Hedge & Value
Gold is a precious metal. It has emotional, cultural, financial value and different people across the globe buy gold for different reasons, often influenced by a range of national socio-cultural factors, local market conditions and wider macro-economic drivers such as a tactical inflation hedge and long-term strategic asset. Gold’s unique attributes as a scarce, highly liquid and un-correlated asset highlight that it can act as a genuine diversifier over the long term.
India is one of the largest markets for gold, and growing affluence is driving growth in demand. Gold has a central role in the country’s culture, considered a store of value, a symbol of wealth and status and a fundamental part of many rituals.
The global financial markets are valued at well in excess of US$ 150 tn, but gold accounts for less than 1% of that total. Raising the amount of funds in gold, even fractionally, would have a very substantial effect on the demand. It would also represent a significant shift in mainstream investor thinking, encouraging wider consideration of gold as a value preservation and risk mitigation asset.
We can provide you with 99.95% 24k certified gold delivered to you or distribute Mutual funds investing in Gold or Multi Asset Allocation funds for your portfolio.
Gold can enhance your financial portfolio in these ways
1. Generate long-term returns
Gold is long considered a beneficial asset during periods of uncertainty. Historically, it generated long-term positive returns in both good times and bad. Over the past decade, the price of gold has increased by an average 14.1% per year in INR since 1973 after Bretton Woods collapsed.
2. An effective diversifier and mitigate losses in times of market stress
The benefits of diversification in investing are widely acknowledged. Gold is different, in that its negative correlation to stocks and other risk assets increases as these assets sell off. The 2008-2009 financial crisis is a case in point. Stocks and assets tumbled in value the SENSEX fell by 56% from December 2007 to February 2009. Gold, by contrast, held its own and increased in price, rising 48% in INR over the same period .
3. Provide liquidity with no credit risk
The gold market is also more liquid than several major Indian financial markets, including bonds and stocks, while trading volumes are similar to those of the S&P 500 and short-term US treasuries. Gold-backed ETFs offer an additional source of liquidity, with the Indian-listed funds trading an average of INR 18 mn per day.
4. Improve overall portfolio performance
Long-term returns, liquidity and effective diversification all benefit overall portfolio performance. In combination, they suggest that a portfolio’s risk-adjusted returns can be materially enhanced through the addition of gold. This dynamic is likely to persist, reflecting persistent political and economic uncertainty, persistently low interest rates and economic concerns surrounding stock and bond markets.