The Interrelation of the Long-Term Gold Yield with the Yields of Another Asset Classes
8 Pages Posted: 23 Jan 2005
Date Written: December 22, 2004
In the article the appealing of gold as the long-term asset of investments is discussed. Particularly it is shown that the 10-years average for the gold yield well correlates with the current real earnings yield (reciprocal of the P/E ratio). So in the phase of earnings multiple expansions, when the market's growth essentially outstrips the earnings growth, the average gold yield tends to fall down. And vice versa, when the earnings multiple is in the phase of contraction, the market participants tend to pick up gold that leads to growth of the gold yield.
Keywords: Asset allocation, long-term investments, P/E ratio, earnings yield, gold yield, risk evaluation, Value at Risk
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