Danny Dolan, CEO China Post Global (UK) has commented on the interest rate cut by the Bank of England and its likely effect on gold prices.
He says: “Low interest rates, heightened macroeconomic and geopolitical risks, concerns over global growth, and unattractive equity and fixed income returns are all combining to drive strong investor demand for gold. Today’s interest rate cut by the Bank of England will strengthen that demand further. Gold continues to be attractive for its ‘safe-haven’ status and we expect to see further growth in demand, pushing prices even higher.
“Investors are looking for UCITS-compliant ways to invest in gold, something that isn’t possible with physical gold or gold-backed securities. In addition, ETCs and ETNs don’t offer investors the same levels of investor protection, risk monitoring and transparency as UCITS ETFs.
“Investing in gold mining companies is an increasingly attractive way for investors to gain exposure to gold. Performance of gold mining equities is closely correlated to the spot price of gold, especially for companies that don’t hedge their production long term. Gold mining companies are now very well positioned to generate profits, as demand is strong and production costs are generally low.”