“The problem with too much gold is too much volatility, which is something that clients really have a hard time with,” Janet Briaud, founder and president of Briaud Financial Advisors, said in the article.
Gold also performs differently in varying economic environments. Over the past 40-years, Wagner found that gold significantly underperformed traditional stocks and bonds during periods of rising growth and falling inflation and periods of deflation and weak growth. However, gold tends to outperform when the economy experiences stagflation, or declining growth coupled with rising inflation.
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Full disclosure: Tom Lydon’s clients own shares of GLD.