Gold is back..!!

Gold seems to have regained its attraction among the investors. It has outperformed almost all other assets by a huge margin in the last 4 years with its present price hovering around $1200 an ounce .Other asset classes like equities and dollar have fared poorly compared to our yellow friend. The attraction towards gold didn't happen overnight. A large number of macroeconomic factors and the collapse of the equity markets contributed to this phenomenal rise. People have begun to use gold as a part of their investment portfolio.

The events in the last few years led to the erosion of investors's faith in paper currency. In the aftermath of the crisis, many countries resorted to printing money to ease credit crunch. The monetization of fiscal deficits in the US and Europe aroused suspicions in the minds of investors about the value of those paper currencies. Moreover, the flooding of banking system due to prevailing low interest rates didn't augur well for the investors. It gave rise to inflationary expectations. Such events contributed to the flight towards gold as a safe haven in this unstable times.

. Gold has become a friend of common man as a hedge against inflation.There appears serious concern that currencies like dollar may suffer prolonged decline .Some emerging countries have decided to alter the composition of their reserves in the favour of real assets. India bought 200 tonnes of gold from IMF in an attempt to diversify its foreign reserves. Thus, many countries have begun to use gold as a hedge against likely crash in the value of dollar.