A portfolio manager and member of the Global Allocation Fund of the Blackstone Group said that gold is now less effective in hedging inflation and the trend of other assets (such as stocks). In comments that seem to have weakened the reputation of precious metals, Russ Koesterich claimed that “gold’s ability to hedge against inflation is exaggerated.”
The reliability of gold in most investment horizons is poor
Although Koesterich still recognizes the status of gold as a “long-term reasonable store of value”, he does believe that “gold is less reliable in most investment horizons.” Koesterich’s company, Blackrock, has managed nearly $9 trillion in assets and appears to be using this new knowledge. As reported by Bitcoin.com News, Blackstone has already begun investing in BTC.
Nonetheless, as a report pointed out, gold has been considered part of a multi-asset portfolio for many years, “which can help balance changes in other holdings (especially stocks).” However, as the Blackstone Group ( The executive said that at present, “although gold has fallen against the US dollar, it is not a good hedge against stock market fluctuations or inflation risks.”
Sinking gold ETF trading volume
At the same time, in support of Koesterich’s claim, the report uses the recent performance of precious metals compared to the U.S. dollar and U.S. stocks. The report uses data from March 11, stating that:
At 9:35 in the morning in London, the spot gold trading price was US$1,735.16 per ounce, which has fallen by more than 8% this year, while the US dollar exchange rate has risen by about 1.8%. Among the stock benchmark indexes, the Standard & Poor’s 500 Index rose nearly 4% in 2021.
In addition, the report also pointed out that the decline in gold in 2021 was accompanied by a “continuous decrease in gold-backed exchange traded fund holdings.” According to the report, “Global ETF trading volume has fallen to its lowest level since June, and has fallen by about 150 tons so far in 2021.”
At the same time, the portfolio manager hinted at the possible disadvantages of the commodity when making predictions for precious metals. Koesterich pointed out that “more stimulus measures and improved vaccine distribution (which indicates that the economy may surge)” are the reasons for his negative forecast. Coincidentally, ABN Amro Bank also shared Koesterich’s views on the prospects for gold. The bank warned in January: “Gold has peaked and will fall.”
Do you agree with Koesterich’s views on gold? Tell us what you think in the comments section below.
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