Tags: mark mobius | gold | portfolio | bullion

Mark Mobius: Every Portfolio Needs at Least 10% of Gold

(Bruno Weltmann/Dreamstime)

By    |   Friday, 05 July 2019 03:13 PM

Veteran investor Mark Mobius says that gold’s set to push higher, potentially topping $1,500 an ounce, as interest rates head lower, central banks extend purchases, and uncertainty surrounding geopolitics and cryptocurrencies fans demand.

“I love gold,” Mobius, who set up Mobius Capital Partners LLP last year after three decades at Franklin Templeton Investments, told Bloomberg TV in an interview.

He added that bullion should always form part of a portfolio, with a holding of at least 10%. “As these interest rates come down, where do you go?”

Gold has rallied in 2019, rising to the highest level in six years, as investors contemplate slowing economic growth, prospects for easier monetary policy in the U.S. and Europe, and festering trade frictions. The upswing has been given added momentum as central banks, including authorities in Russia and China, step up purchases. A revival in crypotocurrencies may lead to spillover demand from investors for the older haven, according to Mobius.

“Interest rates are going so low, particularly now in Europe,” he said. “What’s the sense of holding euro when you get a negative rate? You might as well put it into gold, because gold is a much better currency.”

Meanwhile, gold slid as much as 2% on Friday and was set for its first weekly fall in seven weeks after data showed U.S. jobs growth rebounded strongly in June, which lowered the likelihood of an interest rate cut by the Federal Reserve this month, Reuters explained.

Spot gold dropped 1.2% to $1,398.39 per ounce by 11:37 a.m. EDT (1537 GMT) having hit a low of $1,386.52 earlier. The metal is set for a weekly decline of about 1%, which could be its biggest since mid-April. U.S. gold futures shed 1.4% to $1,400.90.

Nonfarm payrolls increased by 224,000 jobs last month, the most in five months, data showed. Economists polled by Reuters had forecast payrolls rising by 160,000 jobs.

"The U.S. jobs data is driving all the pressure on gold right now. The payroll numbers crushed all expectations. That may decrease the urgency for a Fed cut in July," said Chris Gaffney, president of world markets at TIAA Bank.

Adding pressure on gold, the dollar surged to an over two-week peak against a basket of six major currencies.

Gold is highly sensitive to interest rates and a lower chance of a cut would increase the opportunity cost of holding the non-interest-bearing bullion.

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Veteran investor Mark Mobius says that gold’s set to push higher, potentially topping $1,500 an ounce, as interest rates head lower, central banks extend purchases, and uncertainty surrounding geopolitics and cryptocurrencies fans demand.
mark mobius, gold, portfolio, bullion
398
2019-13-05
Friday, 05 July 2019 03:13 PM
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