Gold is up 40% this year and 100% over the last five years.
The stars are aligned for gold to keep surging to $5,000 and beyond:
- Interest rates are being cut
- US government spending shows no sign of slowing down
- Global central banks are accumulating gold
- Money supply is expanding
So… how much gold do you own?
There are many in the financial world who dislike gold. Like Warren Buffett once said, it “just sits there”.
Gold is a great investment as part of a larger portfolio. When mixed into a portfolio of stocks and bonds, gold works wonders to both reduce volatility and increase overall long-term returns. It works that way because gold has a low or negative correlation with stocks, bonds, and other financial assets. So when their prices go down, gold prices often hold strong or rise.
For proof, look at the worst three markets of this century so far:
- Financial crisis: By March 2009, the S&P 500 had dropped 57% from its peak. Gold’s maximum decline was 30%. By the time the market bottomed, gold had already recovered to near all-time highs. It then doubled by the time the S&P 500 clawed its way back to breakeven.
- Dot-com bust: While the S&P 500 got cut in half and the Nasdaq lost 80% of its value, gold quietly gained 15%.
- COVID: Similar story. By the time the stock market recovered to pre-crash levels, gold was up 30%.
- Gold’s superpower is that its value is independent of any other factor.
Unlike stocks, gold doesn’t require the economy to keep humming or trade to keep freely flowing to rise in value.
Gold’s value is independent. It doesn’t require anyone to keep promises. It’s the only financial asset like this. The only possible exception is bitcoin (BTC), but that’s a topic for another day.
- Buy some gold, forget about it, and get on with your life.
I do own physical gold and will continue to buy every year, bit by bit…
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