Friday, October 7, 2011

World's wealthiest families buying gold for "catastrophe" portfolios

"We have to explain to our clients, it's not about making money these days, it's about keeping wealth"

Do it like millionaires invest in gold
The world's wealthiest families have embarked on damage limitation rather than seeking to boost their fortunes as financial turmoil erodes their riches, with some so worried they are putting their money in "catastrophe" portfolios.

"We have to explain to our clients, it's not about making money these days, it's about keeping wealth," said Ivan Adamovich, head of the Geneva operations of Swiss bank Wegelin.

With inflation eating away at people's nest eggs and rock-bottom interest rates making living off capital increasingly difficult, many rich people are taking new risks just to stand still, private bankers said.

"We have already inflation higher than interest rates in many markets. ... Unless you take some risk, you will not achieve a level of return just maintaining [wealth]," Pierre de Weck, head of Deutsche Bank's private wealth management business, said at the Reuters Wealth Management Summit in Geneva.

Mr. Adamovich said a model portfolio designed to protect people's wealth in the face of global catastrophe has attracted more interest as financial turmoil spread in recent months.

The "catastrophe portfolio" allocates one third of money to gold, one third to defensive and internationally diversified blue-chip company shares and a third to the debt of ultrasafe developed countries.

Mr. Adamovich said interest in the portfolio is still limited to the most "paranoid" clients but interest is rising, particularly among people who have seen previous episodes of societal breakdown and financial collapse in Europe.

from Blanchard (via Noblenomads)

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