New Report Confirms Gold as an Excellent Portfolio Diversifier
Source: World Gold Council, Mineweb (12/6/11)
"The relevance of gold as a strategic asset is likely to continue to grow in a world characterized by sluggish economic performance, poor investment returns, currency wars and high individual and systemic risk."
Thus, a new study from New Frontier Advisors (NFA) entitled, 'Gold as a strategic asset for European investors', was commissioned by the WGC to address these concerns. The NFA's respected optimizer is used to analyze the statistical significance of gold for adding diversification value to an investment portfolio from the currency base and perspective of a Euro based investor. It takes a conservative strategic return expectation that the long-term real return of gold is equal to zero.
The findings suggests that an optimal strategic allocation to gold for euro-based investors ranges from 2–3% for the most diversified and lowest risk portfolios, to between 4–9% for portfolios split 50/50 between equities and bonds and as high as 10%, for portfolios with the majority of assets in equities.
The NFA study makes a valuable contribution towards the World Gold Council's own body of investment research, adding further third-party evidence to the case for gold as a foundation asset which provides insurance against extreme events. The WGC believes that the relevance of gold as a strategic asset is likely to continue to grow in a world characterized by sluggish economic performance, poor investment returns, currency wars and high individual and systemic risk. Gold has unique properties which can protect European investors' portfolios against the systemic risks being faced.
The full WGC report may be downloaded here