Gold recently touched an all-time high at rs 35,074 (10 gm) due to a high import duty and a falling rupee. Gold has been considered the best hedge against a failing economy. ForbesIndia asked experts if it still makes sense to invest in it.
Gold has made a quick rebound in the international market from its oversold position. Reason: Miners report minimum profit and reducing capacities, creating a shortage. The cost structure of gold production indicates it will not go below $1,200/troy ounce in the long-term.Gopal Agrawal, CIO, Mirae Asset Global Investments
In India, we are witnessing a surge in domestic gold prices. Also, there is a ground level supply constraint causing domestic premiums to go up considerably. Whether the prices will come down in rupee terms will depend on how soon the currency strengthens. Keyur Shah, CEO, Precious Metals Business, Muthoot Pappachan Group
Holding 5-10 percent in gold can yield diversification benefits. It has a low correlation with bonds, equities and currencies, and reduces portfolio volatility. Also, supply being limited tends to self-adjust to the relatively inelastic demand, creating an effective floor for prices. Vikaas Sachdeva, CEO, Edelweiss Asset Management Company
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(This story appears in the 20 September, 2013 issue of Forbes India. To visit our Archives, click here.)