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I like gold because it’s a risk-reducing, portfolio-diversifying asset. It’s also
been a strong-performing asset over the past decade – up nearly 400%. What’s more, it’s been reliable. In 2008, when the major U.S. indices plummeted 37% (and more into early 2009), gold returned nearly 6%. In addition to being an exceptional investment, however, gold has also been an exceptional investment within a portfolio context. That is, it has provided return while reducing portfolio risk. Gold has, in essence, been a free lunch. Words: 490
So says Ian Wyatt (www.wyattresearch.com) in edited excerpts from his original article* entitled Now is Not the Time to Give Up on Gold.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), may have edited the article below to some degree for length and clarity – see Editor’s Note at the bottom of the page for details. This paragraph must be included in any article re-posting to avoid copyright infringement.
Wyatt goes on to expand on the merits of owning gold, saying, in part:
Gold Has a Favorable Historical Correlation With Other Assets
The chart below shows gold’s historical correlation with other assets: the lower the correlation (close to zero and negative), the better. Gold has provided exceptional return on dollars invested, while also significantly reducing the overall risk profile of an investment portfolio. [Read: If You Don’t Think Gold IS a ‘Safe Haven’ Then You Don’t Know the Meaning of the Term!]
Gold’s Correlation with Other Assets
…Many investors have been put off by the recent volatility of gold which has been particularly pronounced over the past three months, as shown below but, despite the recent spike in volatility, I still like gold. [Read: Surprise, Surprise – Gold Is A Safer Investment Than Any Other!]
Three-Month Gold Chart
Gold Enhances Overall Portfolio Performance
As discussed above I like gold’s portfolio diversification benefits. Low correlation levels in the price of gold compared to other assets is a primary factor in enhancing overall portfolio performance. You don’t have to be bullish or bearish on gold to get the benefit; you just have to own gold. [Read: Your Portfolio Isn’t Adequately Diversified Without 7-15% in Precious Metals – Here’s Why and Gold is Not an Investment – Gold is Money – and Here’s Why]
Gold Has Significantly Outperformed All Equity Markets Over the Past 10 Years
Past performance has also been something to crow about. Over the past 10 years, gold has significantly outperformed all equity markets. In fact, it has outperformed the S&P 500 by a 3-to-1 margin. [Read: Believe It or Not: Only 1 Fund Has Outperformed Physical Gold Since 2007!]
Gold Hold Its Purchasing Power and Continuing to Appreciate In Dollar Terms
The above said, past is not always prologue, except this time I think it is, because gold is also private money. Gold is a store of value and a back-up medium of exchange. Gold is an insurance policy against reckless money printing as is being undertaken by our Federal Reserve which has more than tripled the base money supply over the past three years, and continues to expand the base by $40 billion a month. Both moves are unprecedented.
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What’s more, each new dollar diminishes the purchasing power of all outstanding dollars. I see no reason why gold shouldn’t continue to hold its purchasing power and appreciate in dollar terms. [Read: James Turk: Why Gold is Preferred to National Currencies]
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My Only Problem With Gold Is…
I do have one problem with gold: it isn’t a cash-generating asset; it doesn’t provide cash flow [but, that being said,] gold can be structured to meet every investor’s needs through the right investment vehicle – and that includes the needs of income investors at High Yield Wealth who also want a portfolio-diversifying asset.
*http://www.wyattresearch.com/article/now-is-not-the-time-to-give-up-on-gold/29035
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
Related Articles:
1. James Turk: Why Gold is Preferred to National Currencies
Some say that the gold price rises and falls, but they are grabbing the wrong end of the stick. It is the purchasing power of national currencies that rise and fall. Here is an analogy to make this point clear. When standing in a boat and looking at the shore, it is the boat (currencies) – and not the land (gold) – that is bobbing up and down. [Let me explain the value of gold further.] Words: 631
2. Race to Debase: How Gold & Silver Have Performed vs. 75 Fiat Currencies
It’s that time of the year again where we examine how gold and silver have performed against 75 fiat currencies around the globe.
3. Nick Barisheff: $10,000 Gold is Coming! Here’s Why
This is not a typical bull market. Gold is not rising in value, but instead, currencies are losing purchasing power against gold and, therefore, gold can rise as high as currencies can fall. Since currencies are falling because of increasing debt, gold can rise as high as government debt can grow. Based on official estimates, America’s debt is projected to reach $23 trillion in 2015 and, if its correlation with the price of gold remains the same, the indicated gold price would be $2,600 per ounce. However, if history is any example, it’s a safe bet that government expenditure estimates will be greatly exceeded, and [this] rising debt will cause the price of gold to rise to $10,000…over the next five years. (Let me explain further.] Words: 1767
4. Gold: What Does a “Troy” Ounce or “18/24 Karat” Gold Really Mean?
You have no doubt read countless articles on the price of gold costing “x dollars per ounce” and possibly own a gold ring or some other piece of gold jewellery but do you really understand exactly what you are buying? What’s the difference between 1 troy ounce of gold and 1 (regular) ounce? What’s the difference between 18 and 10 karat gold? Let me explain. Words: 637
5. Take Note: Gold and Silver are NOT an Investment!
Gold and Silver are not an investment! Let me repeat that. Gold and silver are not an investment! Gold and silver are (excuse the pun) the most “solid” form of money you can possess. Yes, these two precious metals are money!…Don’t fear owning gold my friends. Fear not owning gold and silver, especially if you are a saver. [Let me explain.] Words: 795
