MAR 15, 2018
Above all, gold is a permanent and long-term portfolio component. The savvy investor adds to their gold holdings at opportune times, positioning themselves well ahead of the panic buying that tends to accompany market meltdowns.
As this historic, near-decade-long, Fed-engineered bull market slowly rolls over before the great unraveling, now is one of those opportune times.
Gold has performed competitively against many asset classes over the past few decades, as seen in the chart below. This makes the metal, we believe, an appealing diversifier in the event of a correction in the capital markets or an end to the bull market.
We believe gold is an essential part of a portfolio due to its history as a protector against inflation. I’ve always recommended a 10 percent weighting in the metal, 5 percent in gold bullion or jewelry, and 5 percent in gold stocks, mutual funds and ETFs.
In fact, current economic conditions make an even greater case for gold. It’s important to remember that the precious metal has historically shared a low-to-negative correlation with equities. For the past 30 years, the average correlation between the LBMA gold price and the S&P 500 Index has been negative 0.06.