The bank is marketing its first gold-linked product in Belgium since 2020.
Deutsche Bank is distributing the Gold Opportunity Note 2027 in Belgium. The three-year, capital protected product is issued on the paper of Goldman Sachs International and offers a one-off coupon equal to 100% of the performance of the London Bullion Market Association (LBMA) gold price, expressed in euro. The return is capped at 24%.
Our CIO currently has a constructive view on the gold price and thinks the current rally has further to run on the back of increased demand for gold from, among others, Central Banks and Asian consumers - Christophe Blontia
Gold prices recently reached record levels, partly due to continued strong Chinese demand in a context of a weak local real estate sector and stock markets.
The underlying LBMA gold price closed at €2,151.43 (US$2,317) on 7 May 2024 – an increase of 14% since the start of the year. Its highest level was reached on 12 April (€2,257.17).
“Our CIO currently has a constructive view on the gold price and thinks the current rally has further to run on the back of increased demand for gold from, among others, Central Banks and Asian consumers,” said Christophe Blontia (pictured), senior product manager, Deutsche Bank International Private Bank (IPB) in Brussels.
“Exposure to gold also offers great diversification benefits in clients’ portfolios,” he added.
Deutsche’s analysts expect demand for physical gold to continue, as central banks globally diversify their foreign exchange reserves, and geopolitical tensions and economic uncertainty support the demand from investors for gold as a hedging tool.
The prospect that major central banks such as the US Federal Reserve (Fed) and the European Central Bank (ECB) will cut their policy rates during 2024 is also an important supporting factor for the precious metal as those rate cuts will likely push bond yields lower in the short term, reducing their relative attractiveness versus gold, a zero-yield asset, according to the bank’s analysts.
The Goldman Sachs International (UK) Gold Opportunity Note 2027 is the first gold-linked product launched by Deutsche Bank in Belgium since 2020, when it marketed Deutsche Bank AG (DE) Gold Opportunity Note USD 2025. This five-year product offered a one-off coupon in US dollars equal to the rise in the gold price and capped at 28%.
Prior to that, Deutsche collaborated with BNP Paribas and Société Générale for the launch of two Gold Opportunity notes in 2019: BNP Paribas Issuance B.V. (NL) Gold Opportunity USD 2023 and Société Générale (FR) Gold Opportunity Note USD 2022. Both products have since matured, returning an annualised coupon of 5.73% pa and 6.55% pa, respectively, according to SRP data.
So far this year, Deutsche Bank has distributed eight structured products to Belgian retail investors, including five linked to interest rates, two to a single equity index, and the current gold-linked offer.
As interest-linked products continue to attract the most interest from clients, the bank plans to have interest-linked products in its offer on a continuous basis for the remainder of the year to meet this demand, but there could be more gold-linked products too, according to Blontia.
“If the investment case for gold remains as strong as it is today, we might consider doing another product linked to gold this year, but nothing has been decided at this stage,” he said.
Goldman Sachs International (UK) Gold Opportunity Note 2027 is open for subscription until 29 May 2024. The product is listed on the Luxembourg Stock Exchange but does not provide access to an active market.
Image: Africa Studio/Adobe Stock.
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