World Gold Council reports on strategic value of gold
Allocating to gold helps UK investors obtain equal or better returns over time, with less volatility, according to a new report by the World Gold Council using data covering a period of 25 years.
The Council says the findings are timely given the shift to cash by UK investors in the current environment. This increases inflation risk to investors’ wealth, in turn increasing the credentials of gold, the Council argues.
Juan Carlos Artigas, Global head of Investment Research said: “There is robust evidence for adding gold as a foundation to investors’ portfolios; risk-adjusted returns increase, losses diminish and capital is preserved. The optimal strategic allocation to gold for sterling-based investors ranges between 2.6% and 9.5% depending on their specific risk tolerance and assets they hold. This potential for investors to avoid a significant loss or increase portfolio gains, by adding gold, is especially important during extreme market events.”
The paper uses the Michaud Resampled Efficient Frontier optimisation technology to allow analysis of the statistical significance of gold for adding diversification value. Five portfolio allocations representative of a wide range of UK investors were tested: conservative, moderate conservative, moderate, moderate aggressive and aggressive. The optimal allocations are consistent with those highlighted across other currencies and in almost every economic scenario.
To read the full report click here: [asset_library_tag 5573,Gold as a strategic asset for UK investors]