Mobius sees currency devaluation and recommends buying gold

(Bloomberg) – Veteran Mark Mobius recommends that investors invest 10% of the portfolio in gold, arguing that the currencies will depreciate after the unprecedented stimulus implemented to fight the coronavirus pandemic.

At the current stage, “10% must be placed in physical gold,” said Mobius, who created Mobius Capital Partners after more than three decades working at Franklin Templeton Investments. “The devaluation of currencies globally will be quite significant in the next year, considering the incredible amount of printed currency on offer.”

Gold hit a record last year, when the pandemic sparked a scramble for safe assets, but backtracked on vaccine distribution.

To tackle the crisis, central banks and governments around the world have released monetary and fiscal stimuli of unprecedented magnitude, straining central bank balance sheets and public finances.

“It’s going to be really, really nice to have physical gold that can be accessed immediately, without the danger of the government confiscating all of the gold,” said Mobius — a longtime fan of the metal — during an interview.

The ounce of spot gold is traded at around US$1,815, but it broke a record about a year ago, when it surpassed US$2,075. Since the beginning of 2021, the metal has accumulated a fall of 4%, while the global stock markets remain close to the record and the American central bank (Federal Reserve) outlines the strategy to reduce the stimulus.

Investors have preferred to distance themselves from gold-backed exchange-traded funds (ETFs) because of the stock’s continued strength. The global total of gold assets in the portfolios decreased by 8.5% over the last 12 months, according to data from Bloomberg.

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