Abstract

Gold is known to be a stable investment in times of political and economic uncertainty. Our article is the first to examine the diversification benefits of including gold in the portfolio of a Kuwaiti investor. Our empirical results for the period Jan 2000 to May 2011 show that Kuwaiti investors will gain benefits by adding gold to their portfolios. The results of the Johansen cointegration tests show that gold and KSE index are not related in the long run. In addition, we find that gold has a weak and insignificant correlation with KSE index.

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