We have written in these pages before about the financial authorities giving gold a helping hand, sometimes with their short sited policy actions. Freezing Iran out of the payments system so she settles exchange in other forms with her trading partners, and allowing gold to move back to the heart of the banking system, are two good examples.
Instances such as these usually surprise us given that gold is the antithesis of the financial authorities who manage our national currencies. Humans are prone to err and the Feds are not different, something that as gold investors we celebrate on these occasions.
In the UK the Financial Services Authority’s (FSA) long awaited Retail Distribution Review (RDR) has been growing in form prior to coming into force on the 1st January 2013. The implications of RDR on investment markets have been debated for some time.
Has the FSA boosted demand in the gold market?
Recent research from the World Gold Council (WGC) argues that RDR should be seen as a game changer for gold. Like others the WGC argue that previous regulations limited investment and product choices for retail money managers, limiting advisers’ abilities to provide clients with wide ranging asset allocation and truly balanced and diversified portfolios.
Investment options considered mainstream in today’s contemporary financial era of too big to fail, bail outs, and QE, have been found wanting, leading to a search for other alternatives. Savers and money managers have been looking for other options prompting a widely noted growth in the alternative investment sector.
RDR will shortly enable advisers’ to direct retail funds to a wider range of investments and products. This could be good for gold, and other apparently ‘alternative’ investments. Many might see this as the regulators once more following the ball, and reacting after a phenomenon has occurred.
RDR looks set to increase the chances of retail funds finding their way into the gold investment market. This would offer further support to the gold price, and help clients of the fund management industry achieve their needs of wealth preservation, portfolio diversification and finally some decent and varied asset allocation.
What does RDR mean for gold investment products?
If RDR really causes the above, it will be very interesting to observe the fund management…
