World’s Largest Asset Manager Blackrock: “Perfect Time And Place” For Gold

The world’s largest asset manager, Blackrock Inc., has written a note about gold in which it suggests that this is the “perfect time and place” for gold due to “low and even negative yields, slow growth and potential signs of rising inflation.”

BlackRock has over $4.6 trillion in assets under management and provides guidance to individuals, financial professionals and institutions and the note was written by Russ Koesterich, the Head of Asset Allocation for a leading Blackrock fund.

The blog, ‘Are these the golden days for gold?’ published by Blackrock last week, points out that “gold may continue to shine”:

“Given slow growth, a cautious Federal Reserve and the proliferation of negative sovereign yields in Japan and Europe, U.S. real rates are likely to remain low for the foreseeable future. At the same time, both core inflation and wages have been firming while the inflation drag from last year’s strong dollar and collapse in oil is beginning to fade. This is exactly the type of environment that has historically been most favorable to gold.”

Blackrock believe that the “unusually low level of real interest rates (i.e. after inflation)” now make the asset class of gold a potential remedy:

“All told, this is a serious problem for yield starved investors. Ironically, one potential remedy is to take a second look at an asset class that provides no income: gold.”

In March, BlackRock joined Pacific Investment Management Co. (PIMCO) in recommending inflation linked bonds and gold, warning costs are poised to pick up and there is a growing risk of inflation. “We like inflation-linked bonds and gold as diversifiers” said New York-based BlackRock.

“The strategy tactically invests in multiple inflation-sensitive asset classes, allocating across a broad opportunity set of real assets, including global inflation-linked bonds, commodities, real estate, currencies and gold …

Gold has characteristics of both a commodity that is easily stored for a long period of time and a currency whose supply is limited.”