Has Gold finally lost all its Sheen?
This is a general rule that, in times of panic situation normally risk averse investors sell all investments, even those assets that have got medium to long-term growth opportunities. As per my understanding, the recent selling of gold was mainly related to panic from hedge funds needing to raise money for redemptions as well as a tightening of margin requirements. With the dollar gaining strength, large investors in gold – such as the hedge funds and high net worth individuals went about on a selling spree in the bullion market liquidating much of their positions and converting the investments into cash. For these investors, gold became the handy whipping boy to offset some of the losses suffered in other financial markets. In cumulative terms, gold went into an oversold position. This was not selling pressure based on any fundamental change in conditions or future outlook of this precious metal.
You can still hold Gold as an ideal investment in your portfolios as a hedge against the economic slowdown or stagnation that may occur over the next several years in the global economy. The demand from China and India will continue to drive consumption, and despite the economic slowdown throughout the world, the desire for gold jewelry will continue to rise, it is never going to come down. Gold has become an integral part of every one's life either in the form of jewelry or as an investment in their portfolio. Everybody knows this yellow metal has got no commercial value, greed and fancy are the two driving forces.I am not recommending a portfolio strategy entirely invested in gold, a balanced view matters. Gold should be considered as one of the investment options when you plan your overall allocation strategy. This tangible asset still makes sense as a hedge against some unpredictable risk and provides the opportunity to participate in fundamental developing demand issues for this precious metal. The store value of gold and its status as the best hedge against currency fluctuations cannot be wished away. Gold will therefore continue to shine though some dust collects at the top on account of frantic volatility whenever the financial markets are in turmoil. For the true class of investors, every dip in gold prices presents an opportunity to add or average out their investments. Gold therefore, is bound to peak again sooner than later.
Finally, please keep it in your mind that, the factors governing the decision on whether to invest in gold is the prices and market conditions. Though the variation in the price of gold is not as unpredictable as that of shares and equities, there still is a noticeable difference on a daily basis. However, when you are investing a large sum of money then this small difference can make a lot of difference. Hence, one should study the market carefully and invest when the price is relatively low or take advice from an expert financial/investment planner Best Regards
Prakash Nair
www.keralites.net          |
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