While all asset classes were marred by volatility in 2020, gold provided the much-needed sparkle in an investor’s portfolio. Gold has consistently delivered stellar returns, with its price increasing by almost 10 times in the last 20 years. This article discusses how gold has a universal appeal, and is a great hedge against inflation and volatility. It makes a strong case why every robust portfolio needs the sheen of gold, whether in the form of bars and coins, or via digital channels such as ETFs and gold mutual funds.
In March 2020, when the COVID-19 pandemic started unfolding in India, all asset classes suffered. Stock markets crashed, interest rates dipped, real estate came to a standstill, and gold also fell. While these asset classes struggled to stabilise, gold was the only one that not only hit the bottom quickly but also recovered its losses and went on to scale new heights of above Rs 56,000 for 10 grams.
Gold ended the year by boasting returns of around 24%, which is the best it has given in the last many years.
Chart 1: Performance of gold in 2020
The above chart shows the spectacular returns given by gold in 2020.
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