Gold is a precious metal and has been used for millennia as a means of preserving value.
Since gold has a low correlation with other asset classes, the addition of gold can lead to a reduction in risk and less variation in the total value of the investment portfolio.
Investors who invest in gold are exposed to market risk, ie the risk of a loss in the event of declining gold price. Although the production of gold in the short term is subject only to relatively minor fluctuations, there is always the risk of an unexpected rise in the level of supply, especially from large sales (central banks, fund managers) or by many investors selling. Major users of gold are jewelery manufacturers, industry and investors. As the gold price is always quoted in dollars, there is also a currency risk for investors outside of the U.S. dollar currency area.
Gold does not generate any income. This lack of income can be seen as the insurance premium paid to mitigate disaster scenarios.
In the Asset Allocation Analyzer gold is mapped from 2007 in a Euro currency hedged funds (ETC). The period before this is represented by gold prices first converted into Deutschmarks and then converted into Euros.