1. Gold is real money
Everything else is paper, which they can print as much as possible. But they can’t print gold. Also gold is the only currency that has survived more than 100 years. In a world where all returns are fake, and momentary, gold provides the only real return.
2. It’s highly liquid
Apart from the stability gold provides to your portfolio, it is traded around the globe 24 hours a day. With gold, you possess an international currency which can always be sold around the world at any time. Plus, with the coming of Gold ETFs, now you can buy and sell gold on the stock exchanges, as easily as you buy or sell your stocks.
3. Worried about the rising geopolitical tensions?
The deteriorating conditions in the Middle East, revolts in the US and Europe, the nuclear ambitions of North Korea and the growing conflict between the US and China headline the geopolitical issues, which could explode at any time. A fearful public has a tendency to gravitate towards gold. Before they do, why don’t you?
But how much?
“How much gold should I have in my portfolio?” you may ask.
Not more than 5-10% of your financial savings. See, you must definitely have this much gold in your portfolio for the reasons mentioned above. But the fact remains that in a growing economy like India, sound and solid businesses provide a greater opportunity to grow your wealth in the long term.
So, good quality stocks and mutual funds are your best route for wealth creation.
Gold, on the other hand, is an excellent way for wealth preservation.
So if you don’t have gold in your portfolio, buy now…but have a limit to how much you buy of it (and let your wife know that limit :-)).