6. If You Don’t Think Gold IS a ‘Safe Haven’ Then You Don’t Know the Meaning of the Term!
It would seem that there is a considerable lack of understanding about what the term “safe haven” actually means when it comes to gold. Let me explain just what it means – and does not mean. Words: 740
7. Why, Pray Tell, Would I Want to Own Gold??
Comments I have made that “when this [financial crisis] finally ends the big winners are apt to be the ones who have lost the least purchasing power. Keeping score in nominal dollars is likely to be meaningless. Gold tends to hold its purchasing power regardless of what happens to fiat currency.” have prompted questions about a) how to achieve such purchasing power with physical gold when this stage is reached, b) how to go about buying things with gold coins and c) how gold would be utilized under the assumption that a barter system would develop when dollars become worthless. [Let me explain.] Words: 700
8. Physical Gold and Gold Stocks Should be in Your Portfolio – Here’s Why
Do you own enough gold and silver for what lies ahead? If 10% of your total investable assets (i.e., excluding equity in your primary residence) aren’t held in various forms of gold and silver, we…think your portfolio is at risk. Here’s why. Words: 625
9. Gold is Not an Investment – Gold is Money – and Here’s Why
To fully understand gold’s role in an investment portfolio, we need to adopt a new mindset, a gold mindset which is, simply put: gold is not a bad investment, and gold is not a good investment. Gold is not an investment at all – gold is money.
10. Buy Gold to Protect Your Wealth – Not As Speculation! Here’s Why
In our travels to the Middle East, the Far East and South and Central America [we have found that] most people in those parts of the world see gold as the protector of wealth [as opposed to] in the West where it is viewed as a commodity for speculation… [That shouldn’t be the case. Let me tell you why.] Words: 2159
11. Surprise, Surprise – Gold Is A Safer Investment Than Any Other!
A look at the gold price over the past 177 years reveals that – surprise, surprise – gold could be the safest investment out there! Words: 1377
12. What is Money – Really – and Why Do We Need to Own Gold – Really?
Have you ever wondered what money really is [and why we need to own some gold as a result]? You’ll notice that everyone you read has a strong opinion , but who’s right? [Let look at the situation and see if we can come to an answer that we both can agree on.] Words: 3086
13. A Message to Newly Minted (or Potential) Gold Bugs
I was taught years ago that “gold is not about price… gold is about value.” Be measured, be balanced and don’t make more of it than it is. Gold is just a tool, an anchor to sound money; to value. [Let me explain.] Words: 1120
14. Don’t Laugh – Invest At Least 65% of Your Portfolio In Precious Metals!
There is such a “fear of gold” amongst most people that it must be due to statist indoctrination and propaganda because it makes no rational sense to have such a fear of such a time tested and true store of wealth. After all, we are talking about time tested and true money – the only money that has lasted for thousands of years and is still fully accepted worldwide as a store of wealth….What would you rather hold “for eternity” gold [or] US dollars [which are nothing more than] a paper debt obligation of a bankrupt nation state? Words: 450
15. Believe It or Not: Only 1 Fund Has Outperformed Physical Gold Since 2007!
Out of the 7,500 separate mutual funds available, and with 22,000 shares classes to choose from, only 1 fund – just ONE fund – actually managed to achieve a greater percentage return than gold bullion since the alarm bells rang out at the turn of 2007! [That being said, are you still one of the 99% of investors who, for whatever reason (are you foolishly listening to the “advice” provided by your stock broker/securities salesman going under the guise of a financial “advisor”), is still without any physical gold or silver?] Words: 395
16. Your Portfolio Isn’t Adequately Diversified Without 7-15% in Precious Metals – Here’s Why
The traditional view of portfolio management is that three asset classes, stocks, bonds and cash, are sufficient to achieve diversification. This view is, quite simply, wrong because over the past 10 years gold, silver and platinum have singularly outperformed virtually all major widely accepted investment indexes. Precious metals should be considered an independent asset class and an allocation to precious metals, as the most uncorrelated asset group, is essential for proper portfolio diversification. [Let me explain.] Words: 2137
17. Which Gold and Silver Assets (and How Much) Should You Own?
It is no longer a matter of whether or not you should buy gold and/or silver but, rather, which type of investment(s) and how much. You don’t need a lot but you do need some – and here’s a primer on just what type of investment vehicles are available and recommendations on just how much you should buy. Words: 1086
18. It is Imperative to Invest in Physical Gold and/or Silver NOW – Here’s Why
Asset allocation is one of the most crucial aspects of building a diversified and sustainable portfolio that not only preserves and grows wealth, but also weathers the twists and turns that ever-changing market conditions can throw at it. However, while the average [financial] advisor or investor spends a great deal of time carefully analyzing and picking the right stocks or sectors, the basic and primary task of asset allocation is often overlooked. [According to research by both Wainwright Economics and Ibbotson Associates and the current Dow:gold ratio, allocating a portion of one’s portfolio to gold and/or silver and/or platinum is imperative to protect and grow one’s financial assets. Let me explain.] Words: 1060
19. Protect Your Portfolio By Including 15% Gold Bullion – Here’s Why
We are reading a lot of hype these days about gold and the necessity to own it but only about 2% of ‘investors’ actually have gold in their portfolios and those that have done so have insufficient quantities to offset the future impact of inflation and to maximize their portfolio returns. New research, however, has determined a specific percentage to accomplish such objectives. Words: 1063