"The role of gold in investment portfolios" white paper

Gold’s role in portfolio construction warrants reexamination. Our comprehensive analysis spanning 1973 to 2024, the period after the U.S. left the gold standard, shows why.

We investigated gold’s performance across diverse market and economic environments, using data from five major asset classes (equities, bonds, gold, commodities, and currencies). We found that portfolios with gold allocations between 1% and 35% had better risk-adjusted returns than traditional balanced portfolios during this time frame, with the optimal blend at 18% gold, 49% stocks, and 33% bonds.

Gold’s near-zero correlation with stocks (0.01) and bonds (0.08) explains this diversification benefit. In seven of eight crisis scenarios—including equity bear markets, high inflation, and high economic-policy uncertainty—gold was the best-performing asset. It also ranked in the top three across all economic regimes based on interactions between GDP and inflation.

These results suggest investment professionals should view gold as a strategic core allocation that could enhance portfolio resilience when conventional diversification methods fall short.

This white paper is provided for information purposes only. It should not be used or construed as an indicator of future performance, an offer to sell, a solicitation of an offer to buy, or a recommendation for any security. Flexible Plan Investments, Ltd., cannot guarantee any particular investment’s suitability or potential value. Information and data set forth herein have been obtained from sources believed to be reliable, but that cannot be guaranteed. Before investing, please read and understand Flexible Plan Investments, Ltd., ADV Part 2A and Part 3 (Form CRS) 1. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Inherent in any investment is the potential for loss as well as profit. A list of all recommendations made within the immediately preceding 12 months is available upon written request.