"There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence."Charles De Gaulle (1890-1970)
The reasons for investing in gold have remained constant for centuries as a permanent store of value. Additionally, gold serves as insurance for the investor's personal wealth protection as well as as a portfolio diversifier.
Typical portfolios traditionally consist of stocks, bonds, mutual funds and money market instruments. Including gold in portfolios introduces a level of protection not found in other asset investments. Because the factors that influence the price of gold are generally independent from those that affect the prices of these other assets, gold can help offset market fluctuations and can reduce volatility. After the stock market crash of 1987 and amidst the recent economic downturn we are currently facing, gold has edged up even as stocks face their greatest losses in the last 100 years.
In today's market, gold resides in a favorable environment as an investment that stands on its own. People seek gold as a reaction to the instability of financial institutions as well as the volatility of the U.S. dollar. As a result, the global demand for gold is at near-record levels, far exceeding annual mining production. In addition, worldwide and geopolitical economic uncertainty further increases the rush toward gold, reinforcing its status as a safe haven for investors all over the world.
Whether investors use an aggressive or conservative approach, gold can serve an important role in any portfolio. In 1997, as published in the Financial Perspective newsletter, Joel D. Perlin urged investors to keep 15% of their total wealth in tangible gold. That recommendation certainly can be considered conservative in today's economic climate. Now we have instituted The 20% Rule! ® to ensure total wealth preservation.
