Charlie Morris: Expecting inflation to rise? Buy gold
“Gold remains the best-performing mainstream asset of the 21st century, yet investors own a mere 82 million ounces (worth $128bn) between them via the exchange traded funds. That might sound like a substantial holding, but it is not. With global exchange traded funds worth over $5trn, the implication is that the average portfolio has a mere 2% allocation to gold. Academic studies range in their conclusions, but they all suggest the optimised allocation should be greater than zero. I have often felt that 8% makes sense for a balanced portfolio and 15% to 25% for an all-weather total return fund.”
USAGOLD note: Charlie Morris’ study linked above is highly recommended. In it he makes the same point we did in Gold’s Century: While stocks dominated headlines, gold quietly performed.
From that study:
“The question becomes whether or not an investment that has performed so well in the past is likely to perform equally well in the future. Though nothing in the world of finance and economics is certain, we rest the bullish case for gold on the understanding that none of the economic and financial system problems that created a positive price environment for gold over the last nearly nineteen years have been removed from consideration. In fact, a case could be made that they have only intensified – and dangerously so”
Repost from 1-30-2020