The second and arguably the most key role is that gold acts as a perfect diversifier to one’s portfolio.
SEATTLE (Scrap Monster): John Reade, Chief Market Strategist at World Gold Council (WGC), in a virtual presentation at Pension Bridge Alternatives APAC – Mid Year Review, highlighted the strategic role played by gold in a portfolio. He focused on the ket factors that make gold a strategic asset.
According to him, gold has been able to produce extraordinary returns over the long term, as compared to other major asset classes, even during difficult times such as the global recession, Covid-19 pandemic and the Russian invasion of Ukraine. Hence gold will do a lot in protect one’s portfolio in the event of unexpected things.
The second and arguably the most key role is that gold acts as a perfect diversifier to one’s portfolio. The correlation between gold and US stock returns in various environments of stock performance is a clear evidence of that, Reader noted.
He noted that adding gold over the past two decades has increased risk-adjusted returns of a hypothetical U.S. pension fund portfolio. The yellow metal could significantly improve risk-adjusted portfolio returns across various levels of risk.
Commenting on gold’s recent performance, gold ETFs witnessed 234 tonnes of net inflows in H1, despite modest outflows during the second quarter, Reade pointed out. The gold jewellery consumption surged higher by 4%, whereas the bar and coin investment demand held steady in Q2.
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