Gold prices reach record highs, prompting investment debates
Gold prices have reached record highs, driven by trade tensions, inflation concerns, and increased central bank purchases. Recent data shows that gold has outperformed equities over the past 20 years, with only 11% of S&P 500 stocks surpassing gold returns. Central banks have significantly increased gold purchases, with inflows into gold exchange-traded funds reaching $9.4 billion in February. However, some experts warn that gold may be overvalued compared to equities, suggesting a balanced portfolio allocation of 10% to 20% in gold for stability and growth. While gold has historically provided better returns than equities, it can also be volatile. Investors are advised to maintain a prudent allocation to gold, as excessive investment beyond 20% may not yield better risk-adjusted returns.