How much gold do you really need to have the optimal portfolio?
(Kitco News) - The amount of gold to hold in a portfolio that optimizes an investor’s risk/return profile is much higher than what most would hold, this according to Ryan Giannotto, director of research at GraniteShares.
“We have found that the efficient level, the optimized level, was 35% gold. Not saying you should own 35% gold, that’s an awfully high concentration, but it challenges the conventional wisdom of what pertains to gold and how to use it,” Giannotto told Kitco News.
Additionally, gold serves as an excellent hedge instrument as its performance is independent of other financial assets, Giannotto noted.
“Gold’s correlation to the market, or indeed any other economic force, is essentially zero,” he said.
There are three primary uses of gold in a portfolio, according to Giannotto: to hedge against interest rates, to use as a store of wealth, and moderate and diversify investments.
“Those three together are very powerful,” he added.