WGC: Gold Allocation to Boost Japanese Portfolio

SEATTLE (Scrap Monster): The World Gold Council (WGC) believes that time may be right for gold in Japanese investors’ portfolio.

According to Ray Jia, Senior Analyst, China World Gold Council, there has been a notable rise in volatility of Japanese Government Bonds (JGBs) mainly due to expectations about the Bank of Japan (BOJ) putting an end to its negative interest rate policy. Although bonds continue to remain as a key strategic asset, gold could be considered as an effective supplement in the current scenario. A 5% gold allocation in Japanese investor portfolio is recommended, Jia said.

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As per latest Bloomberg data, the year-to-date gain of JGBs narrowed significantly in 2023, whereas gold in yen delivered robust return of 17% during the initial eight-month period of the year, outperforming other major assets. It must be noted that gold had recorded 16% gain during the previous year.

The fears of persisting inflation pressures are likely to result in higher volatilities in price and yield of JGBs. Under these circumstances, gold is likely to emerge as an effective supplement to Japanese portfolios. The addition of gold to an existing portfolio that already invests in bonds is predicted to not only improve returns but also reduce risks.