Mankind’s fascination with gold is as old as human civilization itself. The Rig Veda contains references to gold. The Romans used gold to purchase silk and spices from India. From time immemorial to the modern age—gold has been and continues to remain a reliable and safe store of value
Gold is ideal for wealth protection primarily because unlike currencies and other financial securities, it has intrinsic value. A currency note can be easily torn or otherwise destroyed. Gold, on the other hand, is an inert metal that cannot be destroyed. All of this makes gold a smart choice when creating an investment strategy for the next 30-40 years.
Physical longevity apart, gold, by virtue of its scarcity, has always been a precious commodity. The currency of a nation or shares of a blue-chip company derive their value from the performance of the country’s economy or the company. Gold is inherently valuable, which makes it the ideal tool for wealth protection.
Thirdly, diversifying into gold can be a smart move due to its position in the modern economy. The general trend observed over the past 100 years is that gold is a safe haven investment. Investors park their funds in gold during economic and political troubles. Since the global economy follows a cyclical pattern of booms and busts, it is useful to know that gold investments are likely to outperform other investment options during recessions and economic downturns.
Gold has historically appreciated in value over the long term, it is easily available in a number of forms
A Smart Diversification Option
Sensible investment is all about creating a diversified portfolio. A portfolio consisting solely of equity investments can offer high returns, but has an equally-high risk of total loss of capital. Diversifying into gold and allocating funds to gold-related investment options can help you balance risk. This is why gold is a fantastic option even for amateur investors with little financial knowledge or investment experience.
Gold investment has become simpler, safer, and easier due to the availability of numerous options for retail and institutional investors.
For starters, one can purchase physical gold bars or coins. Or, one can invest in jewellery.
Other simpler and cheaper options include purchase of units of gold ETFs, and invest in gold mutual funds. Buyers will be allocated units that can be converted into physical gold at the time of redemption of the investment.
One can also deposit physical gold under the recently introduced Gold Monetisation Scheme. Monetisation can help individuals earn interest on gold investments with minimal risk of physical losses or reduction in economic value.
Thus, such a strategy can help you create a balanced portfolio where aggressive high-risk investments are balanced out through allocation of funds to a dependable, lucrative avenue- gold.
Thus, gold combines the best of both worlds & assures protection.
Refers to the risk of the gold prices dropping due to changes in economic variants. However, in India, this risk is the least in terms of gold, since gold prices have generally shown a rising trend.
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