Gold confirmed as strategic diversifier in latest WGC research

Research by New Frontier Advisers, commissioned and published by the World Gold Council, suggests that gold remains a strategic diversifier for European investors.

The report – Gold as a strategic asset for European investors – looks at the asset class across five sets of asset allocation studies. It included four covering the period 1986-2012, and one over the period 1999-2010.

According to the research findings, the optimal allocation to gold for euro-based investors ranges from 2-3% for diversified and low risk portfolios, to 4-9% for portfolios evenly balanced between equity and bonds, up to 10% for portfolios that are predominantly equity based.

The research looked for statistical evidence that gold provided diversification value, using the Michauds Resampled Efficient Frontier.

Three sets of optimised asset allocation were used for the analysis:  without gold and commodities, with gold and without commodities, and with both gold and commodities. The analysis assumed that gold had zero real returns.

Marcus Grubb, managing director Investment for the World Gold Council, said: “During a period of extraordinarily serious economic uncertainty in the eurozone, we wanted to examine the relevance of gold as a strategic asset for euro-based investors to protect their portfolios and to mitigate the systemic risks being faced.”

“The conclusion of the research from NFA provides evidence that gold offers particular value as a strategic diversifier within a European portfolio. Put simply, when used as a foundation asset, gold preserves wealth.”

Click here to read the full report: [asset_library_tag 3794,Gold as a strategic asset for European investors]

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