Lukicheva: Gold should occupy about 10-15% of a non-professional investor’s portfolio

MOSCOW, February 7 – RIA Novosti. Experts interviewed by RIA Novosti say that gold and gold-containing assets should occupy about 10-15% in a non-professional investor’s portfolio this year – it does not bring significant profitability, but serves as a high-quality defensive asset.

On Friday, the press service of the Ministry of Finance of the Russian Federation told RIA Novosti that the ministry expects the growth trend in demand for gold and other precious metals in the domestic market to continue in 2023, with individuals buying more in 2022. More than 50 tons of gold bullion, which is 10 times more than in 2021.

“Let’s start with the fact that any investment portfolio should contain 10-15% gold and gold-bearing assets each year. Oksana Lukicheva, commodity market analyst at Otkritie Investments, answered a question about the prospects for gold this year, while providing a stable return to the investment portfolio.”

Alfa Capital analyst Alexander Dzhioev agrees with Lukicheva, and also believes that the share of gold in the portfolio should be 10-15%, because gold is an asset for non-revenue diversification.

On the other hand, Valery Emelyanov of BCS World of Investments believes that the maximum share that an investor allocates to gold should not exceed 10% as it may not yield profits for years.

Analysts are divided on how to acquire gold and gold-bearing assets.

That’s why Lukicheva believes it’s best to use a basket of gold-containing assets. For example, the share of the portfolio allocated to this asset class can be divided equally into investments in bullion and coins, investments in stocks of gold mining companies, and investments in exchange-traded instruments (for example, purchase of spot gold). At the same time, the expert adds that speculative instruments can be completely excluded, leaving only bullion/coins and shares of gold mining companies.

Dzhioev, on the other hand, believes that the choice of a tool for investing in gold should depend only on the convenience, simplicity and reliability of such an investment. The analyst recommends using funds that invest in physical gold for a non-professional investor.

“Mining stocks are generally a good investment option. You can get a much higher return than investing directly in gold or silver… But the risks in the stock market are higher than if you buy gold or silver,” says Freedom’s lead analyst. Finance Global Natalya Milchakova.

According to Dzhioev, the reference price of gold at the end of 2023 is in the range of 1800-2000 dollars per ounce. The analyst states that precious metal quotes will be supported by increased demand from central banks and that further increases in key rates could put pressure on them, leading to an increase in government bond yields. “attract” a number of investors.

He points out that there is no imbalance in the market in favor of buyers. So gold now has a fairly balanced value. In rubles – even more difficult. The ruble can fall or rise strongly depending on geopolitics and sanctions. The expert warns that gold, even without changing the dollar to rubles, can bring both a good profit and a big loss.

Lukicheva believes that the current year is expected to be positive for gold and gold-bearing assets. According to the analyst, the reasons for this will be the loosening of the monetary policy of the largest central banks, the growth of demand for jewelry and investment in retail, and the increase in official demand for gold. The risk expert highlights the decline in institutional demand for precious metals in exchange-traded funds.

“According to our predictions, the price of gold may grow from 3% to 13% this year and rise to $2,100, depending on various scenarios for the evolution of events in the global economy,” Milchakova said. Throughout Monday, the price of April gold futures on the New York Comex exchange fluctuated around $1,880 an ounce.