For centuries, gold has played a key role in preserving wealth and providing financial stability. And while the Gold Standard[1] has long since been abandoned by countries around the world, gold can still play an important role in an investor’s portfolio. Modern portfolios often emphasize equities and bonds, but gold remains a distinct and uncorrelated asset that can offer security during times of uncertainty. In a landscape shaped by inflationary pressures, the strategic importance of gold has only grown.

The Strategic Case for a Gold Allocation

The optimal portfolio allocation to gold varies based on an investor’s risk profile and investment goals. However, our research supports the inclusion of gold in the 5–20% range to improve portfolio stability without compromising long-term returns. One efficient way to gain exposure to gold while maintaining diversification is through the Hamilton Enhanced Mixed Asset ETF (MIX), a balanced all-in-one solution, built to track 1.25x the Solactive Hamilton Mixed Asset Index (“Mixed Asset Index”).

With an (unlevered) 60% equities, 20% bonds, and 20% gold allocation — MIX is designed to strengthen risk-adjusted returns while mitigating drawdowns and volatility. The improvement in the risk profile is strong enough that even with 25% leverage applied, the portfolio has historically delivered lower volatility and drawdowns than equities alone—while also generating higher returns.

Key Benefits of MIX:

• Enhanced Diversification: Exposure to equities, bonds, and gold in a single ETF for a balanced investment approach.
• Improved Risk-Adjusted Returns: Gold’s low correlation with stocks and bonds helps smooth portfolio fluctuations.
• Inflation Hedge: The gold allocation acts as a safeguard against currency devaluation and rising prices.
• Lower Portfolio Volatility: Reduced volatility and drawdowns compared to equities and the traditional 60/40 portfolio.
• Efficient Exposure: A convenient all-in-one solution providing the optimal mix of stocks, bonds, and gold, with automatic rebalancing and currency hedging.
• Enhanced Returns: Modest 25% leverage to enhance long-term returns while still maintaining lower volatility compared to equities.
• Low Cost: 0% management fee until April 31, 2026[2]. Management fee of 0.35% thereafter.

For investors seeking an innovative approach to asset allocation, we believe MIX represents a compelling solution that strengthens portfolio resilience while maintaining growth potential.

1. Gold’s Low Correlation with Other Assets

Correlation measures how closely two assets move together; values close to 100% indicate the prices for the two assets move in unison, while values near 0% mean there is little to no relationship. As noted above, gold often shines when traditional markets are dim. That near-zero correlation of gold to stocks and bonds can help smooth out portfolio fluctuations and reduce overall risk, enhancing risk-adjusted returns.

 

Gold Correlation with U.S. Stocks and Bonds (1972-2024)

Asset Class	U.S. Stocks	U.S. Bonds	Gold ($/oz)
U.S. Stocks	100%	–	–
U.S. Bonds	11%	100%	–
Gold ($/oz)	3%	9%	100%

Source: VanEck, FactSet, August 2024

2. Gold as a Safe-Haven Asset

During periods of economic distress, gold has historically outperformed equities and bonds. Whether during market crashes, recessions, or geopolitical crises, investors turn to gold as a store of value.

 

Gold Performance During Major Market Downturns — Top 10 Equity Drawdowns in Last 50+ Years[3]

