Recommended Gold Asset Allocations For Euro-Based Investors

The World Gold Council is calling on independent analysis as a diversification benefit for European investors.  It seems as though someone wants to take advantage of the woes of a continent’s ailing currency merger.  The new research cited is by New Frontier Advisors portraying gold as “a diversifier and foundation asset in the portfolios of euro-based investors, especially at a time of heightened currency and investment risk.”
 
The report is titled ‘Gold as a strategic asset for European investors’ and includes four historic periods, including historical data spanning 1986 to 2010 and one using the 1999 to 2010 time frame.
 
While this may seem self-serving, the paper highlights optimal strategic allocations to gold for Euro-based investors as only 2% to 3% for the most diversified and lowest risk portfolios.  For portfolios of equal stock and bond allocations, it recommends 4% to 9%; and it only goes as high as 10% for riskier portfolios that are currently exposed only to equities over the long-term.
 
Also noted, “The paper finds that gold adds significant diversifying power due to its low or negative correlation with most other assets in an optimised portfolio context.”

Frankly, when you see self-commissioned reports of this nature it can be a flag.  This report does not look too self-serving on the surface.