Sep 03, 2025

I recently came across news discussing the significance of gold in an investment portfolio, particularly in times of financial turmoil. A storied hedge fund, DE Shaw, highlighted that gold’s true value lies in its uselessness to other markets, making it a non-productive store of value. The firm suggested that gold should make up to 9% of an investor’s portfolio due to its ability to not follow the same trends as stocks and bonds, providing diversification.

DE Shaw also delved into the valuation challenges surrounding gold, emphasizing that its value should align with global wealth growth. The firm suggested a return assumption of 0.5% per year above the inflation-adjusted risk-free rate for gold, with an assumed volatility of around 15%. Additionally, the correlation of gold to stocks and bonds was discussed, highlighting how gold’s lack of exposure to equity risk can provide utility to a portfolio dominated by traditional assets.

The news also touched upon the current market trends, with stock market futures slumping, bond yields rising, and gold and bitcoin rallying. The correlation between stocks and bonds was noted to have a significant impact on the optimal allocation of gold in a portfolio, with DE Shaw suggesting a 6.5% allocation in a negative stock and bond correlation environment, and a 9% allocation in a positive correlation environment. Overall, the news shed light on the importance of gold as a strategic asset in an investor’s portfolio during uncertain market conditions.

I recently came across some concerning news about the current state of car loans in the US. It seems that the cost of new cars has risen so much that a significant number of buyers are now opting for seven-year loans just to afford the monthly payments. This trend is reminiscent of what happened in the housing market prior to the 2009 recession, where loan terms were extended as prices soared. It’s worrying to see history potentially repeating itself in the auto industry, especially with the emergence of eight-year loans now.

Additionally, recent surveys have highlighted the financial struggles faced by Gen Z, with a significant portion tapping into their retirement funds early to pay off debts. This generation is grappling with high student loan payments, credit card debt, and soaring housing costs, making it challenging for them to stay financially afloat. It’s a stark reminder of the systemic issues that are impacting younger generations’ financial well-being, despite their efforts to be financially responsible.

Stay Well!