Felix Herrmann 01/Jan/2020

2019 was a more than successful year for gold.
Investors are now asking themselves the question: Where is the precious metal heading in the new year?

2019 was a fantastic year for gold. Despite rising share prices and increased risk appetite around the globe, the precious metal was able to gain more than 18 percent last year. When converted to Swiss Francs this is more than 20 percent. It is therefore hardly surprising that there have recently been many songs of praise for gold. After the price increase in 2019, investors are now asking themselves: Where will the precious metal's journey go in the new year?

To cut a long story short: those who think they know if the gold price will rise or fall are very likely to overestimate their forecasting capabilities. After all, experience shows that gold price forecasting is one of the most difficult disciplines in the financial world. Rather than attempting to project the future price, the precious metal should be viewed from a completely different angle: namely as a portfolio stabiliser in a period of low or long-term negative interest rates. In our view, the much more relevant question is: Is gold the better government bond?

10 reasons for gold.

Source: Statista, as of December 2019

Similar to gold, Swiss government bonds also had a successful year in 2019. Ten-year Swiss government bonds delivered a total return of around four percent. In addition, Swiss government bonds – as well as government bonds of other "safe havens – keep playing an important role in many portfolios despite negative current yields. However, this status could be increasingly questioned in the new decade. The lower the interest rates fall into the negative range, the louder the request for an invisible interest rate limit becomes, so that interest rates do not fall below a certain level. Just as no one knows where the gold price will go, no one can pinpoint this lower limit. Nevertheless, investors will probably agree that such a limit exists and that it will become an ever bigger elephant in the room as interest rates become more negative. Whether this limit is close to the yield lows of 2019 or perhaps even lower, is ultimately not important. What is important is that the scope for falling interest rates is less than the scope for rising rates because of this invisible limit. It is precisely this asymmetry that could make government bonds a less attractive portfolio component in the future. If there were to be a sell-off on the equity markets in a phase in which interest rates are quoted close to their glass bottom, government bonds might not be able to play out their role as a portfolio stabiliser, or at least not sufficiently.

Countries with the largest gold reserves 2019.

Source: Statista, as of September 2019

This is where gold comes in. We know in times of market uncertainty that the precious metal has always proved to be a successful hedging instrument. At the same time, an investment in gold does have the advantage of the current negative interest rate, in contrast to the case with Swiss government bonds. This is a well-known advantage of gold, and therefore not a new insight. However, what is new is that there is a high probability that the interest rate landscape with negative interest rates will become the normal condition in the new decade. In that context, gold does not have the disadvantage of an unfavourable price development due to an asymmetrical profile. The price of gold can rise at will. Government bond prices, on the other hand, cannot rise any further once interest rates have reached a glass bottom.

Thus, in the new decade could indeed apply: Gold is the better government bond and should be given greater consideration in a broadly diversified portfolio!


  • European ETP Leader: BlackRock is Europe's largest physical gold manager with over USD 9bn in Gold ETPs, of which over USD 1bn in Swiss domiciled iShares Gold ETFs.
  • All Physical: The iShares Gold ETFs (CH) are 100% secured by physical gold bullions held in a segregated and allocated vaults at Credit Suisse in Switzerland.
  • Multiple Currency: Available in USD and hedged in CHF and EUR.
  • Cost-effective: TER of 19bps in USD respectively 22bps for CHF- and EUR-hedged. Swiss stamp duty (7.5 bps) for ETFs domiciled in Switzerland.


Risk Warnings

Investment in the products mentioned in this document may not be suitable for all investors. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. You may not get back the amount originally invested. The value of investments involving exposure to foreign currencies can be affected by exchange rate movements. We remind you that the levels and bases of, and reliefs from, taxation can change.

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Product Risks

iShares Gold CHF Hedged ETF (CH)
Counterparty Risk, Currency Hedging Risk, Gold Risk, Investment in Gold Risk, Liquidity Risk.

iShares Gold ETF (CH)
Counterparty Risk, Gold Risk, Investment in Gold Risk, Liquidity Risk.

iShares Gold EUR Hedged ETF (CH)
Counterparty Risk, Currency Hedging Risk, Gold Risk, Investment in Gold Risk, Liquidity Risk.