TomorrowMakers

Experts believe gold is still undervalued even though it has performed well in the last five to ten years.

gold as an investment a good option

Discussions and debates around gold as an investment/asset are common. New investors like investing in the precious yellow metal, and the naysayers are changing their stance. In the last five years, gold prices have increased by 70-80% and are around double the 2016 lows. Experts believe gold is still undervalued even though the performance of gold has been well in the last five to ten years. Experts feel equities and other commodities are ahead of gold, and it is not long before gold gets its value. 

Increase in Gold Price

We must understand why investing in gold has stood out in the past few years. We saw the gold run start in 2016, which continued till 2018 due to the central banks purchasing it. Experts say the increase in gold investments in 2020 happened because of the pandemic hedge. They say the quantum of gold ETF inflow grew massively when the pandemic peaked, and it was the fourth-highest consumption worldwide. As time went by, the pandemic hedge started to lose traction. However, falls and spikes in gold in the longer term do not affect its trajectory, and fundamentals come into play eventually. Swings in the price of gold seem amplified because investment happens in short and concentrated periods. 

Also Read: Is buying gold as an investment a wise idea?

Shining Gold 

Experts say that gold as an investment has outperformed all the asset classes despite all the headwinds and overhangs, and if it remains, the tide will turn towards gold in terms of investment in it. 

How Much To Invest in Gold?

A frequently asked question is how much gold one should allocate to their portfolio. The answer is that it depends on an individual's time horizon and investment objective. If someone's investment portfolio is tilted towards risky investments, one should buy gold as a hedge against it. Similarly, gold will average its performance if an investor has parked their funds in debt instruments and FDs. Experts advise investing in gold ETFs over other gold forms. You can trade one unit of gold ETF, similar to a gram. Experts suggest the gold ETF has been among the best investment inventions in the financial sector for around two decades. When you purchase gold ETF, you buy a stake in highly liquid and high-quality physical gold. Gold has been here for many centuries, and some price changes will not change the trajectory of the precious metal in the long term. 

Also Read: Gold ETFs vs. Physical Gold: Which is better?

Gold is a hedge against inflation, and your investment portfolio should always have gold as an investment. Investing in gold is a great investment in India and worldwide. Having different assets in your investment portfolio would be best to be safe.