Gold’s Surge to $4,000 Is About More Than Just Fear
Some of the biggest investors are saying every portfolio needs to have some gold.
Gold prices topped $4,000 an ounce for the first time, the latest milestone in blistering rally in the safe haven asset this year.
There’s a lot more to the rally than anxiety. While the gains have been helped by the erosion of confidence in the dollar and central banks buying more bullion, there’s also the simple fact that more big investors are buying into the investment case for the metal, which pays no income and has few industrial uses.
“Gold is a very excellent diversifier of the portfolio,” said Ray Dalio, the billionaire founder of hedge-fund firm Bridgewater Associates, during a panel discussion on Tuesday with Bloomberg’s Lisa Abramowicz. “So if you were to look at just from the strategic asset allocation mix perspective, you would probably have as the optimal mix something like 15% of your portfolio in gold.”
It’s worth putting the rally in perspective. Gold has jumped more than 50% this year, and returns now outstrip those for equities this century. Looking further back, bullion is on pace for its best annual performance since the 1970s, when rapid inflation and the end of the gold standard sparked a 15-fold rally.
Gold extended gains on Wednesday, adding 1.5%. Shares of Newmont, Equinox Gold and Coeur Mining were all higher in premarket trading.