Why gold deserves a special spot in your portfolio
In a chat with CNBC-TV18, Chirag Mehta, Chief Investment Officer at Quantum AMC, explained why gold stands apart from other commodities.
“Most commodities, unlike gold and silver, are industrial in nature,” Mehta highlighted. “Gold has historically been treated as a monetary asset, which makes it quite different from traditional commodities. While silver lies somewhere in between, with around 65% of its usage coming from industrial purposes, gold’s role in a portfolio is distinct.”
He noted that most commodity funds in India focus primarily on gold and silver, while other commodities remain largely untouched by dedicated investment funds.
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The contrast between gold and other commodities lies in their underlying economic exposures. Commodities typically follow economic cycles, meaning they perform well during periods of economic growth and expansion, similar to equities.
However, gold functions in a counter-cyclical manner. “Gold does well when economies are struggling, offering a unique type of protection that other commodities cannot,” Mehta emphasised.
As such, he believes gold deserves a distinct allocation within an investment portfolio, standing apart from other commodity exposures that tend to follow mean-reverting patterns.
This sentiment was echoed by Kshitiz Mahajan, Co-Founder of Complete Circle Consultants, who emphasised the necessity of having an exclusive allocation to gold.
“Gold is a perfect hedge,” Mahajan stated. “While the last five years have seen central banks heavily purchasing gold—driving its price up and delivering equity-like returns of around 15%—it remains one of the most reliable assets in times of uncertainty.”
For full interview, watch accompanying video
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