Is gold losing its shine? Gold’s role in your portfolio


Nov. 27 2019, Updated 2:17 p.m. ET

Following its sell-off, gold’s role in a portfolio is back in focus. With investors asking if now is the time to buy or sell the precious metal, Russ K weighs in with his view.

Of all the investment topics I’ve discussed with clients, whether to invest in gold usually elicits the most divergent opinions. As an investment that is almost impossible to value, people’s views on gold are often more a matter of philosophy than empirical fact. But for better or worse, following its sell-off, gold’s role in a portfolio is back in focus.

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Market Realist –The graph above shows gold’s performance (GLD)(IAU) since November 2012. The precious metal has lost more than 30% of its value in the last 24 months. It seemed to recover earlier this year due to geopolitical risks between Russia (RSX) and Ukraine as well as conflicts in Iraq. Remember that investors consider gold a safe haven. Any geopolitical risks cause investors to reallocate their funds from risky assets like equities (SPY)(IVV) into safe havens. But the recovery didn’t last long. Gold is down ~3% year-to-date.

A big factor in gold’s decline last year was India’s (EPI) increase in import duty from 10% to 15% as part of its capital controls to stop the rupee depreciation. This move put more negative pressure on global gold prices, since India is the largest gold consumer.


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