(Kitco News) – With gold prices struggling to hold the critical psychological level around $1,800 an ounce, one precious metal investment firm is recommending investors look past the noise and focus on gold’s long-term diversification potential.

In an interview with Kitco News, Wade Guenther, managing partner at Wilshire Phoenix, said his firm’s adaptive gold-backed exchange-traded fund has increased its exposure to gold.

Guenther said that after rebalancing last week, The Wilshire wShares Enhanced Gold Trust (NYSE: WGLD), now holds about a 96% allocation to gold, up from about 81% from the previous month.

Guenther explained that although the gold market saw some dramatic price swings last month, the market’s average volatility has been relatively stable. The Wilshire gold ETF adjusts its exposure to gold based on the market’s average volatility.

“With our algorithms, we are letting the data speak for itself,” he said. “One of the key features of the strategy is to keep investors’ emotion out of the market and stop them from making potentially irrational decisions.”

Although Guenther doesn’t know how the fund will rebalance itself in the future, he said that he sees a positive price driver through the rest of the year.

Guenther said that the most significant factor for gold remains rising inflation pressures. In May, U.S. Consumer Price Index rose 5.0% for the year, the biggest jump since August 2008. He added that the magnitude of inflation will continue to support gold through the rest of the year.

Continue Reading