Gold During Times of Turmoil

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Recently by Frank Holmes: Perfect Storm Creates Tidal Wave of GoldDemand


How does gold perform during times of turmoil?

Jason Toussaint from the World Gold Council (WGC) provided some interesting perspective during our recent Case for Investing in Gold webcast that sheds some light on this question. The WGC looked back at six incidences of market turmoil over the past few decades:

  • Black Monday (1987)
  • Long-Term Capital Management (LTCM) Crisis (1998)
  • Dot-com Bubble (2000)
  • 9/11 Terrorist Attacks (2001)
  • Slowdown (2002)
  • Great Recession (2008)

The WGC calculated two $100 million portfolios. One portfolio held approximately 55 percent equities, 40 percent fixed income and 5 percent alternative assets. The second portfolio reduced the equity allocation by 6 percent and added gold. Here is a chart of the results.

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Frank Holmes is chief executive officer and chief investment officer of U.S. Global Investors Inc. The company is a registered investment adviser that manages approximately $4.8 billion in 13 no-load mutual funds and for other advisory clients. A Toronto native, he bought a controlling interest in U.S. Global Investors in 1989, after an accomplished career in Canada's capital markets. His specialized knowledge gives him expertise in resource-based industries and money management.

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