"Gold is a highly liquid yet scarce asset, and it is no-one's liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio:
• A source of long-term returns;
• A diversifier that can mitigate losses in times of market stress;
• A liquid asset with no credit risk that has outperformed fiat currencies; and
• A means to enhance overall portfolio performance.
"Our analysis shows that adding 2%, 5% or 10% in gold over the past decade to the average pension fund portfolio would have resulted in higher risk-adjusted returns.
This has been driven in part by the advent of new ways to access the market, such as physical gold-backed exchange-traded funds (ETFs), but also by the expansion of the middle class in Asia and a renewed focus on effective risk management following the 2008-2009 global financial crisis," the WGC said.
The WGC says gold is not only useful in periods of higher uncertainty. Its price has increased by an average of 10% per year since 1971 when gold began to be freely traded following the collapse of Bretton Woods.
Overnight, the gold price was fixed at $1309.99 per ounce
The WTI crude oil price was slightly down overnight at $52.65 per barrel.
In softer commodities, cocoa decreased $29 per tonne or 1.28% to $2228/t yesterday from the $2257 in the previous trading session, tradingeconomics.com reported. Historically, cocoa reached an all-time high of $4361.58/t in July of 1977 and a record low of $211/t in July of 1965.
Coffee decreased 1.25c per pound or 1.18% to 104.25c/lb yesterday from 105.50c/lb in the previous trading session, tradingeconomics.com reported. Historically, coffee reached an all-time high of 339.86c/lb in April of 1977 and a record low of 42.50c/lb in October of 2001.