September 8, 2017

Diversify Your Portfolio with Gold

BYTradition Gold

If you want to be truly diversified, diversify your portfolio with gold…


If you have been investing for any period of time, you have likely heard that the way to diversify your portfolio is to hold a mix of stocks and bonds. Although this advice has been handed down for generations now, it may be considered to be largely ineffective. We make the argument that you may now want to additionally diversify your portfolio with gold to reach more secure asset allocation in a runaway economy.


For example, some investors may think they are “diversified” if they hold not just one but numerous stocks in the oil sector. Others may think that holding various names in the utility sector makes them diversified. Still, others may believe that spreading their risk among numerous emerging markets or international stocks makes them diversified.


The reality is, however, that the vast majority of investors are not nearly as diversified as they may think they are. A simple portfolio of stocks and bonds just doesn’t cut it anymore (and perhaps never did).


The idea behind diversification is to attempt to spread risk while not sacrificing the potential for returns. This risk management methodology only works, however, if the assets within a portfolio are not closely correlated. Gold is not closely correlated to most investment vehicles, which is just one major reason why you may want to diversify your portfolio with gold.


Although investors may attempt to hold many different securities such as stocks and bonds, there are also numerous other vehicles available today such as managed futures, real estate and precious metals.


Is Gold the Ultimate Asset Class?

Physical precious metals like gold and silver may potentially play a vital role within a well-diversified portfolio. Why might these asset classes be so effective? Consider this:

  • Gold may provide a hedge against inflation and declining currency values: As a hard asset, gold may potentially retain its value or even increase significantly in value during periods of high inflation. Because gold is denominated in dollars, its price may also rise in the face of a declining greenback.


  • Gold has significant price appreciation potential: Gold is a natural resource, and as such, its supplies are limited. At some point, there will be no more gold mined. The laws of supply and demand tell us that if demand remains constant or increases as supplies dwindle, prices will rise. Gold is purchased not only for its investment value but for jewelry as well. These two sources of demand could keep the price of gold stable and rising over the long-term.


  • Gold carries zero counter party risk: Unlike dollars (or any other currency) and bonds, gold carries zero counter party risk. A government can default on its obligations or go bankrupt, gold cannot. Unlike paper currencies and bonds, gold does not derive its value from paper promises but rather has inherent value that is governed by the laws of supply and demand.


  • Gold is exchanged all over the globe: Gold has been a reliable store of wealth and value for thousands of years. The yellow metal is traded all over the world, and can be used as a medium of exchange anywhere on the globe.


If you have never looked at physical gold as a means to add further diversification to your portfolio, now may be the ideal time to evaluate your options and diversify your portfolio with gold.


Adding gold to your holdings has never been easier than it is today, and the sooner you begin building an allocation in physical gold the sooner you start taking further steps to secure your financial future.


Tradition Gold can help. Our precious metals professionals are here to answer your questions, and can even show you how to buy and hold physical gold using your IRA account.


Don’t wait for the next major economic crises or massive stock market crash before taking action. Look into diversifying with gold today. Call Tradition Gold at 888-294-3990 to get started.

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Investment Guide

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