Some people like having commodities as part of their asset allocation. For them it makes sense: they are already divested in securities and want to further diversify into alternative investments.
Gold has had a special place in portfolios since the dawn of time. However, many people identify it solely as a commodity, when in fact it can also be viewed as a currency.
I’m personally neutral on gold because my biggest alternative investment is our rental house, although I have clients that hold Gold and feel it makes sense for them.
A pretty strong argument can be made either way, but I think it’s foolhardy to ignore the runup Gold has had this last decade, making it a pretty risky investment to start buying into now.
Aside from how you view Gold and it’s rightful, or not, place in your asset allocation, you could do worse than read what Willem Buiter, a former London School of Economics professor, has to say on the subject.
(Disclosure: I am a Fee-Only Financial Planner. Here’s my website.)