Why invest in gold all india

Why invest in gold all india

Gold is a unique asset: it is highly liquid and scarce; it is both a luxury and an investment channel. Gold does not require anyone’s payment commitment, and there is no counterparty risk. Therefore, it can play a fundamental role in the investment portfolio.

During periods of market weakness, gold is a diversification and detrimental tool. It can play a role in offsetting inflation and currency risks.

Key facts investors should know:
There are many factors behind gold becoming a mainstream asset, not just investment demand.
Gold is one of the most effective diversification tools
Compared with other major financial assets, gold can provide competitive returns.
Gold provides downside protection and positive return performance
Over time, the price of fiat currencies , including the U.S. dollar, tends to fall relative to gold .

Combining these factors means that adding gold to the investment portfolio can increase risk-adjusted returns.

But how much gold should investors increase to achieve the maximum return? Asset portfolio allocation analysis (based on the pioneering work of Richard Michaud and Robert Michaud, known as a powerful alternative to traditional mean variance optimization) shows that investors’ portfolio allocation of 2% to 10% of gold can significantly improve return performance. This is true even with a conservative average annual return rate of 2% to 4% (far lower than its actual long-term historical performance).

Gold jewellery 54%
Investment 30%
Technology industry 10%
Central Banks 6%
*Based on the 10-year average demand forecast as of 2016. Including demand for jewelry, technology products, gold bars, gold coins, and exchange-traded funds (ETF). Excluding over-the-counter transactions.

Due to rounding reasons, the sum of the numbers may not be 100%.
Data source: Thomson Reuters GFMS, World Gold Council

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