Ann: Half Yearly Report and Accounts, page-108

Read this in the AFR

Three reasons to own gold

Gold hasn't escaped the selloff sweeping global markets, but BlackRock reckons the precious metal still has an important role to play in insulating portfolios from equity market risk.After inching above $US1700 an ounce earlier this month, gold has slipped back to around $1560 an ounce as investors have sold to cover losses in other parts of their portfolios.

But BlackRock portfolio manager Russ Koesterich says the precious metal should find support as the US dollar slides given it tends to outperform when the greenback is under pressure.The US dollar Index has fallen from around 100 in late February to 97.5.Falling economic growth assumptions should also be a tailwind.Historically, in months where the Institute for Supply Management survey of manufacturing is falling, the median monthly return in around 5 per cent. In months when the ISM is falling very quickly, the median return versus US stocks increased to over 8 per cent.

The slide in real yields may also prove supportive.While gold produces no income, the real yield on a 10-year US Treasury is negative 0.45 per cent.Mr Koesterich notes the direction of real rates has the highest correlation with gold's performance.Over the past decade, changes in real interest rates have explained more than 30 per cent of the change in the price of gold.