Gold is a unique asset class. Its price often increases in value when stock and/or bond values decrease and vice versa as a result of various economic and political factors that undermine market confidence in fiat currencies. Gold’s low (sometimes negative) correlation with other assets is a useful tool in managing portfolio risk. A small allocation to gold related investments can result in a significant reduction in overall portfolio volatility without significantly reducing portfolio returns.

Perhaps gold’s most valuable attribute is that it has effectively served as a form of portfolio insurance during periods of extreme financial distress. Unlike most commodities, it has served throughout history as a form of money, and unlike fiat currencies gold cannot be devalued “at the stroke of a pen.” Its price is extremely volatile however, so we recommend that investors devote only a small portion of their financial assets to gold.|

The chart below depicts the effectiveness of gold as the only form of money that has retained its purchasing power over extended periods.

Gold ETFs allow individual investors to easily own and trade gold bullion. An ETF share represents ownership in 1/10 oz. of gold. ETFs are an excellent way to own gold as a security that is readily tradable on a major stock index. Since their inception, gold ETFs have tracked the price of gold very closely.

We also recommend gold mining stocks as a means of owning “gold in the ground.”
These high-quality gold shares also provide a number of additional advantages:

• Shares of gold mining companies provide ownership of gold “in the ground” via their vast ore reserves.
• These companies, by virtue of their ability to expand production and minimize production costs, offer the potential for share price appreciation that is independent of the gold price.
• All of our recommended mining stocks have a history of maintaining a steady dividend. Unlike gold bullion or even ETFs, mining shares offer investors a reliable stream of income.
• Unlike many highly publicized small mining companies that often hold land with nothing more than unsubstantiated claims of gold resources, the companies we have recommended are actually producing gold, and have proven, long-lived, low-cost reserves.
• Our recommended companies are carefully screened for financial stability; they are large enough so that the shares are highly liquid, their balance sheets are not overly leveraged, and they have diversified operations which can minimize political and other risks.