The case for investing in gold

Should you or should you not invest in gold is one of those never-ending debates that will most likely rage on till the end of time. Here’s a really nice piece by the smart folk at Blackrock, which runs one of the biggest gold ETFs.

  1. Historically, gold has been a diversifying compliment to a traditional stock and bond portfolio throughout market cycles.
  2. In the deepest draw-downs of the past three recessions, gold has outperformed all other asset classes, when investors again tend to flock to “safe-haven” assets.
  3. Though the market currently sees little prospect for inflation, investors who wish to add an asset that offers a potential inflation hedge should consider gold.

This is again based on the foolish assumption that stock markets are cyclical and eternal and that economic downturns are seasonal and comes with the package. Well, here is the brutal truth - they are not. If the last financial crisis has thought humanity anything it should have been the knowledge that man made securities aren’t really worth a dime.