Financial Experts Urge 'Everyone' to Add Gold to Their Portfolio

Gold reached its 2017 high on Friday, briefly climbing to $1,300 per ounce for the first time since the days following the 2016 U.S. Presidential election. In the days leading up to this move higher, two of the world’s largest investment firms spoke out in support of gold, claiming that everyone should allocate a good amount of gold to their portfolio as a hedge against uncertainty. These suggestions came in the days following nuclear tensions between the U.S. and North Korea.

Since then, we saw gold prices soar following the Charlottesville, VA, and Barcelona attacks, as domestic and geopolitical uncertainty continued to rise. Trump’s controversial comments following the Charlottesville attack led to a dip in stock markets, while gold prices climbed to $1,300 per ounce.

Many believe these comments have led to doubt in Trump’s ability to deliver on his promises for tax cuts and infrastructure spending. Beyond a lack of faith in Trump’s ability to pass his economic agenda, analysts at Germany’s Commerzbank believe this controversy could have long lasting economic implications for the U.S. In response to these economic concerns, as well as fears of war with North Korea and terrorist attacks in Europe, demand for safe-haven assets like gold has risen significantly.

On August 9, Ray Dalio, founder, chairman, and co-CIO of Bridgewater Associates, the world’s largest hedge fund, urged that everyone should allocate 5% to 10% of gold to their portfolio as a hedge against economic and geopolitical risks. In a letter to Bridgewater Associates clients, Ray Dalio and his team members Bob Elliot, Steven Kryger, and Neil Hannan explain:

“When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don't have a unique insight that we'd choose to bet on... We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don't have 5% to 10% of your assets in gold as a hedge, we'd suggest you relook at this.”

In response to Dalio’s suggestion that everyone include 5% to 10% of gold in their portfolio, Dennis Gartman, editor and publisher of The Gartman Letter, issued a statement on August 14. Gartman instead believes everyone should allocate 10% to 15% of gold to their portfolio. Like Dalio, he believes gold has strong upside potential. He notes that, in addition to geopolitical tensions, inflationary pressures—via wage increases and expanding supply reserves—will likely have a bullish impact on gold.

Gartman explains his stance as follows, “One never knows when geopolitical risks will arise. One never knows when something untoward will happen economically. So yes, you should have some part of your portfolio in [gold]. I think you should have a tad bit more than 5% or 10% at this point. The stock market looks a little vulnerable. The geopolitical circumstances are getting worse and worse. So, I think that you probably need to bring that up to 10% to 15%, rather than 5% to 10%.”

Own Gold Before Prices Jump Higher

When two of the world’s leading financial experts urge investors to add gold to their portfolio, you need to be paying attention, if you weren’t already considering investing in gold. With gold testing the $1,300 per ounce level, now is the time to buy before prices climb even higher, as is typical during the fall season. Historically, gold prices tend to rise after July due to increased demand for gold as a result of the Indian wedding season, Chinese New Year, and American holidays. You can see these price trends in the graph below.

The latest Commitment of Traders (COT) data reveals that large speculators are pushing their bullish net positions higher in the gold futures markets for the fourth week in a row. Although gold’s push to $1,300 per ounce didn’t last long, many see it making another rally in the near future. As we mentioned in Friday’s market update, once gold breaks and sustains $1,300 per ounce resistance levels, $1,350 or $1,400 per ounce gold may soon follow.

If you’re looking to allocate gold to your portfolio, we now have 1-ounce gold American Eagles available for as low as Spot + 3.4% per ounce*. These are absurdly low premiums for gold American Eagles—so low, we haven't seen premiums like this in a decade! As one of the world’s most popular bullion coins, gold American Eagles occasionally see higher premiums towards the end of the year.

To add gold to your portfolio, call us at 800-831-0007 or email us.

*Prices subject to change based on market fluctuation and product availability. Prices reflected are for cash, check, or bank wire. Offer expires Friday, August 25, 2017.