Can Gold Immunize An Equities Portfolio Against Inflation? | Equity-Market Outlook

by David Ranson

Stock portfolios are adversely affected by inflation, and the damage affects most sectors of the equity market. One clear exception is gold stocks. Equity investors who tilt their portfolios toward gold stocks will reduce the damage proportionately.

The bad news is that it takes a very substantial tilt to do the job. We estimate that, in order to achieve complete immunity from a surge in inflation, the content of a portfolio devoted to gold stocks needs to be raised to about 47 percent.

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