“Again, on this metric, gold looks pretty good as a risk-aversion hedge. By definition, equity market performance was poor, with an average loss of almost 20 percent per episode. Treasuries proved a useful offset, returning an average 3.4 percent and performing positively on seven occasions. Gold, meanwhile, was a star performer, rising almost 7 percent per episode, with gains in 8 of the 10 periods.”
MK note: Came across this article over the weekend. It is nearly a month old, but I thought it important enough to get it posted here for future reference. The author seems reluctant to accept the results of his own research, and ends with an interesting take: “Given the solid performance of a portfolio including gold and the chance that the comfort of owning some might prevent investors from panicking at the height of a crisis, I have to conclude that the notion of gold as a hedge against serious risk aversion is true.”
Imagine that. Remaining calm because you appropriately hedged your portfolio against a Wall Street disaster ahead of time. [smile] The article is worth a read. . . . I might add that the crises listed are mild in comparison to some of the more famous breakdowns in history, i.e., times when gold mattered in an ultimate sense.