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The discomforting scenario for gold investors

If market disruptions continue, this may see investors liquidating gold holdings, just because they can.

People prize gold for a variety of reasons. But for investors, its key characteristic is its inverse correlation to shares.

In investment terms, inversely-correlated assets are highly valuable, especially to long-only portfolios. An asset with an inverse correlation moves in the opposite direction to other assets. Historically, when shares go down, gold more or less goes up. This makes it a natural hedge.

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Michael McCarthy is chief market strategist at CMC Markets.

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    Original URL: https://www.afr.com/wealth/personal-finance/the-discomforting-scenario-for-gold-investors-20200402-p54gmd