Bridge over ocean
1 July 2013 Financial Analysts Journal Volume 69, Issue 4

The Golden Dilemma

  1. Claude B. Erb, CFA
  2. Campbell R. Harvey

Although gold has been around for thousands of years, its role in diversified portfolios is not well understood. The authors critically examined such popular stories as “gold is an inflation hedge.” Investors face the following dilemma: The real price of gold is historically very high and may revert to the mean, but if prominent emerging markets increase their gold holdings, the real price of gold may rise even further from today’s elevated levels.

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