Invest in apartments, modern art, asset manager says
Gold’s traditional role as a store of wealth has been usurped by contemporary art and apartments in cities such as Vancouver, New York and London, according to Laurence D. Fink, head of the world’s biggest asset manager.
“Historically, gold was a great instrument for storing of wealth,” the chairman of BlackRock Inc. said at a conference in Singapore on Tuesday. “Gold has lost its lustre and there’s other mechanisms in which you can store wealth that are inflationadjusted.”
Over the centuries, bullion traditionally lured demand as a protection of wealth during crises, including conflicts and periods of inflation. Prices posted the first back-to-back annual drop last year since 2000 as investor holdings in exchangetraded products contracted, global equities rallied and the dollar climbed. Since peaking in 2011, it has dropped about 38 per cent.
“The two greatest stores of wealth internationally today is contemporary art ... and I don’t mean that as a joke, I mean that as a serious asset class,” said Fink.
“And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.”
Gold rallied to as much as $1,921.17 an ounce in September 2011, but was trading at $1,199.13 in New York on Tuesday. It has risen about 1.3 per cent this year after losing 1.4 per cent in 2014 and tumbling 28 per cent in 2013. Holdings in gold-backed ETFs totalled 1,621.7 tonnes as of this week, 1.5 per cent bigger this year after contracting 9.3 per cent in 2014, according to data compiled by Bloomberg. The funds trade like shares, enabling investors to own bullion without taking physical delivery of it.
“The advent of ETFs for gold made it much easier to own gold and it really democratizes gold,” Fink said at the 2015 Credit Suisse Megatrends conference. “I don’t believe people believe gold is a great store of wealth today. It’s become much more accessible for global families worldwide to store wealth outside their country.”