How gold fits in your clients' portfolios – and how to talk to them about it

What your clients need to know 

The perception of gold as a cumbersome, immobile asset does not reflect the realities of today’s gold market.

Gold flows freely, with more than $180bn ($147bn) traded on a daily basis – exceeding that of other major financial assets. This year alone, gold has outperformed almost all major assets. 

Looking at gold’s performance historically, it is an asset that should perform well through uncertainty, as it has done in five out of the past seven recessions.

For investors looking for a store of value and a portfolio diversifier, gold has a strong track record of delivering those qualities.

Gold provides returns and helps investors manage the risks that other financial assets bring, playing a key role in creating a more balanced and stable portfolio.

As it relates to price, which is an important consideration, investors should think about gold as a long-term strategic asset that will deliver returns while providing liquidity and diversification to a portfolio. 

Because of its liquidity, gold is useful in times of both expansion and recession.

And if investors have illiquid assets that prove difficult to sell, they can still use gold to meet their most immediate needs.

One easy way for clients to get started is through gold ETFs. Since they are easy to purchase, following the same process as buying equities in the market, investing in ETFs can make the idea of owning gold more attainable to clients.

Regardless of the method your clients choose to invest, it is advantageous to explore gold’s benefits in a portfolio.

Long-term returns, liquidity, and effective diversification all benefit overall portfolio performance. In combination, they suggest that the addition of gold can materially enhance a portfolio’s risk-adjusted returns. 

With characteristics that make it viable in both stable and uncertain geopolitical and macroeconomic environments, gold itself also plays a critical role in addressing societal needs and is highly regarded across cultures globally.

Widely understood as a source of financial security, gold also contributes to industries like healthcare and technology, fuelling innovation and offering practical application.

Considering its value and recent demand trends, especially against the macroeconomic backdrop of today, now is a great time to talk to your clients about how to strategically incorporate gold into their portfolio, and the various methods to do so.

Joseph Cavatoni is a market strategist - Americas at the World Gold Council