Positive Aspects Of Gold In The Portfolio
The intensity of gold as a portfolio addition for risk diversification results from the individual relationship between the key aspects.
Gold prices typically tend to move inversely to other assets with the magnitude of drastic losses in other assets being more likely and mitigated by gold in the portfolio. This means that there will not be a major drop in the value of gold.
Unlike stock trading on the stock exchange, gold prices tend to rise faster than they fall. This aspect coupled with the extremely weak correlation meant that gold used to be effective in massively dampening the overall impact of large losses on other assets in the portfolio.
Physical gold is one of the most traded assets in the world. If gold were an actual currency, it would act as the fourth largest currency in the forex market.