Golden balance: Why gold is a strong hedge but shouldn’t dominate your portfolio
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Dipankar Jakharia
Contd from previous issue
During crises, gold often outperforms the market. For example, during the 2008 financial crisis, gold provided a return of 20 per cent, and in the COVID-19 crisis, it returned 25 per cent. This happens because, in times of crisis, investors shift their investments toward gold as it is considered a safer asset.
To provide further perspective, from 2011 to 2015, gold returns averaged below 5 per cent, while equity returns were exceptionally high during the same period. In 2013, for instance, gold prices in India fell by nearly 20 per cent due to a strong dollar and high inflation. Similarly, in 2015, gold saw a 5 per cent decline. In the 1980, gold prices also fell, and from 1990 to 2000, they remained nearly stagnant.
Now, the question is: can gold become a major portion of your investment portfolio, and how does it compare to equity investments in the long run? In India, equity investments have generated long-term returns of 12-15 per cent.
(To be contd)
Contd from previous issue
During crises, gold often outperforms the market. For example, during the 2008 financial crisis, gold provided a return of 20 per cent, and in the COVID-19 crisis, it returned 25 per cent. This happens because, in times of crisis, investors shift their investments toward gold as it is considered a safer asset.
To provide further perspective, from 2011 to 2015, gold returns averaged below 5 per cent, while equity returns were exceptionally high during the same period. In 2013, for instance, gold prices in India fell by nearly 20 per cent due to a strong dollar and high inflation. Similarly, in 2015, gold saw a 5 per cent decline. In the 1980, gold prices also fell, and from 1990 to 2000, they remained nearly stagnant.
Now, the question is: can gold become a major portion of your investment portfolio, and how does it compare to equity investments in the long run? In India, equity investments have generated long-term returns of 12-15 per cent.
(To be contd)