Gold: The Safe Investment

With the sock market in a bear hug, a wave of fear has gripped all the investors. In these uncertain times, you may have also found yourself struggling, and sometimes worried, on how to get the right portfolio mix and avoid the bear’s claws.

I know a friend of mine, who ran out of his wits after his year-long investments eroded in a matter of few seconds. If analysts are to be believed, in such turbulent phases, you can always look up to gold as an investment option not only as an insurance against the choppy markets but for better returns as well.

The Golden Scenario :

With an expected slower US growth momentum, Fed rate easing, a weakening dollar, rising oil prices and heightened geopolitical concerns, gold prices appear to be firmly supported in the months ahead. Strong investor demand coupled with strong jewelery demand from Asia and the Middle East is also likely to push the prices. “In the present context, gold is expected to provide better capital appreciation, provided it is bought at a right price. It is also a good hedge against inflation,” says Mukesh Agarwal, director of Wealthcare Securities.

Strong fundamentals put aside, gold has also given a return of 18% in the first two months of 2008. “Today, it is the most recession-proof asset and is actually playing the role of insurance in the investor’s portfolio,” says Vandana Bharti, senior research analyst (commodity) at SMC.