Fourth edition of Mercer study now available
News Arnulf Hinkel, Financial journalist – 11.03.2019
The comprehensively updated Mercer study has recently been published.
After the 2011, 2014 and 2017 editions, the comprehensively updated Mercer study "Gold as an Asset Class for Institutional Investors" has recently been published. It is available free of charge in the downloads section of our website. Apart from the chapter "Regulatory Framework for Regulated Investors", in which the treatment of gold under the German Insurance Supervision Act and Solvency II Directive is examined, the study offers a wealth of information and recent findings that should also be of interest to private gold investors.
How did gold perform during the eurozone crisis – and after?
After a brief outline of the historical development of the commodity gold from a globally valid, hard currency to an investment commodity, the study closely examines the role of gold during the Eurozone crisis in 2011 and the following years until today. It also presents three possible scenarios for the future European economic development and their respective impact on the gold price.
Does the addition of gold to a portfolio still make sense?
As in previous editions, the Mercer study conducted a quantitative analysis of a standard portfolio made up of stocks and government bonds, both with and without the addition of gold. Based on a 15 per cent probability of a market crisis scenario, the quantitative analysis proves that a gold allocation of 2.7 to 4.4 per cent to a portfolio provides a meaningful diversification. This is especially true in times of crisis, since every target return level in the model could be achieved over the entire yield spectrum both with and without the addition of gold to the portfolio. At the same time, however, the downside risk proved lower in the case of the portfolio containing gold, as in the event of a crisis, the gold price tends run counter to equity prices.