It is recommended to have an allocation of about 15% of one's portfolio to Gold
The long-term trends in the gold prices are driven by changes in the overall level of confidence in the monetary system and the economy. Gold as an asset class has traditionally been an ideal hedge for one's portfolio. The very reason for this comes from the fact that it is not correlated with most other asset classes. Capital Market interacted with Mr. Chirag Mehta - Fund Manager (Commodities) - Quantum Mutual Fund regarding the outlook on gold in CY2011.
Gold is a must have asset class. We all know that the inflation dragon minimizes one's purchasing power i.e. erodes the value of money you own. Over the very long term, there has been a tendency for gold to maintain its value against other real assets and thus acts as a hedge against inflation.
Source:
(Reuters) - Gold has gained nearly 30 percent in 2010, based on Friday's fixing, marking its strongest annual performance since 2007 and its fifth straight monthly rise in December.
The spot price fixed at $1,410.25 an ounce on Friday morning, compared with $1,405.50 an ounce at the previous fixing on Thursday afternoon.
Based on the fixings, gold has risen by 29.7 percent this year, compared with a 28.7 percent increase in the freely traded spot price, the largest annual rise since 2007, when the global financial crisis unfolded.
(Reporting by Amanda Cooper; editing by Keiron Henderson)
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