Long Term Treasury bonds were negatively correlated to stocks by about 50% for the past eight years…since the financial crisis
If this trend continues, then this could mean that Long Term Treasuries could be a good hedge against a market downturn. Regardless if the trend continues, Long Term Treasuries have been a good hedge against the stock market during brief correction periods…which were few in frequency. LT T-bonds (as measured by TLT) seems to be a good tool for reducing risk in a portfolio.
Gold is not necessarily a good hedge for the stock market
In fact, this analysis shows that there is no correlation between the two asset classes. This means that each asset class moves in their own unique way. So, if you are thinking about buying gold to hedge against a bear market, think again. There is a close to 50/50 chance that gold may move in the same direction as the stock market.
Gold is just a bad long-term investment
Warren Buffett proclaimed this a few days ago, so did Ken Fisher, and multiple financial market gurus. If we take a look at this analysis, we can see that gold price (as measured by GLD) yields the lowest risk adjusted return, right above commodities…which has lagged all other asset classes, and is in the negative return category, due to relatively lower global demand for commodities. China, India, and other fast growing emerging markets slowed down their purchases and consumption on oil and metals.