Switzerland’s Lombard Odier Sells Half its Gold Portfolio Over Volatility Concerns

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According to Lombard Odier chief economist Samy Chaar, the US interest rates have become "too deep". He is convinced that this will have a negative effect on the gold price

The current gold price surge should be bullish for any bank holding the precious metal in its reserves. Swiss private bank Lombard Odier is in the process of selling half of its gold holdings. According to company officials, there is “too much volatility ahead”.

Is Gold Nearing the Peak?

For quite some time now, there has been ample bullish gold price momentum. Such a strong uptrend cannot be sustained indefinitely, and market volatility is bound to ensue at some point. How steep that volatility will be, is difficult to predict. For some, this may be a blip on the radar. Others may be forced to begin liquidating some of their holdings just in case.

Lombard Odier, a Swiss private bank, currently manages $327 billion in assets. Despite that aspect, the bank is in the process of liquidating up to half of its gold holdings. The timing for doing so seems to be a bit strange, to say the very least. With gold still surging toward $2,000 an ounce, there doesn’t appear to be an immediate reason to decrease one’s gold holdings.

According to the bank’s top economist, there will be some key volatility in the near future. A logical outlook, as $2,000 will act as a massive psychological barrier first and foremost. Whether that warrants liquidating vast amounts of gold in favor of other assets, is a different debate.

All other markets remain volatile, with no real improvements in sights. Stocks, bonds, treasuries, and even fiat currencies remain on very thin ice under the best of circumstances. Safe haven assets, such as gold, silver, and to an extent, cryptocurrencies, have shown a lot more positive potential than any traditional market. Now is the time to hedge against volatility, instead of actively seeking exposure to it. 

An odd Market Outlook by Lombard Odier

According to Lombard Odier chief economist Samy Chaar, the US interest rates have become “too deep”. He is convinced that this will have a negative effect on the gold price in this quarter and the next. A bit of an odd outlook, as negative interest rates will not go away anytime soon. In fact, they may become the new normal in a lot of countries. 

Chaar also worries about the lack of recovery for the US economy. If this economy continues to contract, there may be a higher demand for gold. However, that situation may reverse sooner than some analysts might expect. Assuming that vision comes true, the price of gold is likely to plummet rather quickly. 

All signs point toward a gold price surge continuation. Volatility is likely to occur between $1,900 and $2,000 for some time to come. However, a steep market reversal seems incredibly unlikely right now. The decision by Lombard Odier may have been premature, to say the very least. 

2 thoughts on “Switzerland’s Lombard Odier Sells Half its Gold Portfolio Over Volatility Concerns”

  1. So Lombard Odier is selling one of its two ounces. It would have been nice to know exactly how much they actually hold, and what percentage of total assets it represents. Also, what other assets do they hold, and why do prefer these?

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