![]() ![]() William Bernstein finds that disciplined rebalancing precious metals equity has historically added a five percent bonus to precious metals equity returns. While the returns of precious metals equity have been lower than the broad market, the characteristics of low correlation and high volatility are features which provide for positive returns for a rebalanced portfolio. In addition, precious metal mining stocks historically have been volatile. Precious metal mining stocks have historically realized low correlations to the broad U.S.Shareholder's receive this value through the distribution of profits via dividends. Unlike gold bullion, mining stocks produce economic value by profiting from the extraction and processing of metals.The following arguments support the inclusion of precious metal (gold) mining stocks in an investment portfolio. Note: If the spreadsheet is blank, select a different sheet, then back to that sheet. ![]() ![]() (View Google Spreadsheet in browser, then File -> Download as to download the file.) Note that mining stocks have historically possessed moderate correlation with gold bullion low to negative correlation with the S&P 500 index and negative correlation with 10 year U.S. The table below provides CRSP data for long term returns (courtesy of Ken French ), for U.S. investors, the returns realized from foreign mining companies are subject to the rise and fall of currency exchange rates. Concentration risk: Mining stocks are a small subsector of the market, and are affected by the economic and political forces that can affect precious metals and precious metal mining companies.Market risk: Mining stocks are subject to the forces that affect the overall stock market.Precious metal mining stocks are subject to a number of risks. The precious metal mining industry is a global industry so the funds that invest in precious metals equity are global funds. Some investors prefer using gold mining stocks as a substitute for gold bullion in an investment portfolio, and use a mutual fund or exchange traded fund that invests in gold mining stocks. Common precious metals include gold, silver, platinum, iridium, rhodium, and palladium. Precious metals equity is a term used to define a company that is involved in the exploration or production of a precious metal. For non-US investors, acting on fund or ETF suggestions in it may have harmful US tax consequences. This article contains details specific to United States (US) investors. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |