Portfolio diversification: 6 excellent reasons to aim for gold

2020 will be a crucial year for investors. Markets and economists are in fibrillation, the Cassandres face dizzying collapses and economic crisis around the corner. As always in a panorama of uncertainties and conflicting ideas, those who invest must make careful and careful choices in order not to let themselves be carried away by enthusiasm towards the abyss.

How to protect yourself in the event of a global crisis and how to make the most of the markets when everything seems to be going well? By allocating part of its investments in safe-haven assets, making them safe, thus aiming for physical gold, the safe-haven asset par excellence. We give you 6 good, indeed excellent reasons to aim for physical gold in this year of fundamental economic transition.

Gold creates security: the Central Banks say so

The central bank of the Netherlands, De Nederlandsche Bank (DNB) said that " if the monetary system collapses, the gold reserve will serve as a basis for rebuilding it ." Gold strengthens confidence in the stability of the balance sheets of central banks and creates a sense of security. According to the latest IMF data, DNB holds 615 tons (15,000 bullion) of gold, mainly stored in Amsterdam, but also in the United Kingdom and North America; the value of the country's gold reserves exceeds 6 billion euros (6.62 billion dollars).

" A gold bar retains its value, even in times of crisis, as opposed to 'stocks, bonds and other securities', which all have an intrinsic risk and whose prices can go down ."

Gold as a hedge in the event of a crisis

Gold is not a liability, it is not a piece of paper that in fact represents a promise of payment and is not part of the credit system . When the financial system collapses, when the markets suffer, when the securities make us sweat cold, gold is an excellent insurance policy to counteract the dynamics of debt-based markets , especially in a possible scenario of high financial volatility.

As we have always argued, gold prices rise in times of financial crisis . Having a percentage of your investments allocated in physical gold allows you to contain your losses pending better times and to save your capital .

As never before, practically all major banking institutions have concentrated their efforts on restarting economic growth and consumer prices.

These are interventions that have subjected the underlying currencies to a risk of progressive devaluation and volatility. For this reason, it may be useful to diversify a portion of the portfolio into assets that are external to the current debt-driven financial system .

According to Nouriel Roubini, who was among the few to predict the 2008 economic crisis, if there are signs that justify some optimism among economists, there are many more that fear a crisis on the horizon.

The trade war between the US and China appears momentarily to subside and Washington does not seem to grasp Iranian provocations. Furthermore, the Federal Reserve and the ECB seem to have reached an agreement ... for now.

On the other hand, there are many reasons to fear new crises:

1.       The global health emergency caused by Coronavirus will have very heavy effects from an economic point of view, with a sharp drop in GDP and evident suffering from the stock exchanges, as we are seeing these days;

2.       Recent economic data confirm the slowdown in China, Germany and Japan;

3.       Washington and Beijing will return to clash in the medium to long term;

4.       protests in Hong Kong have not subsided and can have a contagious effect on Taiwan;

5.       Even without the Brexit no deal, the EU shows signs of alarm and caution, especially in the countries that have always been the driving force behind the group, such as Germany;

6.       the Iranian regime, also grappling with street protests over the sanctions-induced economic crisis, "will see no choice but to continue to stir up instability in an already fiery Middle East"; the events of the last few days are clear proof of this;

7.       with high debt and low interest rates, central banks cannot stimulate the economy indefinitely;

8.       the populist reaction against globalization, immigration and technology is growing in many countries, western and international;

9.       Donald Trump's America with the policies of closing and imposing tariffs on foreign products (USA and France will begin to pay the price) can become the greatest source of global uncertainty;

10.   The socio-demographic, health and environmental situation open new fronts of debt crisis, with bankruptcies and defaults.