Gold is a strategic portfolio asset and the most effective commodity investment according to a new report – but is often underrepresented in commodity indices and under-invested according to research by the World Gold Council.
The report says that gold should be differentiated from other assets thanks to six characteristics which set it apart for investors. These include the fact gold is a very effective diversifier, delivers better long term, risk-adjusted returns, outperforms other commodities in periods of low inflation and is less volatile. The report also notes that gold is very liquid and is a proven store of value. The report notes, “…when compared to commodities, gold has outperformed not only broad-based indices but sub-indices and most individual commodities too. All sub-indices, including precious metals, have fallen over the past five years. But gold has risen during that time. Gold has also outperformed major commodity sub-indices over the past 10 and 20 years and outperformed most individual commodities, many of which have delivered negative returns in recent decades.”
The report also notes that gold as an investment is strong in times of low inflation when other commodities deliver negative returns – something that should give you pause for thought if you haven’t yet invested given the low inflation we’re seeing across many economies now. The bottom line, It’s a good time to buy.