New Model Adviser magazine article written by Jack Gilbert reporting on the very good calendar year 2019 performance of the Charteris Gold & Precious Metals fund. Interview conducted with Charteris CEO Ian Williams on how returns were achieved.
But what was the driver behind Williams’ stellar metal returns?
‘The biggest driver – and this had been going on all last year – has been the negative nominal interest rate,’ he says. ‘Through this period, you had $16tn of negative nominal yields, and that is just on bonds. That is not on bank deposits.’
‘With something like gold, the gain is not guaranteed. But you stand just as much sporting chance of making money as losing it,’ he says. ‘You are paid to take the risk, plus you get the dividend income, which you don’t get in a lot of the bond markets these days.
‘So it is no wonder that investors at the margin are switching into inflation-proof assets, rather than deflation-proof ones. If you go back to the Romans, gold and land are the only things that have held their value.’
Williams adds that another factor for the strong returns of gold funds is that gold mining shares are undervalued compared to the price of gold.
‘Gold shares are historically relatively cheap, compared with gold,’ he says.
‘Gold is recovering from an unloved, depressed position, so it is easier to show big percentage gains coming from there. A gold mining company that has a market cap of £500m can easily go to £900m. It is a function of where you are coming from – the percentage you can grow.’
Click to read PDF – Gold manager Williams on his 52 per cent returns in 2019
Article appeared on New Model Adviser / Citywire Wealth Manager on 21 Feb 2020 (Link opens a new page)