Does Gold Belong in Your Investment Portfolio?

Just over a hundred years ago influential British Economist John Maynard Keynes penned A Tract on Monetary Reform. In it he attacked deflationary policies, argued for currency depreciation, and called for an end to the gold standard. In an oft-quoted passage, Keynes referred to the gold standard as “a barbarous relic.”¹ However, it wasn’t until 48 years later that President Richard Nixon finally took the United States off the gold standard. Nixon was famously quoted as saying “I am now a Keynesian in economics.”

In the same work, Keynes noted “in the long run we are all dead.” This observation turned out to be true, and so the founder of modern macroeconomics didn’t get to witness gold rise from about $38/oz at the time of his death in 1946 to well over $5,000/oz.² Despite Keynes’ literary jab, investors and governments alike have continued to put their faith in the yellow metal. Why do they continue to invest in gold?

And more importantly, does gold have a place in YOUR portfolio?