Gold generated flat returns in 2022 which effectively outperformed the broader market. According to Darrin Woo, managing director at family office Woo Hon Fai Group, this trend could persist in 2023 as the asset class historically does well in a recessionary environment.
In 2022, only two major asset classes generated relatively decent returns, according to Darrin Woo, managing director at Hong Kong-based family office Woo Hon Fai Group. One was the strengthening dollar while the other was gold, which generated flat returns.
«Flat is the new up,» said Woo during a panel attended by finews.asia at HKCVA's Asia Private Equity Forum 2023.
Market Outperformance
Wealth preservation aside, Woo attempted to debunk typical arguments against adding exposure to the precious metal.
«It doesn’t earn interest. It doesn’t pay any dividends. You can’t eat it. You can't drink it. it cost money to store. Why would people want to buy these things?» he asked.
Strength in a Recession
According to Woo, gold has generated 3.5 times return since 2005 and has outperformed the S&P 500 index. In addition, he highlighted the asset class' ability to withstand growth woes, especially in light of recessionary pressures in various economies.
He noted that out of the last seven recessions on record, gold delivered positive returns in five instances. And there is a tendency for gold to eke out gains in the period immediately after the top of the rate cycle and the peaking of the dollar.
Gold is an underappreciated asset class, Woo added.
Gold Family
Woo is the eldest grandson of the late Woo Hon Fai, a renowned figure in the Hong Kong gold market after first establishing a dealers firm in 1950.
Today, Woo’s family office provides a range of services catered to family members across four generations, including asset & investment management, lifestyle concierge, secretarial, accounting & finance and more. Its globally diversified portfolio includes direct investments, hedge funds, private equity and venture capital.
