Why invest in gold
Gold has unique properties as an asset class. Modest allocations to gold of 2 per cent to 10 per cent can protect and enhance the performance of an investment portfolio.* A 5 per cent to 6 per cent allocation is optimal for investors with a well-balanced 60/40 portfolio.*
Retail buyers are embracing gold’s investment properties. Overall investment in physical gold bars and coins during the first three quarters of 2013 rose 36 per cent compared to the first three quarters of 2012. Even so, gold still only makes up less than one per cent of investors’ asset allocations.
Investors of all levels of experience are attracted to gold as a solid, tangible and long-term store of value that historically has moved independently of other assets.* Our analysis shows that gold can be used in portfolios to protect global purchasing power, reduce portfolio volatility and minimise losses during periods of market shock. It can serve as a high-quality, liquid asset to be used when selling other assets would cause losses. National central banks, stewards of the world’s largest long-term investment portfolios, use gold to mitigate portfolio risk in this way, and have been net buyers of gold since 2010.
Gold has also become more readily accessible, due to the development of a range of products, which investors and advisors can include in their own and their clients’ portfolios. The diversity of gold-backed and gold-related products means that gold can be used to enhance a wider variety of individual investment strategies and risk tolerances.
Investors also make use of gold’s lack of correlation with other assets to diversify their portfolios and hedge against currency risk.
*World Gold Council, Gold Investor: Risk management and capital preservation, Volume 4, Why invest in gold?, October 2013