SNB Shock Was ‘Icing On Cake’ For Gold Ahead of Draghi’s Euro ‘Bazooka’

Wednesday, January 21, 2015
By Paul Martin

By: GoldCore
GoldSeek.com
Wednesday, 21 January 2015

Is gold a safe haven? Mark O’Byrne, executive and research director at GoldCore, told CNBC yesterday that yes it is. He said that the Swiss National Bank’s recent decision was “icing on the cake” for gold and shows how gold thrives in a volatile environment.

Interview:
CNBC’s Seema Mody: Given the lacklustre performance of gold over the past two years, investors have been questioning whether gold is in fact a good investment. But last week’s unexpected move by the Swiss National Bank confirmed that perhaps gold is still seen as a safe-haven by investors during a time of rising volatility. Would you agree?

Mark O’Byrne: I would indeed – yes, absolutely. And I think the SNB decision is actually ‘icing on the cake’ because there were strong fundamental factors in place coming through from 2014 and gold prices had actually started to move up – particularly in Euro terms, but also in dollar and sterling terms – even prior to the SNB decision.

Then the SNB decision last week obviously caused a lot of turmoil on the markets and you just mentioned there about FXCM and Alpari and it shows again how volatile these markets are and that is an environment that very much suits gold and speaks to the need of having gold in a diversified portfolio.

Seema Mody: if you are expecting volatility going into the New Year should one be buying gold and if so how much of their portfolio should be allocated towards the shiny metal?

Mark O’Byrne: Well there is a huge amount of academic research just in recent years both coming out of academia but also out of independent research by massive allocation specialists – the likes of Ibbotson and companies like that – and a lot of the research shows that a small allocation of gold is very, very prudent.

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