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December's Agenda and Gold

December 3th 2020 – Written by Jonathan Chorley & Andrew Chorley

December’s Agenda

As we move into the Festive Season, we would like to make you aware of our plans for December and early January 2021 –

  • Rebalancing – we shall send our Q4 Rebalancing Recommendations the week beginning the 14th December in the previously agreed formats. There are several recommended changes to our Asset Allocations in this quarter’s rebalancing and we will provide all the necessary documentation in conjunction with our Recommendation Summary.
  • Annual Valuations – we shall send our 2020 Annual Valuations at the beginning of the New Year. The Annual Valuation includes Portfolio Valuations as of 31st December 2020, Historical Portfolio Valuations and Performance Analysis.
  • Investment Review – we shall send our 2020 Investment Review at the beginning of the New Year. Our Investment Review typically highlights our plans for the coming year and any strategies we feel will prove beneficial moving into 2021.

We will of course continue to be available to answer any queries you have via email or telephone.

Gold Long Term Gains but Expect Short Term Volatility

We have been advocates of holding Gold for some time for a combination of reasons: -

  • A hedge against market volatility
  • Protection in the event of future inflationary shocks
  • Interest rates are low which is positive for Gold that pays no income or dividend, if other assets have little or no income its popularity rises
  • Real interest rates (interest rates less inflation are negative) increasing its attraction for the same reason as above
  • It has underperformed in recent years compared to other assets
  • The US Dollar looked primed to weaken after being strong for a number of years
  • Large stimulus programmes will increase Government Deficits; a lack of confidence in a currency increases Gold’s appeal
  • Stimulus programmes during and after WWII and again in the 1970’s led to triple digit rallies in Gold

All these factors remain in place but there are some short term headwinds that could see Gold decline in the short term; these are mostly sentiment based as investors take profits and their risk appetite increases on good news such as COVID-19 vaccines. The chart to the right shows how Gold has been following a similar pattern to 1995-2007 and whilst the trend is intact it may well have got a little bit ahead of itself -

EST. 1999