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

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