Bloomberg News: Goldman Urges Investors to Buy Gold and Oil as Long-Term Hedges
Article by Sybilla Gross and Yongchang Chin in Bloomberg News
Goldman Sachs Group Inc. touted gold and oil as hedges against inflation in long-term portfolios, citing the appeal of bullion as a haven amid concerns over US institutional credibility and crude’s ability to protect against supply shocks.
Analysts including Daan Struyven said investors with so-called 60/40 portfolios — an investment strategy of allocating to equities and bonds — have historically been able to maintain average annual returns while reducing risk by adding long-term allocations of the two commodities.
“Following the recent failure of US bonds to protect against equity downside and the rapid rise in US borrowing costs, investors seek protection for equity-bond portfolios,” the analysts said in a note on Wednesday. “During any 12-month period when real returns were negative for both stocks and bonds, either oil or gold have delivered positive real returns.”
The analysts recommended a higher-than-usual allocation to bullion and a lower-than-usual — but still positive — weighting to crude, calling the commodities “critical” hedges against inflation shocks that tend to ......