Add Glitter To Your Portfolio

The price of gold has steadily risen over the decades. This underscores the attractiveness of gold investments as they tend to keep pace with inflation. Furthermore, investing in this precious metal is often seen as a means of preserving and safeguarding one’s wealth

Gold has experienced a significant uptrend, surging by more than 8 per cent since the beginning of this month. This significant rise can largely be attributed to the escalation of geopolitical tensions associated with the Israeli-Palestinian conflict. This surge in gold prices comes after a relatively subdued performance of gold in the first nine months of the current year. Gold has a well-established reputation as a crisis hedge due to its unique characteristics.

This includes its immunity to credit risk and its negative correlation with riskier assets like equities. Historically, we have observed that gold tends to exhibit a negative correlation with equity returns and maintains a very low correlation with fixed income returns. Therefore, it serves as an ideal hedge in the context of the Indian market, a concept we will delve into in the subsequent paragraphs. The graph below illustrates the trajectory of gold prices dating back to 1979.

As the graph demonstrates, the price of gold has steadily risen over the decades. This underscores the attractiveness of gold investments as they tend to keep pace with inflation. Furthermore, investing in this precious metal is often seen as a means of preserving and safeguarding one’s wealth. With reference to the chart, if an investor had allocated ₹1,000 to gold at the outset of 1979, their wealth would have grown to ₹92,240 today, boasting an annualised return of 10.62 per cent. This exemplifies how gold investments offer a protective shield for investors’ capital. In India, the affinity for purchasing gold is deeply ingrained in our cultural traditions, and it spreads over various occasions and events.