“I think the big catalyst … is what’s the role of bonds in a portfolio?” said Will Rhind of GraniteShares in an interview.
Gold market participants have been hearing lately that it’s only a matter of time before generalist investors return to the space and help drive the yellow metal’s price up.
But what will be the catalyst that brings these investors back? Will Rhind, founder and CEO of GraniteShares, shared his thoughts in a recent interview.
“I think the big catalyst … is what’s the role of bonds in a portfolio?” he said, noting that for a long time the idea was to have a portfolio allocated 60 percent to equities and 40 percent to bonds.
“Obviously that was in a world where we had interest rates at some level, and you held bonds because they diversified or helped diversify from your equities, and also gave you some income as well,” he said.
“Now obviously we’re in a situation where we have zero interest rates, so bonds are no longer giving people income. And arguably at the bottom of the interest rate curve, what room do bonds have to go in terms of performance?” Rhind continued.
He clarified that he doesn’t see bonds disappearing completely — but he does see an opportunity for gold to take some of their space in investors’ portfolios.
“If your’e looking for a reason, or a part of the portfolio that I think gold will be used, it will be people reducing their fixed-income allocation and replacing that with gold,” he explained.
GraniteShares offers a variety of exchange-traded funds, with the GraniteShares Gold Trust (ARCA:BAR) being its flagship asset. It’s been gaining traction since its launch about three years ago, and Rhind said his outlook for gold moving forward is positive.
“I certainly think it’s realistic (for gold to pass its all-time high). You’ve got to think back or cast your mind back to 2008 and what happened there … in that year, the price of gold went up, the price of gold went down — it bottomed out around US$700 an ounce. But the average price for that year was somewhere around US$850.” Then, in 2011, it reached its all-time high of over US$1,900.
“If you look at where we are now, we were sitting at around the US$1,500 mark in terms of gold before all of this happened. So if gold were to do what it did in 2008, and double or slightly more from here, then clearly we’d reach an all-time high for the gold price.”
Watch the interview above for more from Rhind on gold and GraniteShares.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.