Investing in gold is always a good way to diversify your portfolio. Academics, independent researchers, and asset allocation experts have a strong and increasing consensus that gold is a hedging resource and a safe haven asset.

Gold bullion is used as a protection against currency fluctuations, particularly the U.S. dollar. There is an erroneous belief that gold is “quoted in dollars.” This is not the case because gold is quoted around the world in terms of local currency. The rates for London AM and PM Fix are in U.S. dollars, British pounds and euros. Given the importance of U.S. markets and the dollar as the current sole reserve currency in the world, traders quote the U.S. dollar price most frequently and for simplicity and ease of financial media tend to quote the gold dollar price.

The history as a hedge against inflation is essentially self-fulfilling, and the only reason that analysts have suggested over the past two decades that it has lost the position as an inflation hedge is that, at least in the Western Hemisphere, there has been no inflation to hedge against. For parts of Asia, where recent inflationary pressures or expectations have occurred at times, along with currency depreciation, gold has remained an asset of choice in the battle against both of these powers–which are, of course, intertwined.
Here we come to an important distinction–between “quality” and “value.” The price of gold is real, observable in any currency you want, and subject to market forces. The value of gold is much more philosophical. It is reflected in its anonymity and portability for those escaping danger or threat, while its very low or negative correlation with virtually all other asset classes, as well as its position as an inflation hedge, makes it a valuable component of a portfolio as it extends the efficient boundary (higher risk reward and vice versa). That’s why if an investor wants to spread risk around their portfolio, it doesn’t matter what price they’re paying for the gold because their contrary spirit will minimize their risks over time. Clearly, the point is very different if they are aiming for capital appreciation.

Fears that trade tensions between the US and China could lead to a global downturn, continuing instability in the Middle East, and continuing uncertainty about the UK’s Brexit negotiations have all given a boost to the precious metal. Although gold is a non-yielding commodity, it is viewed as a safe haven for investors in the midst of growing market storms, Vincent Ropers, TB Wise Multi-Asset Growth Fund portfolio manager, noted that “it’s a classic cover for inflation. Yes, gold is deemed impervious to the behaviour of centralized organizations in times of economic instability.”
Experts also see gold as a good value shop diversifier and lasting. This is because the gold price continues to shift differently from other assets like equities. Asked by Finacial Times reporters, Robin McDonald, Head of Multi-Manager Investment at Schroders, said: “On a 12-18 month view, we’re pretty bullish about gold, believing it has a decent chance to help diversify a balanced portfolio in ways that bonds struggle with such low yields.” He added: “In the event of a possible downturn, we’re confident that gold will perform well, especially as the policy response went hand in hand.