By Rayna Penelova
Gold is the asset class most associated with stress in the markets. Gold is typically the shelter investors seek during turmoil in the markets. So far this year, gold is up 15% percent, so one might think market anxiety is high. However, that’s far from the case. Equity markets have continued to hit record highs and consumer confidence is at levels unseen since during the tech bubble. The S&P 500 index is at all-time high of 2471 and up 12% for the year.
After noticing this phenomenon, naturally we dug deeper and found out that there have been 10 instances over the past 50 years, when both gold and S&P have been up over 10% percent for the year. On average, the following year has been quite positive for gold returns, with an average return of 18% and a positive hit rate of 80%.
If you have been thinking about adding exposure to gold, possibly as a hedge against uncertainty and extended market valuations, it looks like you’re still not late for the party. Should the stock market and gold continue on their current path through year-end, the odds favor solid performance for the shiny metal in the year to come.
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This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.
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