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        Gold For Portfolios

        • Gold’s historically low or negative correlation to other asset classes means the potential for greater diversification.
        • A strategic allocation to gold may help reduce the impact of market volatility.

        Why Consider Investing in Gold?

        Gold is both an investment and a consumer good. Global economic growth, income growth, monetary policy and market volatility drive demand.

        A strategic allocation to this unique asset class may help an investor to pursue the following potential benefits of gold:

        • Long-term returns
        • Greater diversification
        • Improved risk-adjusted returns
        • Deep liquidity

         

         

        Gold’s low correlation with major equity and bond markets underscores its potential in diversified portfolios.

         

         

        Gold’s performance during tail events highlights its benefit as a low-correlation diversifier.

        "7.79% p.a.—the compound annual growth rate for the LBMA (London Bullion Market Association) Gold Price PM since 19711." 

         

        Long-term Returns
        Since 1971, when President Nixon removed the US dollar from the Gold Standard, the price of gold has increased from $43.28/oz. to $1323.85/oz. at the end of March 2018, generating a compounded annual growth rate of 7.79 percent per year.1 Gold’s prices are influenced by a diverse set of global drivers in pro-cyclical and counter-cyclical markets.

        Greater Diversification
        Gold’s historically low or negative correlation to other asset classes means the potential for greater diversification that could potentially lower portfolio volatility, enhance overall risk-adjusted returns and preserve purchasing power.

        Improved Risk-Adjusted Returns
        Because gold has historically tended to rise during stock market pullbacks, a strategic allocation to gold in a multi-asset class portfolio may help temper the impact of market volatility and reduce portfolio drawdown.

        Deep Liquidity
        The average daily turnover of gold is over $250 billion, equivalent to $62 trillion per year. That makes the gold market larger than that of many stocks and bonds.2

        More on Gold

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