Gold has no role in wealth client portfolio, says Goldman’s manager

Do not believe the exaggeration.

That’s the message from Sharmin Mossavar-Rahmani, director of private wealth management investments at Goldman Sachs, who thinks gold is too expensive and doesn’t have a clear role in the portfolios of his private clients.

Our view is that gold is only appropriate if you have a very strong view that the US dollar will be downgraded. We don’t have that view. We believe that the dollar maintains its status as a reserve currency. The dollar may get a little cheaper because it is moderately overvalued, but that does not mean that it will be downgraded, that we will have high inflation and that gold is a good substitute.

During an interview on CNBC Thursday morning, Mossavar-Rahmani explained that his wealth management group has two factors that he focuses on when he thinks about gold: strategic and tactical.

She said that gold is not a great deflation hedge, does not generate any income and is not linked to economic growth and corporate earnings, so the strategic obstacle fails as Goldman’s wealth management team assesses its relevance in a balanced portfolio.

Second, he explained that, tactically, gold is a difficult case unless investors have the perception that the current episode of weakness in the US dollar is the beginning of a more severe recession of the dollars and a possible change in the leadership of the monetary unit that is seen as the number 1 reserve currency in the world.

“So all this excitement and fuss about gold is not something we buy,” said Mossavar-Rahmani.

“In fact, at one point, we believe that people should look back and think that there are more downsides to gold,” he said.

Mossavar-Rahmani’s comments contrast with Goldman’s commodity team, which earlier this week raised its 12-month gold forecast from $ 2,000 to $ 2,300.

That shift was precipitated by “a potential shift in the United States Federal Reserve toward inflationary bias in a context of mounting geopolitical tensions, high internal US political and social uncertainty. And a growing second wave of related infections with COVID-19, “said a team of analysts like Jeffrey Currie.

Thursday, gold gold GOLD,
it fell at $ 11.10, or 0.6%, to settle at $ 1,942.30 an ounce, after settling at a record on Wednesday, marking its ninth consecutive advance, which is its longest winning streak since a 10-session climb ended in January. .

The rise of gold came amid growing cases of COVID-19 in the US and around the world. However, the rise in gold has also coincided with a weakening of the dollar against its main rivals, which can give gold buoyancy because bullion and other precious metals are priced in the currency and their softening can cause metals to be more attractive to buyers who use alternative currencies.

A measure of money, the ICE US Dollar Index DXY,
It was down around its lowest level since 2018 and has fallen 4.5% so far in July, according to FactSet data, while gold is up 8.1%, according to the most active contract.