Four Key Reasons Gold Can Enhance Your Portfolio
Why buy gold?
The Relevance of Gold as a Strategic Asset report released by the World Gold Council offers four reasons to add gold to your portfolio.
What makes gold a strategic asset in the first place? The World Gold Council provides a quick summary of gold’s qualities.
Gold benefits from diverse sources of demand: as an investment, a reserve asset, jewelry, and a technology component. Most people think of gold primarily as an inflation hedge, and the yellow metal has lived up to this expectation. According to the World Gold Council, gold’s average annual return of 11% in US dollars over the past 50 years has outpaced the US and world consumer price indices . Gold does even better in extremely high inflation environments. In years when inflation was higher than 3%, the price of gold increased 15% per year on average.
In stark contrast to many financial markets, gold’s liquidity does not dry up, even at times of financial stress, making it a much less volatile asset.«World Gold Council analysis concluded that allocating a portion of a portfolio to gold improves overall performance.
Our analysis of investment performance over the past five, 10 and 20 years underlines gold’s positive impact on an institutional portfolio. It shows that the US pension fund average portfolio would have achieved higher risk-adjusted returns and lower drawdowns if 2.5%, 5% or 10% were allocated to gold».