The prospect for a resurgence in inflation looks high. The aggressive policy responses put in place around the world to deal with the financial crisis combined with the emerging green shoots that signal a fading recession have investors concerned with how to protect their assets in an environment of rising prices.
Continuing nervousness over banks drove stocks down and caused investors to flee to the relative safety of gold and US treasuries in trading on Wednesday, September 17.
ETF investors have several choices for gaining exposure to gold including funds that hold physical gold, invest in futures contracts or own gold mining stocks. Leveraged and inverse funds are also available.
Bob is interested in adding gold to his portfolio after reading the results of a joint study by the World Gold Council and New Frontier Advisors. The study found that the appropriate allocation to gold is dependent on the portfolio risk level, recommending a 1-2% allocation for low risk portfolios and 2-4% in a balanced risk portfolio.