Gold is an important strategic asset with unique characteristics, and Royal Gold provides an alternative to investors who want exposure to gold with additional potential upside from higher prices, production expansion and exploration success, while reducing downside risk from direct exposure to operations.

Gold is an asset that has many potential intrinsic qualities that make it unique and that, when added to an investment portfolio, can enhance risk-adjusted returns. These intrinsic qualities include:

  • A Store of Value – Gold has been regarded in society as a highly valued commodity for thousands of years and continues to be a highly sought-after commodity to this day. It is relatively scarce in quantity, difficult to extract and durable. Additionally, gold remains one of the most liquid and widely accepted forms of exchange in the world, and it cannot be printed like a fiat currency.

  • A Liquid Asset – Gold can be readily converted into cash with essentially no impact to its value. There is a robust market for gold, with large numbers of buyers and sellers, where a market price can be determined at any given time.

  • A Safe-haven Asset – Without a large industrial application, the value of gold is relatively insensitive to the performance of the general economy. Gold also has a negative or low correlation to the value of investments such as stocks and bonds. U.S. treasuries are a competing safe-haven asset, and their yield often represents the main opportunity cost of gold. Gold prices have an inverse correlation with real interest rates and have closely tracked total global negative yielding debt over the past several years.

In addition to playing a role as a safe-haven asset, gold in a portfolio can also provide:

  • A Diversifier – Gold has historically had a negative or low correlation to stocks and other financial instruments. Diversifying an investment portfolio with the addition of gold can mitigate the effects of market volatility.

  • A Hedge Against Inflation – Gold can be used as a hedge against inflation because its price in U.S. dollars is variable. In times of inflation, the U.S. dollar loses purchasing power while gold tends to become more expensive – the cost of each ounce of gold will increase as a result of inflation.

  • A Competitive Return – Gold is often viewed as an asset based on an inverse relationship with the general economy – some investors may decide to hold gold when the economy is suffering and sell gold when the economy is booming. In reality, economic growth generally leads to positive income growth, which can increase consumer demand for gold.

Research, information and tools to help explain the role of gold as an investment can be found on