May 11th, 2009 | 
Author: Investing in gold has been a wise option since time immemorial. The yellow metal has been the best bet against political uncertainties, inflation and rapidly changing investment trends. Portfolios that contain gold are considered robust and safe.
The best thing is that gold works like an ‘effective diversifier’. Its performance is independent of other investments and economic indicators. Also, its price is not driven by the same factors that drive the performance of other assets. It therefore brings stability to a portfolio
Gold maintains its long-term value and keeps its purchasing power.
The value of gold, in terms of what it can buy, has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined. That is why gold is considered an effective preserver of wealth
During periods of financial, economic and social turmoil, gold is a safe refuge. It is among the rare handful of financial assets that is not matched by a liability. It is not affected by the economic policies of individual countries and it is independent of the promise to pay clause.
It can be traded easily over the counter. This gives it great liquidity, and adds value to its utility as an asset. However, gold is not a useful investment from the speculation point of view. It does not deliver big returns over a short period of time. One has to be patient, and wait for gold prices to rise. Generally, it takes decades for significant price increases to occur.
Gold should ideally be bought as coins, because coins are easy to keep, carry and trade. Gold can also be bought as bars but then it cannot be easily carried, and needs more storage space. Gold jewelry is good for fashion, and ostentation. However, as investment it suffers from wastage. Most jewelers charge making and wastage charges, which erodes the value of gold.
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