August 5, 2011

Gold can Help Balance Your Portfolio in These Times of Economic Stress

The S&P 500 and Gold were almost the same at about $1,300 in February 2011. Since then, economic stress in Europe and the U.S. has pulled the S&P 500 down while Gold moved higher. Perhaps now is the time to better balance your portfolio and consider re-allocation from cash, stocks and bonds to Gold.

Gold Up – S&P 500 Down

Gold and S&P

This chart gives a graphic example of the negative correlation between Gold and one of the other asset classes, stocks.

In Feb. 2011, the S&P 500 and Gold were almost the same value.
The closest the two were together was Feb. 2, 2011. Gold was $1,337.80 while the S&P 500 was at $1,289.80; a difference of 47, or 8%.
As of Aug. 4, 2011, the difference has expanded. Gold reached $1,649.80 while the S&P 500 fell to $1,200.07; a difference of 450, or 37%.