Of all the precious metals, gold is the most popular. Traders generally buy gold as a way of diversifying risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility as are other markets. Compared to other precious metals used for trading, gold has been the most effective safe haven across a number of countries.
In general, gold is seen as a diversifying trade. It is clear that gold has historically served as a trade that can add a diversifying component to your portfolio, regardless of whether you are worried about inflation, a declining U.S. dollar, or even protecting your wealth. If your focus is simply diversification, gold is not correlated to stocks, bonds, and real estate.
