All That Glitters Is Gold

It is not a question about whether you should buy equity or gold. It is more about whether it should be an essential part of your portfolio. In this article we have highlighted the reasons why we recommend gold to be an integral investment along with other asset classes

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Warren Buffett, the legendary American investor, has recently done some significant churning in his portfolio. He has sold more than a quarter of his stake in the best known US financial companies such as Wells Fargo & Co. and completely exited from Goldman Sachs. At the same time, he has also acquired stake in Barrick Gold Corp., a Canadian mining company. According to the filling by Warren Buffett’s Berkshire Hathaway Inc. with Security Exchange Commission, the company has bought 21 million shares of Barrick Gold worth USD 563 million, representing 0.3 per cent of Berkshire’s holding.

Such a move has come after the gold price has already rallied by more than 50 per cent in the last year. Even year till date, it has jumped by 35 per cent and has comfortably beaten the best performing equity indices. The gold rally that started somewhere in 2018 has only gathered momentum of late due to the corona virus pandemic and geo-political tension. This move has also been driven by a combination of high uncertainty about global economy, very low-interest rates and positive price momentum. These are the conditions on account of which the gold price has historically witnessed a great jump.

Gold for the first time has breached the level of Rs 56,000 per gram recently. Though after that it has cooled offand has remained volatile. So for an investor, the moot question is whether the rise in price of gold is sustainable, especially after the recent volatility.

Golden Returns