“Gold has shown low correlation to most mainstream assets. Many diversifiers fail to truly diversify, as correlation increases during times of stress. Gold tends to do its own thing and be much more impacted by the dollar than the stock or bond market,” Micah Wakefield, Director of Research and Product Development, Swan Global Investments, said.

To build a diversified core portfolio, Milling-Stanley argued that investors should include gold exposure, and for many, the SPDR Gold Shares (NYSEArca: GLD), the largest physically backed gold-related ETF on the market, has been the go-to ETF option for gold exposure.

“Relative to both a hypothetical pure equity portfolio and a hypothetical portfolio composed of 60% equity, 40% fixed income, a hypothetical portfolio composed of 59% equity, 35% fixed income and 6% gold would have reduced drawdowns and would have more quickly recovered its maximum losses after stock market crashes during the period from July 1, 1998 through June 30, 2018,” Milling-Stanley said.

Milling-Stanley also pointed to the recently launched SPDR Gold MiniShares Trust (NYSEArca: GLDM), which has a 0.18% expense ratio, as an easy way to construct a cost-efficient core that includes gold exposure.

Furthermore, while the U.S. dollar has strengthened and weighed on gold prices, it does not mean that the relationship is the sole driver of gold returns. Gold may still be used to hedge risks, and something like the SPDR Long Dollar Gold Trust (NYSEArca: GLDW) has allowed investors to maintain the safe-haven aspect of gold without worrying about currency risks.

“Investors have been quick to seize the opportunity to add to holdings in GLDW, our ETF designed to offer investors some protection from the potential adverse impact of a rising dollar on the dollar gold price. We saw new creation activity in GLDW totaling over $3.5mn toward the end of June, and daily trading volumes in that ETF have also picked up. I would expect that trend to accelerate if the dollar continues to strengthen over the rest of the year,” Milling-Stanley said.

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