GOLD AS AN INVESTMENT VEHICLE

Gold has been used extensively for savings, investments and consumption since ages;<br>however the importance of the gold as an investment instruments has been much talked in the recent<br>times. This research paper intends to find various applications of gold portfolios as an alternate asset<br>class: the benefits of including gold to an investment portfolio have been analyzed. The results indicate<br>that gold has performed significantly better than other assets like debt and equity in both emerging and<br>US markets. It was noted that addition of gold to portfolios helped reduce the volatility and increase<br>overall returns during the period 2009-12. For example, in 2008, when the U.S. equity market plunged to<br>36.99%, gold in fact showed returns of 5.8%. It is also observed that the inverse correlation exists<br>between the dollar index and the gold prices helped reduce the portfolio risk as a result of diversification.