Gold is a commodity that has a lot of value. This is one of the very few commodities that have an intrinsic value in it. Of the many precious metals that are traded and saved, Gold is a metal that is having a universal value. This is because of the fact that it is not only precious, but it has various physical properties by nature. It can be made into any kind of jewels and this has caused it to have an increased value. In the recent times, there has been a sudden rally iGold is good as an investmentn the price of the gold and this is because of the fact that there is a great demand for the metal. Not only individual people, but also central banks of various countries and even the jewelers in the various countries are hoarding gold. This is mainly because of the fact that Gold is usually hedged to prevent various risks in equity markets and other investments.
So, let us come to the question as to whether Gold is good as an investment. Consider these factors that will help you make the decision for yourself.
Gold may not rally every year:
Though the prices of Gold have been increasing in value in the recent years, the rally may not be sustained at all times. There are some tears when Gold has underperformed consistently to other methods of investment. So, you should not Gold to provide you with stellar returns on your investments each and every year. You can buy Gold every year as an investment and it will increase in value over a period of time. It may even beat inflation. But the growth cannot be sustained. There are some years when the value of Gold may provide stellar returns. The last few years have been like this.
Gold jewels are less valuable than paper Gold:
The value of the physical Gold that has been converted into jewels is very less over a period of time. The value of the pure Gold in the jewels will be the same, but the wastage and the additives that are present in the Gold when it is made into jewels will be discarded and this value will be lost. On the other hand when you buy Gold as e-Gold or even paper Gold, they will have the same value as far as the price is concerned for the weight of the Gold that was bought by you. There will not be a decrease in the value of this form of Gold.
If you are investing in Gold, then it should not consist more than 20% of your investment portfolio. This is because of the fact that the growth of the investment will be lesser than the investments you have made in other instruments.
All these factors make you understand that the Gold is a good investment and a hedge against the various risks that you may have to face. On the other hand, your investment in Gold should only be a percentage of the whole investment. It should not form a major chunk of your investment.