While silver behaves in a similar way, it is more commonly known for its industrial uses. “This renders it more sensitive than gold to inflationary environments or growth expectations, as well as idiosyncratic structural changes to industrial silver demand, as processes evolve with technological improvements,” Mr Meurice adds.
While the recent performance of commodities and equities has tended to diverge, NN Investment Partners suggests the performance of the two asset classes may be about to converge again.
It reveals that over the past five years world equity markets rose by more than 70 per cent in US dollar terms, while the performance of the Bloomberg Commodity index was “firmly negative” at more than -40 per cent.
The firm’s analysis shows the two asset classes had a high correlation of 76 per cent over the 20 years prior to 2011, but then this reversed to -75 per cent for the next five years.
Nevertheless, many other multi-asset managers are likely to continue to allocate to commodities in the belief their diversifying qualities will endure.
Ellie Duncan is deputy features editor at Investment Adviser
