29 March 2023


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Yellow Metal


Why should i invest in Gold (Yellow Metal ) ?

By.. Mr.S kumar a financial consultant 

Traditionally, Indians love to possess gold and have long regarded gold as an important asset and the surest store of wealth.  Besides the traditional and emotional bonding, the yellow metal’s track record in safeguarding wealth during financial uncertainties and inflation has been striking. 

Gold is still underrated as an investment class and is normally not considered as a component of portfolio building. A major reason why gold is only seen as a mere hedge against inflation or is only bought in the form of jewellery is the belief that gold has offered low year on year returns as against the other more risky assets.

However, that is not quite the case. Mostly, we are tempted to invest or trade in risky assets such as equity shares, bonds, mutual funds or even derivatives because of the so-called knowledgeable people encouraging everyone over social platforms to invest or trade, calling it to be fairly easy and painting a very rosy picture. One is bound to get attracted to trade/invest due to the showcasing of super rates of return shown on such platforms. 

But let us talk about gold, is it really that bad? We know gold has a tendency to perform well, when the investors are not in a position to take risk during stress times in economy, and money flows away from risky assets to safer ones like gold. Also, when inflation rises, Gold, being a commodity, increases in value and outperforms other asset classes.

An important point for all of us to understand is that after the Great Financial Crises which triggered from US in 2007 and then spread over all parts of the World, the World has yet not been able to come out of the same. We have had multiple downturns in the global economic performances after the Financial Crises including the European Crises, US-China Trade war issue and the Covid impact being the recent one. Hence after 2007, we can safely say that the economies have been in more or less in slowdown phase and now in recession phase due to Pandemic. 

Gold prices are on track to notch new records. Gold marks a fresh milestone in a bull run that began in late 2018 and has gathered momentum during the corona virus pandemic. The precious metal has soared almost 35% in 2020. Since 2007 performance of gold is better than most of the risky assets.  

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