Go for gold, CIMB Private tells high net worth clients

Published: 2009/05/05

CIMB Private Banking is advising its high net worth clients to invest in gold, as the precious metal can help diversify their investment portfolio amid the current economic and market volatility.

In a statement, CIMB Private Banking co-head Alan Inn said gold is a good choice due to its lack of correlation when held up against most of the other asset classes.Most investment portfolios mainly focus on traditional financial assets such as stocks and bonds.

"A truly diversified portfolio contains not only a range of different asset types, but those that do not correlate with changes in the price of mainstream financial assets regardless of the health of the financial sector or broader economy."Given the volatility of the current market, there is a need for a diverse portfolio of investments so as to protect the portfolio against fluctuations in the value of any single asset class.

"Portfolios that contain gold are generally more robust and better able to cope with market uncertainties and volatility than those that do not," he added.Gold has long achieved its status as a safe haven investment in times of financial and geopolitical stress.

In addition to being an excellent hedge against inflation and currency values for the last 30 years , gold also stabilises one's investment portfolio regardless of cyclical factors or economic conditions, the statement said.

Inn said investment in gold can be in the form of gold bullion, Exchange Traded Funds ( ETFs ), gold futures or stocks.He said investors should look to gold not for specifically delivering a huge out-performance, but to neutralise the volatility of traditional asset classes and attain a more balanced, well-rounded, and non-correlated portfolio of investments.

Set up in 2002, CIMB Private Banking is the Malaysian wealth management arm of CIMB Group. It offers a complete range of private banking services catering primarily to high net worth individuals, extending from investments to securities financing to trust services.