WGC Highlights Gold’s Relevance as A Strategic Asset in India

SEATTLE (Scrap Monster): The World Gold Council (WGC) noted that adding between 6% and 17% in gold to a hypothetical Indian pension fund average portfolio over the past ten years would have resulted in higher risk-adjusted returns.

In the new decade, investors face increased number of challenges, including lower interest rates, financial market uncertainty and rising asset volatility. In the current environment, gold is a useful long-term strategic component for asset portfolios. Also, gold’s dual appeal as an investment and a consumer good implies that it is capable to generate positive returns in good times too. For instance, gold could deliver positive correlation with stocks and other risk assets in positive markets.

The yellow metal can enhance a portfolio in four different ways, said WGC. Firstly, it can generate long-term returns. Gold can act as an effective diversifier and mitigate losses in times of market stress. In addition, it could provide liquidity and deliver overall improvement of portfolio performance.

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According to WGC, gold shares some similarities with commodities. However, the unique attributes that makes it different from commodities ensures that distinct allocation to gold can result in enhanced portfolio performance of those with passive commodity exposures.