Why Now Is The Time To Buy Gold

Written by Staff Writer

gold 672052 640Why Now Is The Time To Buy Gold -Seeking Alpha
"Ray Dalio once said, 'If you don't own gold, you know neither history nor economics.'....This is the crux of Dalio's statement. Paper currency regimes, with no mechanism to regulate increases in the money supply, have an inflationary tendency...While paper currencies lose value over time, gold has served as a store of value for over 5,000 years....

A study conducted by Flexible Plan Investments determined the optimal allocation of gold to a portfolio. It determined that a 20% allocation to gold, with 48% in equities, and 32% in treasuries provided the highest Sharpe (risk-to-reward) ratio....Saddled with rising debt and a wave of retiring baby boomers, there's a chance that the U.S. remains stuck in a Japan-like deflationary spiral...With demographic trends skewing the numbers...I would reduce the optimal allocation of gold from 20% to 10%....With corporate debt at record highs and 50% of corporate credit ratings one level above junk, I believe over-levered corporations, not necessarily banks, will be at risk of defaulting when corporate profits drop in the next recession....In conclusion, gold may chronically underperform if the Fed implements the same monetary policy as Japan. However, if current MMT rumblings come to fruition, gold will skyrocket while other asset classes lag."