Inflation: Gold as an investment?

Yesterday I had many reasons why you should buy and keep gold. Today I will start by giving some more reasons why you should have gold in your portfolio. There are equally compelling reasons for NOT having gold in your portfolio!


1. Gold is gaining popularity: funnily, you should  buy gold because everybody else is buying gold. This will ensure that gold prices keep rising. In a country like India or China where gold is a status symbol, and the youngsters buy it as a fashion statement, demand is not an issue!

2. Rising Middle East Tensions: Political tensions increase the price of gold. There is enough tension between Iran-Iraq, and this will get the prices soaring.

3. Ease of buying and holding even small quantities of gold is now possible (that too paperless) is increasing its popularity.

4. More mutual funds and other collective schemes are now pushing gold as an investment.

Now let us look at reasons why you should not buy gold:

1. Transactions costs are high. Even if you buy a small quantity of gold there is a impact cost.

2. Knowing when to buy is also important (however SIPs are possible, but in an etf you may have to do the monthly buying yourself).

3. Over 3o years gold has not even given you a return of reasonable levels.

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