3 REASONS TO CONSIDER AN ACTIVELY MANAGED ALLOCATION TO GOLD AND SILVER
Central banks are also injecting vast amounts of stimulus into the system, swelling their balance sheets to extreme levels. And unlike in 2008, this money is flowing into the real economy.
History tells us the result could be inflation – with negative real interest rates and a devaluing of fiat currencies.
If the Federal Reserve were to enact even more extreme monetary policy, such as Modern Monetary Theory or ‘helicopter money’ to support government spending plans, that would be further bullish for gold as a tool to hedge against inflation.
The gold price typically moves inversely to ‘real’ interest rates – the rate of interest excluding the effect of expected inflation. In this way, it can help to defend a portfolio against the effects of inflation.
Real interest rates in the US have turned negative, meaning that many US Treasury bondholders face losses in post-inflation terms, revealing gold and silver as the stores of true value. We see this trend continuing, and it is an ideal environment for monetary metals.
‘Shrinkflation’ where products become smaller but cost the same, is a well-known phenomenon. It is harder to track than simple price rises but is a good example of how inflation can appear from ‘out of the blue.’
- The fund manager aims to outperform gold to help allocators generate meaningful attribution
- Flexible and dynamic strategy that allocates to gold and silver bullion, and mining equities
- De-risked approach to investing in bullion and mining equities
Actively blending silver with gold
The manager aims to add value by increasing exposure to silver when prices are rising, and reducing exposure when prices are falling.
Active exposure to gold and silver mining company shares, alongside bullion
As with the blending of gold and silver, the mix of exposure to mining shares and the metals themselves is actively managed with a view to adding value as market conditions evolve.
Lower energy costs combined with rising gold and silver prices have made operating margins for gold and silver mining companies extraordinarily attractive.
WHY ALLOCATE TO SILVER ALONGSIDE PHYSICAL GOLD?
Silver also has dual importance as an industrial component, as well being a monetary store of value.
There is growing demand for silver for use in green technologies, such as photovoltaic cells for solar panels, and it is widely used in electronics! Silver can be found in solar cells, water purifiers, touch screen & smartphones, electric vehicles and semiconductors.
- Investment risk – there is no guarantee that the Fund will achieve its objective. A capital loss of some or all of the amount invested may occur.
- Sector concentration risk – the Fund’s investments are concentrated in natural resource companies, and may be subject to a greater degree of risk and volatility than a fund following a more diversified strategy. Silver tends to outperform gold in a rising gold price environment and it tends to underperform gold when sentiment moves against the sector.
- Strategy risk – as the Fund invests in other collective investment schemes, which themselves invest in assets such as bonds, company shares, cash and currencies, it will be subject to the collective risks of these other funds. This may include emerging markets risk and smaller companies risk.
- Company shares (i.e. equities) risk – the value of Company shares (i.e. equities) and similar investments may go down as well as up in response to the performance of individual companies and can be affected by daily stock market movements and general market conditions. Other influential factors include political, economic news, company earnings and significant corporate events.
- Concentration risk (number of investments) – the Fund may at times hold a smaller number of investments, and therefore a fall in the value of a single investment may have a greater impact on the Fund’s value than if it held a larger number of investments.
- Smaller companies risk – smaller companies are subject to greater risk and reward potential. Investments may be volatile or difficult to buy or sell.
- Liquidity risk – some investments may become hard to value or sell at a desired time and price. In extreme circumstances this may affect the Fund’s ability to meet redemption requests upon demand.
- Currency risk – the Fund can be exposed to different currencies. The value of your shares may rise and fall as a result of exchange rate movements.
- Derivative risk – the Fund may use derivatives to generate returns as well as to reduce costs and/or the overall risk of the Fund. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment. Derivatives also involve counterparty risk where the institutions acting as counterparty to derivatives may not meet their contractual obligations.
For a more detailed explanation of risks, please refer to the “Risk Factors” section of the prospectus.
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Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The performance datadoes not take account of the commissions and costs incurred on the issue and redemption of shares. The value of investments and the income from them may go down as well as up and investorsmay not get back the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value ofoverseas investments to rise or fall.
This communication provides information relating to a fund known as Jupiter Gold & Silver Fund (the “Fund”), which is a sub-fund of Jupiter Asset Management Series plc. Jupiter Asset Management Series plc is an investment company with variable capital established as an umbrella fund with segregated liability between sub-funds which is authorisedand regulated by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, asamended. Registered in Ireland under registration number 271517. Registered office: 33 Sir John Rogerson’s Quay, Dublin 2, Ireland.
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The Fund has not been approved for offering to non-qualified investors in or from Switzerland by the Swiss Financial Market Supervisory Authority FINMA (“FINMA”). First Independent Fund Services Ltd., Klausstrasse33, CH-8008 Zurich is the Swiss representative and BNP Paribas Securities Services, Paris, succursalede Zurich, Selnaustrasse16, CH-8002 Zurich is the Swiss paying agent in relation to the shares of the Fund (“Shares”) distributed, offered or marketed in or from Switzerland. Accordingly, the Shares and the relevantfund documents and any offering material relating to the Fund and/or the Shares may only be distributed, offered or marketed in or from Switzerland to qualified investors as defined in art. 10 para. 3of the Federal Act on Collective Investment Schemes of 23 June 2006 and its implementing ordinances, as amended from time to time, and the most current practice of the FINMA and the competent courts. In respect of the Shares distributed in or from Switzerland, the place of jurisdiction is at the registered office of the Swiss representative.
The net asset value of the Fund may have high volatility due to the nature of the asset class invested. Your attention is drawn to the stated investment policy which is set out in the Fund’s prospectus.