Gold Is A Hedge—If You Have Time
Gold has long been used as a store of value, as a unit of exchange and to make jewelry. More recently, due to the popular view that it’s a safe haven in times of economic trouble, gold has come to be thought of as an investment asset with a potential role in the asset-allocation decision, such as in Harry Browne’s Permanent Portfolio.
Don Bredin, Thomas Conlon and Valerio Poti—authors of the 2014 paper, “Does Gold Glitter in the Long-Run? Gold as a Hedge and Safe Haven Across Time and Investment Horizon”—examined the period from 1980 through 2013 to determine whether gold consistently acts as a hedge and safe haven.
The study, which incorporated data from the U.S., U.K., German and Japanese stock and bond markets, adds to the literature by looking at gold’s hedging properties over short and long horizons. Following is a summary of their findings:
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