The November round of quantitative easing announced by the U.S. Federal Reserve is expected to provide support for gold prices throughout the tenure of this policy and beyond, according to a recent report from Mellon Capital Management Corporation, part of BNY Mellon Asset Management.
The report, which is part of BNY Mellon Asset Management’s global market outlook for 2011, notes that the easing policy is likely to keep treasury yields low at a time that government deficit spending worldwide has raised expectations about future inflation.
“Investors are likely to be faced with the choice of either buying treasury bonds with low yields or buying real assets, such as gold, that potentially can retain their buying power in the face of unexpected inflation or geopolitical turbulence,” said Kenton Yee, senior research analyst for Mellon Capital and author of the report. “In fact, we have seen a remarkably strong link between the real yields of U.S. inflation-protected bonds and higher gold prices since 2008.”
The report raises the possibility that gold could become a shadow currency against which all other currencies are evaluated as the world monetary base expands.
“It is important to not get caught up in the excitement of the gold rally,” Yee said. “The strategy concept is to hold gold, not to speculate on price appreciation, but to help diversify your portfolio against unexpected inflation or shifting winds in global capital markets.”
Notes to Editors:
Founded in 1983 by innovators in the investment management field, Mellon Capital Management Corporation applies a disciplined and analytical approach to global investment management strategies. As of September 30, 2010, the firm had $191 billion in assets under management, including assets managed by dual officers of Mellon Capital Management Corporation, The Bank of New York Mellon and The Dreyfus Corporation, and $9.2 billion in overlay strategies. Additional information about Mellon Capital is available at www.mcm.com. It is part of BNY Mellon Asset Management, one of the world’s largest asset managers.
BNY Mellon Asset Management is the umbrella organization for BNY Mellon’s affiliated investment management firms and global distribution companies.
BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $24.4 trillion in assets under custody and administration and $1.14 trillion in assets under management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available at www.bnymellon.com.
All information source BNY Mellon Asset Management at September 30, 2010. This press release is qualified for issuance in the UK and US and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Asset Management (US) and BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. Registered office of BNY Mellon Asset Management International: The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Services Authority A BNY Mellon Company(SM)
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