Economic Times: Time has come to add gold to your portfolio

Economic Times states that there are several ratios that show gold is undervalued compared to other asset classes. Gold fundamentals are close to the bull market on the capital cycle. The main question is not if but when will next gold bull cycle start.
Aasif Hirani points to factors that have the strongest correlation with gold. Cameron Crise, a macro strategist with Bloomberg, conducted research on 25 years spanning 1990 and 2015. One of the key findings is gold has the strongest correlation with negative real US yield, followed by central bank gold purchase, industrial metal sector, equity volatility and weakness in the dollar. Negative real US yield or real interest rates are nominal interest rates minus inflation expectations.
US CPI is at 2.5 per cent and the 2-year Treasury yield is at 2.7 per cent. So, there is positive real US yield. Negative interest rates are a perfect environment for gold. Gold also performs well as a hedge against a crisis.

There are several ratios that show gold is undervalued compared to other asset classes. Gold fundamentals are close to the bull market on the capital cycle. The main question is not if but when will next gold bull cycle start.

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