In a recent interview with the World Gold Council, Allianz chief economic advisor Mohamed El-Erian discussed the potential role gold may lay within a portfolio. He stated “As part of a diversified portfolio allocation that includes a higher-than-usual cash allocation, gold can play an important role in overall risk mitigation. It can also provide a notable upside should the enormous amount of central bank liquidity injection gain traction and result in higher inflation, be it actual or expected.”
El-Erian went on to state “A growing number of investors are recognizing the potential of gold to increase returns and improve risk-mitigation attributes of well-diversified portfolios. At the same time, there are-understandably- growing worries about the over-valuation of public equities and fixed income, thereby strengthening the case for an appropriately-sized allocation to gold.”
Hmm. Over-valuation of equities and fixed income… Could he be referring to the current levels in global stock and treasury markets?
In our view, “over-valuation” is an understatement.
Stocks have been on a multiyear run higher, while bond yields have hovered at or near all-time lows. Although the U.S. Fed has ended its QE program, other global central banks are keeping their feet on the gas pedal. Some have made the argument that the rally in stocks is artificial, and that it is simply the product of massive amounts of quantitative easing. At some point, something will have to give. If and when the printing presses do come to a halt, the stock and bond markets may look quite a bit different than they do today.
Although you should certainly interpret El-Erian’s comments yourself and come up with your own conclusion, we think he is saying in simple terms that gold could potentially take off if inflation does and that given the lofty current levels being seen in stock and bond markets, an allocation in gold makes a lot of sense.
Inflation has not accelerated and stock and bond markets have not collapsed yet.
This means that you still have time to begin building an allocation in physical gold. The window to acquire gold around current price levels may be closing soon, however.
The time to take action is now.
If you own physical gold already, consider adding more to your holdings. If you don’t own any gold, don’t wait to start buying.
Building a precious metals portfolio has never been easier, and you can begin an allocation in gold by simply picking up the phone.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our professionals are here to answer your questions, and to show you how easy it is to begin buying and holding physical gold. Our representatives can even show you how to buy and hold physical gold using your IRA account.
Don’t wait for runaway inflation or for the next stock market collapse before taking action. Call us today at 1-800-341-8584 to get started.Tags: advantage gold, bond market, diversification, el-erian, gold, inflation, interest rates, portfolio allocation, stock market bubble