If you happen to learn the headline of this text, you in all probability have the identical thought as everybody else:
“No CHANCE”
That means, there isn’t any manner this headline is true. I imply, what number of buyers are you aware with a portfolio that’s 60% shares and 40% gold? (Okay perhaps a number of loopy Canadians or Australians?)
Probably the most iconic institutional benchmark is the 60/40 portfolio of US shares and bonds. It appears loopy to suppose that there’s nothing particular about this allocation. So let’s run a loopy thought experiment and swap out one of many belongings, bonds, with one other completely unrelated asset, gold, and see what occurs. Certainly it’ll crush returns…..proper?
All the threat and return statistics are nearly the identical. Some readers will after all reply that the time interval is cherry picked, but it surely holds for the final 100 years too.
Traders like to suppose it binary phrases “Ought to I personal bonds OR gold?!” Nevertheless, traditionally the extra uncorrelated belongings included within the portfolio, the higher. So as an alternative of asking “Ought to I personal bonds OR gold?!”, maybe the query must be “Ought to I personal bonds AND gold?!”
Traditionally, the reply has been…”BOTH”.
Are gold and bonds simply interchangeable?
Not a gold bug however I lived with a Canadian as soon as.
