According to Bobby Eng, head of SPDR ETF business development, our neighbors to the north tend to be more sophisticated and conservative investors. When I first heard that I began reading further on the subject, finding an article published by Neils Christensen for Kitco News that explored the reality of heavy-hitting Canadian asset managers turning to precious metal at a rapid pace.
Recently, Eng presented in Montreal and shared that his firm has seen Canadian investment demand grow by approximately $2 billion for SPDR Gold Shares, (NYSE: GLD), the world’s largest gold-backed exchange traded product. This is the largest gold-backed exchange and it is leveraged out to a new high of 540:1. That means there are 540 investors with the same claim to one ounce of gold. Did your heart drop?
Though the “heavy hitters” are wise to look to precious metal, they are turning a blind eye to the obvious. They see the unpublished, hidden need for a diversifier and hedge against growing market risk and volatility, however, they miss the available public statistics of the leveraged fund. This is why we push physical possession for you and your clients.
Christensen continues in his article, “In an exclusive interview with Kitco News, Eng said that the end of 2016 Canadian investment in GLD represented about 7% or around $630 million of $9 billion invested in SPDR products. The most significant portion of Canadian investment dollars is in SPDR S&P 500 ETF (NYSE: SPY). By the end of 2017 allocation in SPDR assets increased to about $17 billion with GLD allocations totaling around $2.7 billion, representing 16% of total SPDR assets, Eng said. Investment in the gold ETF increased more than 300% from the previous year.”
National Gold Consultants has always recommended a 5 to 10% allocation into precious metals that your clients possess. Canadians started by positioning themselves at 7% but as they have watched the volatility grow, the dollar weaken and equity markets become more fragile, they continue to move toward an even stronger position in precious metals.
Eng’s assessment that Canadians tend to be less risky and more conservative fits with this data. They see gold and silver for what it is – a market hedge that will dampen risk and loss. As the bubble continues to grow and volatility continues to rise, we will to see an increasing number of major players recognize the need for this hedge and strengthen their positions in precious metal. History has shown us that, on average, recessions occur every eight years, and we are now on year ten and obviously overdue for a market correction.
In his interview Eng went on to say, “Research from both the World Gold Council and State Street Global Advisors shows that a strategic investment in gold can maximize the gains in a portfolio while limiting its risk…while investor demand is expected to ebb and flow with market risk, they are seeing a trend among asset managers to create a strategic allocation in the yellow metal, more so than it just being a tactical investment. Investors are starting the see the value of holding an allocation in gold for a better risk-adjusted return in their portfolio, it’s an allocation to control the portfolio during times of risk. It’s an insurance policy.”
Your clients are also searching for not only tactical investments but protective ones as well. Positioning in physical gold and silver is the best way to protect and grow your clients’ portfolio in this equity climate. Tell your clients that you have a trustworthy resource that specializes in precious metal investing. Whether your clients have purchased precious metal before or are holding ETFs like GLD, we are here to help reposition, liquidate or consult, no matter their metal situation.