Investment in gold

Gold is considered the best choice of investment from thousand years ago. But after the financial market grew in 1990s, the investors have moved back from gold and had less touch. But recently gold has gained its momentum and has been looked upon by the investors as a safe option to put in the money.

After the global recession gold has become the best option to invest in. In spite of the failure of all other assets gold has managed to remain upbeat. The surge in the usage of gold jewelry in Asian countries has contributed to the increase in gold investment. The demand for gold in China had increased about 20 % and Indians have bought 900 tonnes (one-fifth of the world market). But this growing demand for gold is not met with the gold available from mines. The major miners of gold namely Australia, China and South Africa have got less resource to meet the surging demand. Though among these countries China had showed increase in production of gold, its hiking demand has outnumbered the produced gold. This inability to meet the demand is responsible for the steady increase in the price of gold.

The stimulus policy of American government will increase money supply and may create hyper inflation. But gold will remain unaffected by this effect as it has inverse relation with the fall in US dollar. Hence the fall in the dollar value will push the investment in gold. Whenever there is increase in price of crude oil or the food prices it directly affects the price of gold. It has low correlation with other assets and provides diversification for the portfolio. So in case, a sector is not doing well the risk of loosing money is greatly reduced. Also, gold has got great liquidity. The World Gold Council has come with good solutions to create awareness to invest in gold and its easy access.