Gold Emerges as the Most Effective Commodity Investment

Moreover, it is considered as a more effective diversifier than other commodities.

SEATTLE (Scrap Monster): The latest analysis report published by the World Gold Council (WGC) suggests that gold continues to be the most effective commodity investment in a portfolio. Gold deserves to be treated as a differentiated asset, it noted.

The Council outlines six major characteristics that distinguish gold from other investment options. Gold has a proven store of value, high liquidity and lower volatility. Gold’s volatility has been stable, amidst variability in equities, bonds and alternative assets. The volatility has increased across major assets and commodities in 2020, mainly on account of Covid-19 pandemic, but less so for gold in comparison. It has delivered superior returns over multiple time horizons, compared to other commodities. Moreover, it is considered as a more effective diversifier than other commodities.

The report said that gold, unlike commodities, tends to perform positively, when volatility increases. It has acted as a better diversifier than commodities and treasuries during strong equity selloffs. Gold and broader commodities tend to perform well in high inflation environments.

Gold usually accounts for only around 1% of the total portfolio. The returns from gold allocations have improved significantly over the past 20 years, more than other commodities, WGC report noted.

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