BlackRock's Koesterich Explains Why He Invests in Gold

The video discusses the role of gold in a diversified portfolio, highlighting its function as a hedge against volatility and its relationship with real interest rates. It questions the effectiveness of a small gold allocation and compares gold's performance with Treasury yields, considering the impact of Federal Reserve actions.

What is one of the primary roles of gold in an investment portfolio?

• To generate high income

• To hedge against risks affecting paper assets

• To provide liquidity

• To outperform stocks consistently

Why might a small allocation of gold in a portfolio be questioned?

• Because it may not provide significant insurance

• Because it is not a popular asset

• Because it is difficult to trade

• Because gold is too volatile

How do real interest rates affect gold prices?

• Gold prices fall when real interest rates are low

• Gold prices rise when real interest rates are high

• Gold prices are unaffected by real interest rates

• Gold prices rise when real interest rates are low

What historical event is mentioned as a reason for the collapse in gold prices in the 1980s?

• High real interest rates

• Strong economic growth

• Low inflation

• Stock market boom

What could limit gold's effectiveness as a hedge in the future?

• A decrease in political risks

• A more hawkish Federal Reserve

• A decline in stock market volatility

• An increase in gold mining