Carley Garner, Senior Strategist and Broker, Decarley Trading, explains why gold might not protect your portfolio when markets crash.
Transcript:
CAROLINE WOODS: Gold is seen as this flight to safety, though, and it hit record highs around the same time that the equity market hit record highs. What do you make of that?
CARLEY GARNER: You bring up a very good point. The consensus mindset is that gold is a place to be when the stock market’s not doing so well. But that’s actually not true. In fact, we’ve seen gold and stocks go up together here in the last couple of years. So gold is gold is the Jack of all trades. Gold is a diversifier more than anything. And what I mean by that is it doesn’t have a specific rule or let’s say mode of conduct that it follows. It kind of does a little bit of everything. Sometimes it moves in tandem with the stock market, sometimes it doesn’t. So it’s one of those assets that is I said, a diversifier more than anything. There are times where gold and the dollar go together and sometimes they go opposite. So it’s a great way to diversify a portfolio away from other assets that are moving along. Again, I will reiterate, though, gold is generally thought of as a risk off asset, but it can be a very, very risky asset. I would never call gold a safe asset or a safe haven, although that’s what it’s generally referred to as because I’ve seen what it does when it’s not performing, and it’s kind of market that it goes up pretty quickly, but it goes down even faster than it goes up.
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