The World Gold Council just published a country specific guide to gold's role as a strategic asset. According to the report, gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment.

As such, gold can play four fundamental roles in a portfolio:

 
• a source of long-term returns  
 
• a diversifier that can mitigate losses in times of market stress  
 
• a liquid asset with no credit risk that has outperformed fiat currencies  
 
• a means to enhance overall portfolio performance.

The analysis shows that adding 2%, 5% or 10% in gold over the past decade to the average pension fund portfolio would have resulted in higher risk-adjusted returns.

Most importantly, gold has outperformed all major fiat currencies over time.

Relative value between major currencies and gold since 1900*

Source: Bloomberg, Harold Marcuse – UC Santa Barbara, World Gold Council

The report offers a number of very interesting charts and statistics, and it discussed the aforementioned topics under the following chapter titles:

 
• Why gold, why now  
 
• A source of returns  
 
• Well above inflation  
 
• A high-quality, hard currency  
 
• Diversification that works  
 
• A deep and liquid market  
 
• Enhancing portfolio performance  
 
• Gold goes beyond commodities

The report is definitely worth a read, particularly for those new to the topic and undecided on how to address the current day economic realities…!

>> Read more and download the full report here.