Few investments have such an illustrious glimmer as gold, which has been a store of value for thousands of years. However, with the rise of crypto and soaring gold prices, should it still hold a place in modern investment portfolios?
The answer depends on who you ask and the client’s needs. While many investors have argued that gold is a hedge against inflation, this has only been true when evaluating its value over a century. In the short term and even over multiple decades, its value can fluctuate wildly depending on many factors.
During a recent podcast episode of Odd Lots, the hosts featured Maksud Agadjani, a jewelry dealer in New York City and a proponent of investing in gold.
Mr. Agadjani made many arguments about why gold is still desirable in our modern era, but perhaps the most poignant was that it has perceived value that has stood the test of time, whether in the form of coins, watches, bars, or necklaces. The same cannot be said of cryptocurrencies, a newer alternative asset class that has only begun to gain acceptance from institutional investors over the past couple of years.
While Mr. Agadjani’s observation regarding gold as an asset class was spot on, its price is extremely volatile in the short term, and thus, it requires adequate risk mitigation when included in a portfolio.
Many experts think that gold will have a hard time making additional gains in the near future since it has rapidly appreciated over the short term. While it may remain an attractive place to allocate some funds, diversification is essential, as is the expectation that gold prices will likely stay in a holding pattern for the next few years.
At Lundeen Abrams Advisors, we believe each client has a unique set of needs, and we invest accordingly. For some of our clients, gold is an integral part of their portfolio construction. Meanwhile, for others, we choose other alternative investment options.
We do not believe in a one-size-fits-all approach; thus, we may or may not include gold when investing and diversifying a client's assets. If you are unsure whether gold might be a good fit in your investment portfolio, we are here to help. Please call us to schedule an investment consultation so we can learn more about your unique situation and goals. We look forward to talking with you soon!
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