Pension funds were never fond of gold. Only a mere US$16 billion (1,81% of $US900 billion) is invested by pension funds in gold and silver. In other words, 0,032% of all pension assets are invested in precious metals.
But lately, we see some pension funds starting to allocate 5% into gold. We know that 21% of global assets are pension funds, so 5% of 21% is 1%. If gold allocation increases 1%, this would double the global allocation in gold and will more than double the gold price as demand doubles.
This is because the formula of market capitalization is exponential.
But lately, we see some pension funds starting to allocate 5% into gold. We know that 21% of global assets are pension funds, so 5% of 21% is 1%. If gold allocation increases 1%, this would double the global allocation in gold and will more than double the gold price as demand doubles.
This is because the formula of market capitalization is exponential.
Formula: C = (A+B)^2 / A^2
Where:
A = initial market cap
B = net inflow of money
C = price multiplication
