7IM's Sleep buys gold to hedge against 'human stupidity'

7IM's Sleep buys gold to hedge against 'human stupidity'

Gold is less an investment and more about speculation but it has a role in portfolios as a hedge against human stupidity, according to Peter Sleep, senior portfolio manager at 7IM.

Mr Sleep said he has been buying gold for the portfolios he manages because it holds its value in times of severe turbulence, such as war, or geopolitical upheaval.



The fund manager said there are plenty of reasons to fear such upheaval, which could become a feature of the world given the number of what he thinks are "stupid" events going on.

Mr Sleep said that gold’s role as a hedge against extreme volatility has been proven over time, as it tends to go up when other assets fall in value.

Adrian Lowcock, investment director at Architas, said: “Gold behaves differently to other investments as it doesn’t produce anything and has no income.

"It is used a small amount in industry but not enough to have a significant impact on the value.  

"It is still in a sweet spot in that it is rare, but not too rare, making it attractive and an accessible investment.  

"Typically I would suggest investors hold around 5 per cent of gold in their portfolios as a long term diversifier.

"Rising inflation should be good for gold but we are coming from a low base and inflation doesn't look set to get out of control.

"In a mild inflationary environment other assets can also protect against inflation in particular equities.

"Whilst geopolitical risk seems high it is an ever present theme when investing and markets are currently shrugging the risks off – possibly a result of becoming desensitised to the risks after 10 years of financial crisis."