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Eurozone swings sentiment on gold and government bonds


At a recent Schroders Investment Conference in London, 120 intermediary clients who attended from Europe, the Middle East and Latin America, were asked their views on the Eurozone as well as their outlook for several asset classes.

The results reveal that 81% believe that the Euro will not collapse despite current problems in the Eurozone. However, significant concerns towards the region exist with 59% considering European structural problems as the most pressing global macroeconomic issue today followed by US structural problems (22%). Furthermore, there is a strong consensus (62%) that the best path for Europe is to put Greece into a “managed” default and recapitalise the banks at a national level.
In light of recent market volatility, the survey reveals a positive outlook towards certain government bonds and gold. Almost half believe that German, UK and US bonds will yield between 2-4% in five years’ time and 31% believe the same bonds will yield 4-6%. Attitudes towards gold are also optimistic with almost 40% believing that the gold price will reach at least $2,000 per ounce in two years.
Peter Beckett, Head of International Marketing, Schroders, says: “The ongoing uncertainty around Greece and Italy as well as the fear of further contagion is causing markets to be driven by daily or hourly swings between fear and euphoria that are entirely unrelated to traditional company fundamentals. It is therefore not surprising that investors have strong views on how to resolve the Eurozone problems and are optimistic towards ‘safe haven’ asset classes such as gold and government bonds from stronger countries. Gold in particular offers important diversification as well as protection against uncertainty, inflation and concerns over the value of the US Dollar, Sterling and Euro, which are all prevalent in current markets.” 

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