The World Gold Council released Volume 6 of their Gold Investor this week. Their latest research highlights the amazing liquidity of gold, even when compared to other alternative asset classes. This special report focuses on three aspects of gold investment:
I. How gold improves alternative asset performance
We scrutinise alternative assets – private equity, hedge funds, real estate, and commodities – to see if they deliver performance and diversification. We found that alternatives can improve portfolio performance. However, we also find that gold returns have outperformed some alternative assets and – an important diversification-and-performance point – it has a correlation to equities that is lower than any alternative asset.
II. Gold: metal by design, currency by nature
We make the case for gold as a distinct asset class rather than a commodity. Our analysis shows that gold suffers from a category confusion. It features in commodity indexes but it responds to different economic factors – particularly those that drive currencies – is less volatile, and has a far lower correlation to the business cycle.
III. The most liquid of all ‘liquid alts’
Liquid alts offer investors a more liquid investment in alternative assets. They have grown dramatically since 2008 and are expected to keep rising. However, when we compared liquid alts to gold, we found that it meets the key criteria of liquid alts (alternative, liquid and transparent) but does not have the same drawbacks – including limited liquidity and relatively high costs. high costs.
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