This is not a paywall.

Register for free to continue reading.

The news sucks. But your reading experience doesn't have to. Help us improve that for you by registering for free.

Please create a password or click to receive a login link.

Please enter your password or get a login link if you’ve forgotten

Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

Goldman Sachs Says Yen Offers a More Attractive Hedge T...

Business Maverick

Business Maverick

Goldman Sachs Says Yen Offers a More Attractive Hedge Than Gold

One kilogramm fine gold bar are pictured in the Pro Aurum KG in Munich, Germany, on Wednesday, July 10, 2019. Photographer: Michaela Handrek-Rehle/Bloomberg
By Bloomberg
23 Jul 2019 0

Investors looking at haven assets to protect against a risk-off shock should find the yen a cheaper option than gold, according to Goldman Sachs Group Inc.

An increase in gold-price volatility has made bullish options on the traditional haven more expensive than yen equivalents, wrote strategists including Alessio Rizzi in a note Monday.

“Implied volatility and options-call skew are expensive now for gold and buying calls on the yen appears attractive,” they said. “With gold positioning becoming more stretched, the yen might be a more attractive hedge tactically.”

Holdings in bullion-backed exchange-traded funds have hit the highest level since 2013 thanks to a combination of global-growth concerns, geopolitical concerns and plans by central banks to restart monetary stimulus. Spot gold is up 11% this year. The yen has only risen 1.6% against the dollar — less than half the gain for the un-havenlike Canadian dollar.

Gold and the yen both might benefit in the case of a shock U.S. intervention to weaken the dollar, the Goldman strategists wrote.


Please peer review 3 community comments before your comment can be posted