Bob Elliott Says Market Action In 2022 Is Good Reminder Of 'Diversifying Value Of Gold In A Portfolio'

Bob Elliott, co-founder, CEO and CIO of Unlimited Funds, has pointed out that market action in 2022 and this month are a good reminder of the diversifying value of gold in a portfolio.

What Happened: Elliott said that in a month when financial assets in aggregate have performed poorly and bond yields have risen, gold has outperformed. Similarly, in a year when financial assets have performed poorly and bond yields have risen, the yellow metal has outperformed, he said in a tweet.

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“Gold is non-interest bearing money, so it should perform poorly as rates rise and does so in the wiggles,” Elliott tweeted adding, that the reason it hasn’t fallen over time is that it also serves as protection as tailed scenarios become increasingly priced-in, including very high or very low inflation.

He argued that these types of scenarios happen more often than most investors think they do. “Yet largely no investors hold reasonable allocations to gold. The market action this year and this month are a good reminder of the diversifying value of gold in a portfolio,” Elliott said.

Gold prices have been on an upward path since late October. The SPDR Gold Trust GLD has gained 3.18% in the last one month while the iShares China Large-Cap ETF FXI has risen over 4% in the period.

Replying to a Twitter user on gold’s price movement during the 2008 financial crisis, Elliott said that developed central banks’ sales of gold in the late 90s and early 2000s put a big structural weight on the yellow metal for a while. It ended in 2007 and the price rose after it stopped, he said.
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