	Event	Start	End	S&P 500[4]	Treasuries[5]	Gold (CAD)	60/20/20	DD multiple
1	Global Financial Crisis	Oct ’07	Mar ’09	(55.2%)	21.2%	65.6%	(25.1%)	0.45x
2	Dot-Com Bubble	Sep ’00	Oct ’02	(47.4%)	29.0%	24.7%	(23.6%)	0.50x
3	Inflation Crisis ’74	Jan ’73	Sep ’74	(41.8%)	(0.8%)	125.7%	(12.6%)	0.30x
4	COVID-19	Feb ’20	Mar ’20	(33.8%)	12.7%	4.2%	(17.8%)	0.53x
5	Black Monday	Aug ’87	Nov ’87	(29.6%)	2.6%	7.8%	(16.3%)	0.55x
6	Inflation Crisis ’22	Jan ’22	Oct ’22	(24.5%)	(28.0%)	(0.1%)	(21.2%)	0.86x
7	Trade War/Fed Rate Hikes	Sep ’18	Dec ’18	(19.4%)	4.7%	9.5%	(9.1%)	0.47x
8	Russian Financial Crisis	Jul ’98	Aug ’98	(19.2%)	5.1%	(2.2%)	(11.4%)	0.59x
9	Trump Tariffs**	Feb ’25	Apr ’25	(18.7%)	1.0%	2.4%	(11.1%)	0.59x
10	European Debt Crisis	Apr ’11	Oct ’11	(18.6%)	29.7%	18.8%	(2.3%)	0.12x
	Top 10 Equity Drawdowns (Average)			(30.8%)	7.7%	25.6%	(15.0%)	0.49x

 Source: S&P Global, Solactive AG, Hamilton ETFs. Past performance is not indicative of future results.

3. Gold as a Hedge Against Inflation

Gold has a long history of maintaining its purchasing power during periods of rising inflation. Unlike bonds, which suffer when inflation reduces the real value of fixed payments, gold tends to appreciate as the value of fiat currencies declines. This makes gold an effective way to preserve real wealth when inflation erodes the returns of traditional fixed-income assets.

Gold’s role as an inflation hedge is particularly relevant in today’s environment, where monetary and fiscal stimulus, combined with supply-side constraints, have contributed to elevated and persistent inflation. As real returns on bonds fall during inflationary periods, gold often provides positive real returns, helping to offset the loss of purchasing power elsewhere in a portfolio.

Hamilton Enhanced Mixed Asset ETF (MIX)

Our research supports our belief that gold plays an essential role in building resilient, long-term portfolios. Its ability to hedge inflation, reduce volatility, and improve diversification makes it a valuable complement to traditional assets. For investors seeking a simple, efficient way to incorporate gold, the Hamilton Enhanced Mixed Asset ETF (MIX) offers a well-balanced, all-in-one solution. With its 60/20/20 structure and modest 25% leverage, we believe MIX can serve as a core holding designed to navigate a wide range of market environments while supporting long-term growth.

 

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A word on trading liquidity for ETFs …

Hamilton ETFs are highly liquid ETFs that can be purchased and sold easily. ETFs are as liquid as their underlying holdings and the underlying holdings trade millions of shares each day.

How does that work? When ETF investors are buying (or selling) in the market, they may transact with another ETF investor or a market maker for the ETF. At all times, even if daily volume appears low, there is a market maker – typically a large bank-owned investment dealer – willing to fill the other side of the ETF order (at net asset value plus a spread). The market maker then subscribes to create or redeem units in the ETF from the ETF manager (e.g., Hamilton ETFs), who purchases or sells the underlying holdings for the ETF.

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Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. Indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and does not take into account sales, redemptions, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Only the returns for periods of one year or greater are annualized returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated.

Certain statements contained in this website may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.

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[1] The Gold Standard was a system under which nearly all countries fixed the value of their currencies in terms of a specified amount of gold or linked their currency to that of a country which did so. Source: World Gold Council, The Classical Gold Standard, accessed April 16, 2025, https://www.gold.org/history-gold/the-classical-gold-standard.
[2] Annual management fee rebated by 0.35% to an effective management fee of 0.00% at least until April 30, 2026
[3] Source: Solactive AG and S&P Global. Data from January 31, 1973, to March 31, 2025. Past performance is not indicative of future results.
[4] The S&P 500 Index (“Index”) and associated data are a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Hamilton ETFs © 2025 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein.
[5] “Treasuries” is represented by Bloomberg US Long Treasury Total Return Index Value Unhedged (LUTLTRUU Index).