Owning gold is as much about diversification as it is about capital appreciation

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Owning gold is as much about diversification as it is about capital appreciation

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KnowledgeLeadersCapital/Bryice Coward/6-24-2020 “These days, gold as an asset class is in an entirely unique position to no

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KnowledgeLeadersCapital/Bryice Coward/6-24-2020

photo of gold coin pile featuring the American Gold Eagle - one troy ounce
“These days, gold as an asset class is in an entirely unique position to not only provide upside potential, but also provide a layer of diversification within a portfolio that neither stocks nor risk-free nominal bonds can achieve on their own or even together. Much of this has to do with the rather disadvantageous position of risk-free bonds at the moment that have brought us to the death throes of the 60:40 portfolio. Indeed, with risk-free rates so close to zero (even on the long end), bonds simply don’t have enough convexity (aka capital appreciation potential) left in the tank to act as a sufficient diversifier of equity risk.”

USAGOLD note:  There are many avenues to wealth through investments, but few options when it comes to protecting it when the chips are down.  This article explores the possibility of a new role for gold in the portfolio – one built on its historic reputation as the ultimate store of value and asset last resort and given impetus by the now endangered 60:40 portfolio structure.

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