With record-high equity markets and low volatility reflecting increased complacency, ETF investors should think about ways to diversify against a sudden risk-off event with an asset that historically exhibits low correlation to traditional assets, such as gold.
On the upcoming webcast this Thursday, Dec. 14 (available live and on demand for CE Credit), 2018 Gold Outlook and Trends, George Milling–Stanley, Head of Gold Strategy at State Street Global Advisors, Matthew Bartolini, Head of SPDR Americas Research for State Street Global Advisors, and Juan Carlos Artigas, Director of Investment Research at the World Gold Council, will look for ways to improve risk-return characteristics in current market conditions and the role gold can play in today’s global multi-asset portfolio.
For instance, inflation could serve as a catalyst for the yellow metal and for gold-related ETFs. By some metrics, the Fed has under-estimated U.S. inflation, which could prove beneficial to gold because the yellow metal is historically a popular inflation fighter.
Another possible catalyst for gold entering the back of the year is lingering debate surrounding how many times the Fed can raise rates, especially if the tax reform bill goes through and triggers faster growth.
Moreover, in an extended bull market environment, any sudden turns or risk-off events could trigger heavy selling in risky assets like equities and cause many to shift over to the relative safety of physical assets like gold.