks, bonds, or mutual funds could be disastrous, as all it would take is one market crash or an extended downturn to wipe all of it out. Converting a percentage of your retirement portfolio into gold gives provides the diversification required to protect against market instability.
In addition to its’ being the safe haven against all financial asset classes, thanks to its industrial and technology applications as well as its use in jewelry, gold will always be in demand. This high demand coupled with relative scarcity serves to drive up the spot price, which means there’s tremendous growth potential for gold.
eFinance Group is licensed to operate by the Australian Securities and Investments Commission (ASIC) and currently serves over 8,000 global institutional clients with offices across continents in North America, South America, Europe, Australia, UAE, and South Africa.
The firm handles more than 2.3 billion dollars in assets under management with gold reserves in excess of 800 million dollars as of January 2019.