A Big Investor Now Stores Physical Cash Because of Negative Rates and What This Could Mean for Gold
By GCRU Gold News on Saturday, March 19 2016, 23:02 - Permalink
So it is quite remarkable that the world’s largest reinsurance company, Munich Re AG, is now bucking the trend and investing more in gold and physical cash to avoid paying a penalty for saving.
The company has around $250 billion in assets and just added an eight-figure amount in physical cash to its gold holdings.
Other estimates have put the total institutional allocation to gold and gold mining shares to less than 0.3 percent or $300 billion according to the 2014 numbers.
So even while rates were still moderately positive, a 2014 study by Mercer consulting suggested a 3-5 percent allocation to gold for the institutional portfolio to reduce volatility and enhance returns for a standard institutional portfolio.
If institutions wanted to allocate only 5 percent (or $5 trillion) to physical gold, there simply would not be enough to buy at this price. The market size of only $7.4 trillion and a large part is not for sale, like the Indian gold hoard.
A Big Investor Now Stores Physical Cash Because of Negative Rates and What This Could Mean for Gold