Precious metals, resources benefit from geopolitical tailwinds

Investments in gold, silver and oil power award-winning funds

The current geopolitical climate has roiled markets, resulting in higher volatility and higher-than-desired inflation.

But funds focused on resources and precious metals have largely benefited, including this year’s LSEG Lipper Fund Award winners in the commodities, energy equity, and natural resources equity categories.

“The world has become more multi-polar, characterized by adversity, tariffs and reindustrialization,” says Onno Rutten, portfolio manager for the Mackenzie Precious Metals Fund.

The fund won the Lipper Fund Award in the precious metals equity category for five-year performance based on its portfolio of gold mining producers, a roughly 10-per-cent allocation to gold bullion, and mid-cap miners often involved in exploration and development.

The country’s growing debt has led other central banks and, more generally, investors to invest in gold due to concerns about the U. S. dollar’s status as the world’s reserve currency.

That has fuelled gold demand – though the price of the precious metal has fallen over the past year from record highs.

Silver has also hit record highs in recent years as its price is often tied to gold, amid worries about deficit spending, but it has also benefitted from strong industrial demand, says Nawojka Wachowiak, a senior portfolio manager for Ninepoint Partners Silver Bullion Fund.

The fund, which holds silver bullion and silver certificates, won this year’s Lipper Award in the commodity category for five-year performance.

“The industrial side is becoming more important for the commodity’s [price] momentum,” Ms. Wachowiak says, adding that industrial use counts for 60 per cent of demand.

From The Globe and Mail