Alan Mudie, chief investment officer of Union
Bancaire Privée’s private banking division, has argued that gold is
the only asset that can get investors through the current economic
crisis as it is the “ultimate shield” from the risk of monetary
chaos and the depreciation of currencies.
Outlining his expectations for 2012, Mudie
said the traditional idea of portfolio management – based on the
premise that riskless assets exist – has become obsolete.
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Mudie said UBP has therefore opted for a
pragmatic implementation of its convictions, ignoring the models of
the past.
Mudie commented: “The two greatest challenges
for states and central banks in years to come will be, firstly, to
implement austerity policies that are able to reassure the markets
without plunging their economies into a deep recession, and
secondly, but just as importantly, to reduce the debt burden by
creating a little inflation, but without allowing prices to spiral
out of control.”
Mudie’s comments come as the November 2011
investment strategy bulletin from Lombard Odier notes that from
February 1920 until November 2011 – a period covering five global
banking crises – gold’s real price has increased by 622% or 2.2%
per annum in real terms.
The Lombard Odier paper states: “Gold is a
good asset to hold in times of global banking crisis or systemic
collapse of financial systems. It thus seems that gold should be
the perfect asset class to hedge against today’s lingering concerns
over the stability of our globalised and interlinked financial
systems.”
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