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Strong physical gold take-up expected in 2016

Continued low term deposit rates and market volatility this year were likely to prompt SMSF trustees to turn to physical gold as a way to protect their portfolios, according to a precious metal and gold bullion specialist.

“This year globally we’ll see continued very strong demand for gold out of China and India, we’ll likely see continued buying from central banks and we’ll also see a continued gradual accumulation or a rediscovery of gold by western investors – institutional asset managers in Australia, SMSF trustees, high net worth investors, family offices and the like,” ABC Bullion chief economist Jordan Eliseo told selfmanagedsuper.

“There’s just more and more interest in gold within SMSFs growing, considering what’s happening in the Australian and global economy.

“At ABC Bullion we track sales to our SMSFs as a subset of our overall client base and we’ve noticed that in 2015 the volume of gold sales or gold turnover has pretty much tripled since 2014.”

Eliseo pointed out one of the major drivers of the increase was the lowering of interest rates by the Reserve Bank of Australia.

“Many SMSFs are now finding their term deposits are rolling over and they’re paying much less than they previously were,” he said.

“The second component has also been the additional volatility that we’ve seen on the Australian Securities Exchange this year, so some of the more traditional banking stocks and the like have started to pull back a little bit.

“So plenty of trustees are saying that they have a reasonable share positioning in their portfolio, term deposits aren’t doing much now, they’re looking for an alternative and physical gold is one of those assets that can play a natural role in their portfolio, with the other advantage that it’s a natural currency hedge – it’s an easy way of getting a US dollar exposure without having to buy overseas stocks that are highly correlated to local stocks as well.

“It balances out the portfolio in that sense.”

ABC Bullion and ABC Refinery was constantly evolving and developing new products and ways to reach new clients, he said.

It planned to launch new products this year, he said.

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