Golden glow would not ever fade
Indians are known for buying gold. Indian people buy the gold than any other country. Here are some interesting and eye-opening facts about gold:
1) Indians was purchase 700 tons of gold in 2006.
2) 18% of annual global demand for gold that India's demand.
3) Mostly Indians have as jewelry of gold is more than 14,000 tones. It is 10% of the world's reserved gold !
4) Indians have much more gold than U.S., FRANCE and GERMANY governments have the total gold!
Of course, Indians love gold immensely! But gold is used for investment? No. As we saw, most of India use gold as ornaments. Almost 73% of total gold demand in India to make ornaments is used.
Hold as gold jewelry is not the optimal way to invest in gold. (To read more about it read "you have invested in the jewelry / ornaments?”) To be on everyone's portfolio, gold is definitely desirable.
So, let's go to discussed about the importance of gold as an investment.
Why gold should be part of your portfolio? Why should you invest in gold? The reasons are: Negative correlation with other asset classes.
Gold prices are too funny - when the price of everything else (such as crude oil, real estate and stocks) is rising, then price of gold is usually low. But in other asset prices are falling, then strength is coming in gold prices!
This is therefore because gold is seen as the safest investment even safer than investing in government-backed securities! So, when other assets are declining in value, people tend to start investing in gold for safety.
Protection against depression (hedging)
Due to its negative correlation with other assets Gold is preferred investment in time of economic recession. During the recession of the economy people lost faith in the future is, and all other assets of the price decreases. But since gold is more secure than government bond, people start buying gold as Security (hedging). That is why in times of economic downturn increases the price of gold.
So if gold in your portfolio, you will be protected to the extent that against the economic downturn.
Protection (hedging) against inflation
On average, inflation in the long term gold is defeated - though a small margin. Historically, about 7% of gold per year profit (return) does. It is not spectacular, but it certainly does beat inflation. Gold has maintained its purchasing power from many Thousands of years.
Investing in gold against inflation and economic recession works as an insurance policy. Keeping an eye on profits from investment in gold is a key that always give comfort because you never have to pay periodical insurance for it.
Another aspect of gold coins
If you invest in gold, so during times of economic boom will reduce your total profit. But you save your profits in times of economic downturn find that we have to compromise!
Conclusion - The Gold is forever
Thus we can conclude that gold should be a part of everyone's portfolio. But the next question is how much gold you need? How much percentage of your portfolio you should invest in gold?
Usually according to an approx law (rule of thumb) you should invest in gold around 10% of the portfolio. The investment of your portfolio in gold will work as a solid pillar or core and your portfolio economic up - and down will give strength to withstand with little effect.
Of course, it is only a approximate method. Real investment in different assets depends on many factors. For more information, read the article "Asset allocationh
