Moreover, the inclusion of Homestake significantly enhanced overall returns. It is difficult to find assets that tend to move counter to stocks.
Gold is one of a few that do.
The price of gold rose significantly during the 1930's and 1970's when stocks plunged in value. Gold's negative correlation with stocks combined with the fact that the price of mining shares are leveraged to the price of gold is the reason gold shares offer a very efficient form of portfolio insurance against catastrophic stock market declines. O'Higgins provides a significant amount of data and he explains the logic behind his methodology. In Beating the Dow with Bonds , O'Higgins has illustrated how, by using bonds, investors can beat the Dow by an even more remarkable margin. As noted below, we have imposed a gold investment on the O'Higgins results to see whether we could further improve on the fantastic results gained by O'Higgins.