Gold: Safe-Haven Role Firmly Established

(November 27, 2019 - Investment Solutions)

Historically, government bonds have been the safe-haven or risk-free asset of choice to diversify the risk in a portfolio.

However, negative government bond yields in Europe and Japan have fundamentally changed the relative merit of government bonds versus gold as safe havens, for two reasons: 1/ in these economies, government bonds no longer have an income advantage over gold; 2/ there is a limit to how low negative bond yields can go and still attract investors

We believe the negative yield environment will remain in place for euro and Swiss franc government bonds for the near future. This has profound implications for long-term portfolio construction: the expected returns of government bonds in case of a stress scenario are capped and gold becomes a necessity rather than an optional allocation.

For the complete story read the full Gold: Safe-Haven Role Firmly Established here: https://www.mintstategold.com/articles/Gold - safe-haven role Firmly established.pdf