Broker Check

Where's my hedge? Gold disappoints investors.

| April 22, 2013

The opinions and forecasts expressed are those of Cory P Binsfield and Structured Wealth Advisors, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results. 

Did you catch the action on Gold recently? Last Monday, when the Dow Jones Industrial Average dropped 1.79% in a single day, Gold fell 9.2%. This was the worst drop in thirty years.  

For years, the gold pundits have been telling us that gold acts as a safe haven or "hedge" against uncertainty. In the case of today's price action, about the only hedge I see here is against capital gains.

For the record, we have never advised clients to buy gold due to the fact that it is not worth the risk. Since the 1970's, gold has experienced more risk (as measured by the standard deviation of return) than stocks with considerably less return. 

For an alternative view on the merits of gold versus traditional asset classes, check out our prior blog post titled "Did Buffett Predict the Gold Market Top" on March 14, 2013. This  is a great summary on why great companies and real estate always beat bonds and gold. 

Still not convinced?  click here. This is from Barry Ritholtz's blog "The Big Picture." If you can't pull up the video, click the Yahoo Finance link to see the transcript. While I'm not a fan of hedge fund managers, he has an outstanding blog and some interesting insights.

Related Links