That is the standard refrain that most investors have. How can gold help in wealth creation. After all, over long periods of time, gold hardly moves. It is only during short spurts like 1971 to 1979 and 2006 to 2011 when gold has given really attractive returns. The logic is; if gold has outperformed only twice in a span of 50 years then is it really worthwhile considering gold as an asset class? More importantly, does it really qualify to be part of your financial plan?

The answer is that gold is not exactly a return generating investment like equity or a regular flow generating asset like bonds. Gold is at best a hedge against uncertainty. When all asset classes are performing badly as we saw in 2008, gold can actually save you the blushes. When one talks of including gold in the long term portfolio the idea is not to outperform the market. The focus is more on diversification than on enhancing returns or wealth creation. Remember, gold has no intrinsic value as it does not earn anything nor does not generate any returns. The price movement is normally a demand/supply equation. Gold can be tweaked in the range of 10% to 15% based on the macroeconomic conditions and the geopolitical expectations for your portfolio.