For Retirees Seeking an Inflation Hedge, Here's How to Add Gold

NEWS SUMMARY: Precious metal prices eased again Tuesday as signs of lockdown easing lifted risk appetite. U.S. stocks traded mixed as as shares of the so-called FANG tech companies declined.

BARRONS--- "Gold has again excelled in its role as a safe haven and portfolio diversifier, with the precious metal near 7 1/2-year highs after rallying around 10% since early March while stocks tumbled during the coronavirus-driven market tumult. Looking ahead, gold figures to play a starring role as a store of value as investor expectations on future inflation climb amid global stimulus efforts that have put a flood of cash into the financial system. For retirees on a fixed income, inflation can be a killer especially as interest rates remain low. But how much should retirees allocate to gold and how to include in a portfolio?....Kristina Hooper, chief global market strategist at Invesco, says gold is appropriate in anyone's portfolio as part of the alternatives allocation since the metal can offer portfolio diversification and be an inflation hedge over the long run...Depending on the person's risk tolerance, gold can take up a 5% or less portfolio allocation, she says....Frank Holmes, CEO of U.S. Global Investors, which issues precious metals mutual funds and exchange-traded funds, says gold becomes a true store of value when the inflation rate starts to outpace interest rates. In gold markets, investors look at 'real' interest rates, subtracting the benchmark rate from the inflation rate. If that rate turns negative, as it has recently, gold shines. Negative inflation-adjusted interest rates were behind gold's last run between 2008 and 2011, when gold hit a nominal all-time high of just over $1,900 an ounce. Gold started to retreat when those 'real' rates turned positive, he says. With benchmark rates near zero, this could work in gold's favor again. He recommends gold holdings up to 10%."