The Case for Risk Managed Gold

18 Pages Posted: 1 Apr 2021

See all articles by Ben McMillan

Ben McMillan

IDX Insights

Donald Robinson

Palladiem, LLC; American Economic Association; American Finance Association

Josh Myers

IDX Insights

Mark Kennard

Palladiem, LLC

Date Written: November 27, 2020

Abstract

The strategic case for gold revolves around its long history as a store of value. Humans have been drawn to the yellow metal despite its inability to pay a dividend or provide productive output ownership since somebody first discovered it. From an investment perspective, gold has demonstrated an ability to provide a long-term source of uncorrelated returns while also serving as something of a "flight to safety" hedge during geopolitical or fiat instability periods. While there are plenty of speculators looking to gold as a source of potential outsized return, most of the investing public looks to gold at the intersection of those two objectives: risk management. The authors make the case that there is a risk premium for investing in gold, understanding that even though gold does not provide a stream of future cash flows paid out to investors, it has genuine utility as a store of value. The authors also explore the benefits of managing gold exposure in investment portfolios to manage large drawdowns through systematic momentum measures.

Keywords: Gold, Risk Managed, Downside Risk

JEL Classification: G10,G11,G19

Suggested Citation

McMillan, Ben and Robinson, Donald G and Myers, Joshua and Kennard, Mark, The Case for Risk Managed Gold (November 27, 2020). Available at SSRN: https://ssrn.com/abstract=3738699 or http://dx.doi.org/10.2139/ssrn.3738699

Ben McMillan (Contact Author)

IDX Insights ( email )

5111 N. Scottsdale Rd
Scottsdale, AZ 85254
United States

Donald G Robinson

Palladiem, LLC ( email )

900 West Valley Rd, Suite 900
Wayne, PA Pennsylvania 19087
United States
646-239-4960 (Phone)
19087 (Fax)

HOME PAGE: http://www.palladiem.com

American Economic Association ( email )

2014 Broadway, Suite 305
Nashville, TN 37203
United States

American Finance Association ( email )

United States

Joshua Myers

IDX Insights ( email )

5111 N. Scottsdale Rd
Scottsdale, AZ 85254
United States

Mark Kennard

Palladiem, LLC ( email )

900 West Valley Rd, Suite 900
Wayne, PA Pennsylvania 19087
United States
4843182153 (Phone)
19087 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
54
Abstract Views
206
rank
453,693
PlumX Metrics