Now do 2000-2009.
Gold as a standalone asset class is quite clearly inferior to stocks. It has lower returns and significantly higher volatility.
But it also has very low correlation to stocks. As a complement to a stock portfolio, gold can reduce overall volatility and increase portfolio efficiency.
Using PV's asset allocation tool and backtesting from Jan 1995 - Oct 2025:
100% US Stock Market: 10.96% CAGR, 15.53% Stdev, 0.60 Sharpe
80/20 US Market/Gold: 10.76% CAGR, 12.88% Stdev, 0.68 Sharpe
And that's intentionally starting the backtest with a period of poor gold performance.
One can make a perfectly fine portfolio without any allocation to gold, but to dismiss it out of hand based on a cherry-picked, short period of return data is disingenuous, at best.
Gold as a standalone asset class is quite clearly inferior to stocks. It has lower returns and significantly higher volatility.
But it also has very low correlation to stocks. As a complement to a stock portfolio, gold can reduce overall volatility and increase portfolio efficiency.
Using PV's asset allocation tool and backtesting from Jan 1995 - Oct 2025:
100% US Stock Market: 10.96% CAGR, 15.53% Stdev, 0.60 Sharpe
80/20 US Market/Gold: 10.76% CAGR, 12.88% Stdev, 0.68 Sharpe
And that's intentionally starting the backtest with a period of poor gold performance.
One can make a perfectly fine portfolio without any allocation to gold, but to dismiss it out of hand based on a cherry-picked, short period of return data is disingenuous, at best.
Statistics: Posted by venkman — Wed Nov 12, 2025 11:11 pm — Replies 2 — Views 376