i have a very simplistic view about gold.
its price reflects purchasing power of USD (actually a combination of major currencies). when their purchasing power reduces, gold goes up.
i think the major world power would like their currencies to be supreme so they tried to downplay gold as a benchmark. and succeeded to a great extent in late eighties when gold was down to 250$ an ounce. All the Major powers sold their gold reserve (except china , i think) during those period which was major cause of those low levels. however in the near future all major powers are going to be too busy to defend their currencies and may not be in position to sell their gold reserve again.
in which case a crash inthe Gold prices like the late eighties may be quite unlikely in near future.
once we can rule out such crash, investing in gold (and other commodities) may be a good hedge against inflation.
i feel 10 to 15% investment in precious metals should be there. especially when we expect high inflation.
while real estate is good (or better since it can yield rent) it is quite illiquid and hence gold needs to be part of portfolio .
its price reflects purchasing power of USD (actually a combination of major currencies). when their purchasing power reduces, gold goes up.
i think the major world power would like their currencies to be supreme so they tried to downplay gold as a benchmark. and succeeded to a great extent in late eighties when gold was down to 250$ an ounce. All the Major powers sold their gold reserve (except china , i think) during those period which was major cause of those low levels. however in the near future all major powers are going to be too busy to defend their currencies and may not be in position to sell their gold reserve again.
in which case a crash inthe Gold prices like the late eighties may be quite unlikely in near future.
once we can rule out such crash, investing in gold (and other commodities) may be a good hedge against inflation.
i feel 10 to 15% investment in precious metals should be there. especially when we expect high inflation.
while real estate is good (or better since it can yield rent) it is quite illiquid and hence gold needs to be part of portfolio .
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