LIVE MARKETS-The 'strategic' case for gold and oil
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THE 'STRATEGIC' CASE FOR GOLD AND OIL
Goldman Sachs is advising investors to consider "strategic" allocations to gold and oil in long-term portfolios, especially after U.S. Treasuries failed to protect against stock selloffs.
According to the U.S. investment bank, history suggests that for investors looking out five years or more, allocations to gold and oil are ideal for mitigating risk or protecting against significant downturns for a specific return.
"During any 12-month period when real returns were negative for both stocks and bonds, either oil or gold have delivered positive real returns," writes Goldman's Co-Head of Global Commodities Research, Daan Struyven.
He highlights that gold acts as a hedge against losses in central bank and fiscal credibility, while oil often offers protection against negative supply shocks.
In more details, Goldman recommends an overweight allocation to gold for current strategic positioning and a "lower-than-usual" but still positive allocation to oil. For tactical purposes (0-2 years), however, GS recommends using oil puts to hedge against recession risks and to benefit from increasing supply.
(Danilo Masoni)
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