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Gold is considered by many to be a hedge against political uncertainty and inflation. Which would not be a recommended method to hedge a stock
Gold is considered by many to be a hedge against political uncertainty and inflation. Which would not be a recommended method to hedge a stock portfolio with gold?
a. Gold mining stock
b. Gold coins
c. Gold futures
d. Gold ETF
the answer is here and I have no idea what it is :(
Investments in gold and other precious metals are often marketed as good ways to achieve diversification. Gold values tend to increase during times of political uncertainty and inflation and decrease when economic conditions are more stable. In general, however, the average returns on these investments are so low that they drag down overall portfolio returns in good times. Let's look at an example. During the recession of 20072009, gold sellers advertised that gold was the only safe place to invest money. They argued that investing in gold would provide protection against looming inflation, which they claimed would inevitably result from federal stimulus spending and rising debt. Apparently lots of investors found this line of reasoning compelling-the price of gold rose from about $300 to more than $1,700 in about a decade, far surpassing returns on any other asset class. Unfortunately, inflation never turned out to be a problem, and many investors bought gold after its price had already gone up considerably. When the gold bubble eventually burst, many were left with significant lossesStep by Step Solution
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