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Investors, don’t depend on stocks and bonds to hedge each other


BloombergBusinessWeek/Peter Coy

Repost from 7-19-2021

“[F]or almost a year now, Bloomberg market reporters have been detecting anxiety from the pros that the era of negative correlation {between stocks and bonds] may be over or ending, replaced by an era of positive correlation in which stock and bond prices move together, amplifying volatility instead of dampening it.”

USAGOLD note: The kind of clear inverse correlation Coy alludes to in this article might not be available when both asset classes depend to a large degree on monetary largesse for value, rather than traditional market forces of supply and demand. Under those circumstances, gold stands out as a true hedge – one disconnected from direct central bank and/or government support. That, perhaps, is why many institutional investors are turning to it as a portfolio alternative.

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