InvestorQ : How old is the global market for gold and is it a good barometer?
Dilmini Mercia made post

How old is the global market for gold and is it a good barometer?

Answer
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Dhwani Mehta answered.
1 year ago


You will be surprised to know that gold represents one of the oldest and the most enduring market for financial assets. This is an interesting aspect about gold. Historically, it has been one of the longest surviving secondary markets. That is because gold never goes out of demand and is a global product in the true sense of the term. If you compare the Dow Jones index over the last 70 years or the Sensex over the last 30 years, the components are vastly different. New stars have risen and old stars have fallen along the way. Therefore any investment in equity and mutual fund runs the risk of market churn. Gold is probably the only asset that is free from the risk of churn. You can be confident that even after 30 years there will be a robust secondary market for gold. The crux of the story, therefore, is that you must have a 10-15% exposure to gold in your long portfolio; ideally it can be demat gold. Don’t exceed that limit and keep it as close to 10% as possible. You must extend the limit to 15% only when there is a high degree of macroeconomic uncertainty or when geopolitical uncertainty is peaking. It will give your portfolio variety and also will act as a low correlation addition to your portfolio. As a hard asset, its stability has stood the test of time over the years!