Gold – good time to switch from mining to bullion, says Barings

With gold hitting an all time high, breaking through the $1,000 an ounce barrier, Percival Stanion, head of asset allocation at Baring Asset Management (Barings), believes that now is the time for investors to switch from gold mining to gold bullion.

Percival explains, “The multi-asset portfolios at Barings have recently benefited from the surge in gold prices and have now sold out of our exposure to gold mining and switched into gold bullion.  In our view, gold is a more stable store of value, over a five year view, than all paper currencies except the renminbi. Sterling is still our least favoured currency, even after significant falls in value.

“Our asset allocation strategy over the past few months has had a high weighting in UK and European equities while avoiding US and Japanese equities, which both turned out to be laggards.  Now we have benefited from the European equity rally, we are largely moving away from European stocks, due to concerns about a lack of transparency in the banking sector, compared to Anglo-Saxon companies. We are also apprehensive about Europe’s prospects for growth while the currency is so strong.”

Percival concludes, “Following the strong rally from UK equities, we have been trimming our exposure over concerns about the speed with which the market has rallied.  The global economic recovery is looking sub-par due to over indebtedness in the UK, US and some parts of Western Europe. There is going to be a speed limit on growth in the West as final demand weakens, in part due to the explosion of government debt, which will surely result in revenue raising measures.”

Barings’ flagship institutional multi asset offering, the Baring Dynamic Asset Allocation (DAA) fund and the recently launched retail fund, the Baring Multi Asset Fund, aim to deliver equity-like returns with less risk than holding an equity-only portfolio. The DAA fund has won over £320 million of new mandates this year, bringing the total funds under management to well over £1.5 billion since its launch in January 2007.