Gold's distinctive traits are what set it apart from other commodities, making it a safe-haven asset like no other. Historically, gold has delivered positive performance over the long term, because its minimal or negative correlation to performance of other assets.
1. 1. Risk-adjusted returns:
Gold's use as an investment and jewellery/adornment has helped deliver annual
average returns of about 9% over the last 10 years (2009-2019). This performance is
comparable to that of stocks but ranks higher than that of Indian bonds and commodities.
Since 1981, gold's average annual return of 10% has surpassed India's consumer price index (CPI).
2. 1. Hedge against inflation:
During times of inflation,
gold holds its own by acting as a hedge against market risks. In contrast, many other assets fail to protect
portfolios when the market turns volatile.
- During the global economic meltdown of 2008-2009, Indian stocks, real estate, and most portfolio diversifier commodities
plummeted. SENSEX tumbled 56% between December 2007 and February 2009. Over the same period, the price of gold went up by 48%.
