{"id":33345,"date":"2018-04-19T17:29:40","date_gmt":"2018-04-19T09:29:40","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=33345"},"modified":"2024-12-04T10:31:21","modified_gmt":"2024-12-04T02:31:21","slug":"gold-may-safest-bet-protect-investment-portfolio","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/gold-may-safest-bet-protect-investment-portfolio","title":{"rendered":"Why Gold May Be The Safest Bet To Protect Your Investment Portfolio"},"content":{"rendered":"

\"Affin<\/p>\n

With the spectre of a trade war looming ahead and geopolitical risks still on the minds of markets, gold prices have climbed recently fuelled by risk off flows in response to higher volatility.<\/p>\n

Is it time for investors to turn bullish on gold?<\/p>\n

Here\u00a0we talk\u00a0about the potential risks and rewards, as well as a smarter way to get\u00a0into\u00a0gold investing that you might not have heard\u00a0of.<\/p>\n

<\/span>First, let\u2019s talk about the good<\/strong><\/span><\/h2>\n

Hedge against investment risks<\/h3>\n

<\/a>One of the most famous benefits of gold is that it is a hedge, meaning it is an investment that offset losses in another asset class. Investors flock to gold to hedge against the decline of a currency, usually the US dollar.<\/p>\n

It is also a defence against inflation. For example, the price of gold more than doubled<\/a> between 2002 and 2007, from US$347.20 to US$833.75 an ounce. That\u2019s because the dollar\u2019s value (as measured against the euro) fell 40% during that same period.<\/p>\n

Also some researchers have found that gold hedges well against a potential stock market crash<\/a> and is a safe haven against extreme market conditions, such as geopolitical flare-ups, and economic instability.<\/p>\n

For example, many bought gold during the 2008 financial crisis and prices continued to skyrocket in response to the infamous Eurozone crisis.<\/p>\n

There\u2019s also diversification<\/h3>\n

That\u2019s the goal of any investor and gold can play a part as an effective portfolio diversification tool. Contrary to what some might think, an ideal portfolio isn\u2019t one that does not incur any losses at all. That would be impossible to achieve.<\/p>\n

But, rather a diversified portfolio with a suitable blend and mix of asset-classes, coupled with an asset allocation strategy tailored to meet their investment objectives and risk-appetite comes pretty close to what can be called as \u2018ideal\u2019.<\/p>\n

A more aggressive investor would often devote the bulk of their portfolios to stocks and fill out the remainder with fixed income, and possibly leaving some room for holdings such as real estate, REITs and commodities. Whilst this is a good start to building a diversified portfolio, investors must also consider how these asset-classes move in relation to each other which brings us to the next benefit of gold.<\/p>\n

And low investment correlation<\/h3>\n

Metals, including gold, fit into a completely separate category from traditional stock-market investing. According to Investopedia, <\/em>precious metals have been more volatile than the stock market but their ups and downs have occurred at opposite times.<\/p>\n

For example, during the economic malaise of the late 1970s, which was marked by a stagnant stock market and runaway inflation, gold prices went higher than US$2,000 per ounce and silver tipped US$100 per ounce.<\/p>\n

But during the late 1990s, during the stock-market boom, gold dropped below US$350 per ounce and silver to a paltry US$6 per ounce. Precious metals then experienced a resurgence between 2007 and 2011, when investors flocked back to gold due to its characteristics as a safe haven to seek shelter from a plummeting stock market and weakening US dollar.<\/p>\n