New Case for Gold in A Diversified Portfolio
The comments below are an edited and abridged synopsis of an article by George Milling-Stanley
While gold has traditionally been a tactical way to help preserve wealth during market corrections, times of geopolitical stress or persistent dollar weakness, there is a case to be made for gold as a core diversifying asset with a long-term strategic role in multi-asset portfolios.
The expanding universe of investable asset classes and the relative ease of shifting across different assets mean that multi-asset portfolios today look different from the balanced stock and bond funds of the past. Gold’s historically low or negative correlation with most other asset classes argues in favour of a strategic allocation for long-term investors.
Milling-Stanley looks at how gold-backed assets have behaved over time as a portfolio diversifier, tail risk hedge and inflation hedge.
Up for discussion: Gold’s usefulness in terms of increased portfolio diversification, as a tail-risk hedge, and as an inflation hedge.