Armstrong Investment Management is looking at precious metals and commodities as a way to hedge the risk of rising inflation.
In the funds it runs for Distinction Asset Management, AIM is holding three exchange traded funds from ETF Securities that provide exposure to physical gold, physical silver and physical platinum respectively.
There are also two agricultural commodity holdings in the portfolios, ETF Securities forward agriculture DJ-UBSCI-F3SM and Potash Corporation of Saskatchewan.
Potash Corporation of Saskatchewan is a Canadian fertiliser company with products that help crops grow. The fertilisers it produces are also used to make livestock feeds and industrial goods. ETF Securities forward agriculture tracks an index of futures contracts on commodities such as coffee, oil and sugar.
AIM believes that agricultural commodity prices have the potential to rise due to low supply and rapidly increasing demand. The company also expects gold, silver and platinum to benefit as alternatives to fiat currencies because central banks are trying to weaken their currencies, causing inflation to rise. It says there are benefits to holding a range of precious metals rather than investing solely in gold.
AIM managing partner Patrick Armstrong says: “Silver behaves differently to gold in that it is a leveraged play on gold. When gold goes up, silver goes up more and when gold falls, silver falls more. Platinum has the same drivers as gold but it is linked to the global economic environment more than gold or silver.”