What's the best way to invest in gold?

[Derek Chevalier]

clubsport said:

Derek Chevalier said:

DonkeyApple said:

Personally, I view it as only appropriate as a small part of a much larger portfolio

I don't understand what purpose it serves in a portfolio. Is it tin hat protection?

-ve or low correlation with other asset classes can help bring down overall risk profile of a portfolio, which can lead to a higher Sharpe ratio.

You might not like it, but such measures are a valid part of modern portfolio theory.

Taking the "dumb" portfolio of global equities (which provide growth) and high quality, currency hedged global bonds (volatility damping, and little or no drawdown (hopefully) in turbulent times) I'm still not sure where gold fits into this. It's too volatile to be considered to be a volatility dampener and suffers from very long periods of little real return for it to be considered a growth asset.

In the context of modern portfolio theory, what expected return do you assume for gold? It doesn't have a coupon or pay a dividend. I assume that's why it's rarely seen in portfolios of the "serious" players such as Vanguard and Dimensional, nor the DFMs whose rigorous and methodical portfolio construction approach I respect.

If you have any papers that construct a valid case for holding gold from a UK perspective in the context of the above portfolio it would be useful to see it (most of what I've seen is U.S. based).

[Derek Chevalier]

Voguely said:

whilst other things are falling.

High quality bonds as well?