Gold Had a Great Year, But Will It Remain a Safe Haven?
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What is the main topic discussed in this episode?
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Here's your money briefing for Thursday, April 29th. I'm J.R. Whalen for The Wall Street Journal. All this week, we're explaining investing basics, the differences between various assets, the benefits and risks, and how each of them fit into a diverse portfolio. As they say in sports, the best defense is a good offense. And over the past few days, we've explained ways to protect your portfolio against sharp market swings through bonds and mutual funds. Today, you can add gold to that list of safe havens.
In general, a lot of financial advisors recommend investors allocate at least a small portion of their portfolio to gold as a hedge.
Coming up, our markets reporter Amrith Ramkamar will shine a light on gold, whether it lives up to its promises and how to add it to your portfolio. That's after the break.
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When major economic or world events shake the markets, investors look for someplace safe to put their money. And for many of them, that's gold. It's no coincidence that gold had its best year in a long time during the pandemic. But how does gold pan out in the long term?
What is the episode's focus on gold and investing basics?
Amrit Ramkumar covers markets for The Wall Street Journal, and he joins us now. Amrit, thanks for being with us.
Yeah, thanks so much for having me.
All right, Amrit, so tell me, why would I or why would anybody want to invest in gold? What's the appeal?
There are a ton of reasons people invest in gold, and gold, I would say, is one of the most contentious mainstream financial assets. Some people use it simply as a hedge against an economic downturn. Some people use it to hedge against a huge surge in inflation. A lot of people use it simply to speculate, though. And I think that's a big key here is just as is the case with stocks and other riskier investments that are other commodities like gold is used to bet on higher prices. And a lot of people don't. think that it can be quickly traded and swapped out to make a quick buck. But some people and some kind of disaster theorists or people maybe preparing for the end of the world like to hold on to it because its value over time can tend to go up.
So it's a very contentious topic. A lot of people, like even our Wall Street Journal investing columnist Jason Zweig, has famously called it a pet rock. Jason did that a few years ago, then the price shot up to new records in 2020. So there are a lot of reasons gold is in the newsletter on occasion and a lot of reasons people own it. But usually people investing in it are doing it for one of those broad reasons.
Okay, so let's say I have a portfolio. I have stocks, a 401k. Maybe I have some savings. Where does gold fit into that in terms of the spectrum of investments that I have?
In general, a lot of financial advisors recommend investors allocate at least a small portion of their portfolio to gold as a hedge. So it's a precious metal. Its value tends to be relatively stable when the economy's going bad. That's why we saw the coronavirus pandemic spark a big surge in prices, for example.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–2:13
2
What is the episode's focus on gold and investing basics?
2:13–9:32
3
Why did gold rally during the pandemic and what does that history tell investors?
9:32–10:54
4
What reasons do investors give for holding gold as a hedge or speculation?
10:54–10:54
Speakers
4 identifiedMore from WSJ Your Money Briefing
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