Investors should keep 10% of their portfolio in Gold since currencies would be depreciated due to the massive stimulus carried out to combat the coronavirus epidemic.
According to Bloomberg, veteran investor Mark Mobius, disclosed this saying, “10% should be put into physical gold; Currency devaluation globally is going to be quite significantly next year given the incredible amount of money supply that has been printed.”
“It is going to be very, very good to have physical gold that you can access immediately without the danger of the government confiscating all the gold,” he added.
Bullion reached a new high last year as the coronavirus epidemic prompted a flight to safe-haven assets, but it has subsequently fallen as vaccinations have become available.
Central banks and governments worldwide have launched an unprecedented surge of monetary and fiscal stimulus to combat the crisis, increasing balance sheets at the Federal Reserve and elsewhere while straining state budgets.
Nigeria also participated in the surge of money supply and stimulus package during the heat of the pandemic. Hence, the advice of the seasoned investor Mark Mobius is very much applicable to Nigerian investors.
Despite the ongoing rise in stocks, investors are shifting away from bullion-backed exchange-traded funds. According to Bloomberg statistics, worldwide gold-backed assets have dropped 8.5 percent in the last year.
Why this matters
The global effects of government intervention in the form of stimulus and increased money supply will negatively affected investors’ portfolios, especially when these packages come to a final stop. Questions surrounding how the economy would maintain the pace of growth would come to play, and Gold serves as an asset that would be stable and even appreciate during these uncertain times ahead.