Holding a small amount of gold typically enhances and returns reduces overall portfolio volatility. Basel 3 reclassifies gold as a Tier 1 reserve asset. Central bank buying has been a big driver of gold demand in recent years as they implement the new capital requirements and diversify out of the US dollar. I don't see any problem with individual investors, like central banks, diversifying some of their reserves into gold, but I suspect many will be tempted to go all-in because of recent momentum. Return-chasing is one of the biggest reasons that investors underperform. If not having "intrinsic value" is a reason to steer clear, then you might consider gold mining equities instead. The increase in gold prices has increased margins and cash flow, and many of these companies are still quite cheap.
Comments
Holding a small amount of gold typically enhances and returns reduces overall portfolio volatility. Basel 3 reclassifies gold as a Tier 1 reserve asset. Central bank buying has been a big driver of gold demand in recent years as they implement the new capital requirements and diversify out of the US dollar. I don't see any problem with individual investors, like central banks, diversifying some of their reserves into gold, but I suspect many will be tempted to go all-in because of recent momentum. Return-chasing is one of the biggest reasons that investors underperform. If not having "intrinsic value" is a reason to steer clear, then you might consider gold mining equities instead. The increase in gold prices has increased margins and cash flow, and many of these companies are still quite cheap.
Post: Go for the Gold?
Link to comment from May 10, 2025
Gold is "harder" than an asset that only exists on a digital ledger. It has actual utility, in jewelry and industrial applications.
Post: Go for the Gold?
Link to comment from May 10, 2025