Is it time to add gold?

Financial Journalist
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Key points

  • The Australian dollar gold price, which matters most for local producers, has rallied from A$1,333 an ounce in November 2014 to around A$1,500.
  • Because gold has a different relationship to shares and bonds, it can protect wealth when other assets are going backwards.
  • Exchange-traded products (ETPs) eliminate company and market risk inherent in investing in gold equities, and offer purer better exposure to gold bullion.

Investment bright spots have a habit of emerging in the market’s darkest places. Amid unrelenting resource-sector gloom, the iron ore price bounced in April, the Australian-dollar gold price has rallied and gold equities are outperforming the broader market this year.

Resource bears will argue this is a bear-market rally that attracts and destroys fresh capital. That may be true of iron ore, but there is more substance to the gold sector’s near-term outlook, and the case for modest portfolio exposure to the precious metal is strengthening.

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