Christopher Lindsay, the head of thematic research at Sarasin, has said the firm’s investment staff “are a bit schizophrenic” on gold amid conflicting arguments about the worth of the asset class.
Sarasin continued to hold Barrick Gold at the end of October in its £487m EquiSar Global Thematic and £141m EquiSar IIID funds.
But David Vickers, a multi-asset fund manager at Sarasin, has reduced his gold holdings from 10% to 3-3.5% in his balanced funds, citing increasingly expensive prices.
Lindsay observes the gold price has risen massively off its lows, but predicts there might be more demand to come from retail investors.
He says consumers have grown nervous about the fate of the dollar and other amid continued quantitative easing and huge federal deficits. (article continues below)
According to Lindsay, demand could also emerge from unexpected sources. Electronic chip manufacturing requires an expanding array of metals, and gold may become an increasingly important component, he says.
However, Lindsay warns recycling of metals such as gold could undercut demand from miners.
In India, for instance, he says as much as 80% of electronic products are recycled, although the number is only 25% in Europe.
Such behaviour would make mining stocks less effective as a means of playing the price of gold and other metals.
According to Lindsay, many countries could resort increasingly to recycling following the recent wave of mining accidents.