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May 25, 2021  |  News

Equity volatility due to high inflation will push investors further into gold – Wilshire Phoenix

(Kitco News) While the rising inflation threat has been leading investors back into the gold market, one firm said that this is only part of the story as inflation is expected to create more market volatility adding to gold’s safe-haven allure.

Wade Guenther, managing partner at Wilshire Phoenix, said that his firm is seeing firsthand the renewed interest in investment demand for gold. The company launched an adaptive gold-backed exchange-traded fund in February: the Wilshire wShares Enhanced Gold Trust (NYSE: WGLD).

“The volume has been, we believe, very positive for a new fund, said Guenther. “We’re really excited by the momentum that WGLD has built up.”

Because of its adaptive algorithms, the fund adjusts its allocation between gold and cash based on market volatility. Guenther said that since its launch, the ETF has moved from about an 84% allocation in gold to a 100% allocation. He added that as long as gold market volatility remains low and prices are in an uptrend, the fund will remain entirely invested in the precious metal. The ETF is rebalanced monthly, he said.

“Gold has been topical for all of the right reasons,” said Guenther. “We understand the catalysts that support these strong gold prices.”

Guenther said that while rising inflation pressures will continue to support gold prices, this is only half of the story. He added that investors and market analysts still don’t clearly understand how inflation will impact equity market valuations.

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