Gold and Precious Metals Provide a Hedge During Uncertain Times

A recent whitepaper "Reassessing the Role of Precious Metals as Safe Havens – What Colour Is Your Haven and Why?" This report confirms that gold and other precious metals such as silver, platinum and palladium offer a safe haven—especially in times when the stock and bond markets are turbulent.

The researchers confirm this (see the referenced chart above) showing that gold historically has a low correlation to other financial assets. As an investor, you want to build diversity in your portfolio to help minimize risk during uncertain times and provide opportunity for growth longer term against inflation and currency risks. This report confirms what many "gold bugs" and contrarian investors have preached for many years: gold and other precious metals, while not dividends payers, do potentially offer unique benefits that other asset classes can't: A hedge. (You can read the full report here on the hyperlink provided)

Most all of the precious metals are still trading well off of their 2011 highs—30% to 50%. Inflation is starting to pick up worldwide and the metals may benefit in the coming months. With the stock and bond markets at record highs, I recommend investors allocate at least 5% to 10% in gold and precious metals. You can do this in various ways with ETFs that track the spot prices of gold, silver, platinum and palladium. In addition to the "bullion" ETFs, owning some gold/metal mining stock ETFs or funds can provide a leveraged exposure to the metals. If you don't have a current exposure to precious metals, start with at least 5%, and build on your positon during weakness—then hold on to them and benefit from this low correlated asset haven.

While there may be many uncertainties concerning the U.S political environment and stock markets, gold (and other precious metals) may help provide a "silver lining" for your portfolio.

You can read the full report here: Gold Is A Safe Haven Asset

Comments

Womack Weekly Commentary: September 18, 2017

Womack Weekly Commentary September 18, 2017 The Markets “In theory, there is no difference between theory and practice, in practice there is.” Yogi Berra was talking about baseball, but the concept also applies to diversification, according to the GMO White Paper, The S&P 500: Just Say No . From the title, you might think the authors – Matt Kadnar and James Montier – don’t like U.S. stocks. They do: “Being a U.S. equity investor over the past several years has felt glorious. The S&P 500 has trounced the competition provided by other major developed and emerging equity markets. Over the last 7 years, the S&P is up 173 percent (15 percent annualized in nominal terms) versus MSCI EAFE (in USD terms), which is up 71 percent (8 percent annualized), and poor MSCI Emerging, which is up only 30 percent (4 percent annualized). Every dollar invested in the S&P has compounded into $2.72 versus MSCI EAFE’s $1.70 and MSCI Emerging’s $1.30.” The au...

Another Tornado Record's in Sight for U.S. as Thunderstorms Boom

Bloomberg by Brian K Sullivan Another wave of tornado-spawning thunderstorms is set to rip across the Great Plains and South this week, putting the U.S. within reach of a record year for life-threatening twisters. Severe storms will drench a swath of the country from Texas to Mississippi over the next five days, according to the U.S. Storm Prediction Center. Through Thursday, 369 tornadoes have been reported across the country, the most in five years and more than double the normal number of sightings. An active jet stream and unusually balmy weather are to blame for the burst of deadly tornado activity, the storm prediction center said. Strong winds have dragged storms into the warm, humid air that’s blanketed the eastern half of the nation, creating conditions ripe for a weather phenomenon that leads to at least $400 million in damage a year in the U.S. “We have a severe threat starting today and continuing for each of the next five days through at lea...

Pandemic-Driven Demand Is Providing Fuel for Investors

For four weeks, the U.S. stock market has sparked and sputtered like a campfire in light rain. Today, pandemic-driven demand is providing fuel for the investors. The need for certain types of products and services has accelerated and innovation is creating new opportunities. Consider: · Technology . Today, digital technologies support nearly all group interactions, which has accelerated innovation. Traditional video communications platforms are in high demand, and multi-person virtual platforms are emerging. Robotics innovations are racing ahead, too. Robotic dogs enforce social distancing in Singaporean parks, reported Accenture. Other types of robots sanitize streets and facilitate contact-less delivery around the globe. · Consumer products and services . COVID-19 increased demand for staples, cleaning, and personal hygiene products. The virus may have inspired deeper and longer-lasting changes in consumer behavio...

Womack Investment Advisers

Search This Blog