ASSET-CLASSESM12

Gold: Inflation Hedge & Crisis Protector

Understand gold as a hedge against inflation and currency risk, and why 5–10% allocation makes sense.

Learning Goals

  • Understand gold's role in a portfolio.
  • Learn about physical gold vs. gold ETFs and mutual funds.
  • Determine appropriate allocation based on risk tolerance.

Core Concepts

Gold as Inflation Hedge
Beginner

Gold price rises when inflation rises, protecting purchasing power. Over 50+ years, gold has kept pace with inflation.

Low Correlation
Beginner

Gold often rises when stocks fall, making it a portfolio stabilizer. In 2008, gold gained while stocks crashed.

Storage & Purity
Beginner

Physical gold requires secure storage; gold ETFs eliminate this hassle but charge small fees.

Indian Market Context

Indians hold over 25,000 tonnes of gold (mostly jewelry). Gold imports spike during Diwali and weddings. Digital gold and gold mutual funds now offer easy access.

Hands-On Calculators

Future Value Calculator
Future Value₹3,10,585

Gain: ₹2,10,585

Behavioral Insight

🧠 OVERWEIGHTING: Many Indians over-allocate to gold (30%+) due to cultural preference, missing equity returns.

From History

Gold: Inflation Hedge & Crisis Protector

Families who held gold during demonetization were grateful it was outside the banking system; families with only stocks worried.

Take the Quiz

Module Quiz
Over 50 years, gold has primarily served to:
Holding 20% gold is better than holding 5% gold.
Why do some investors prefer gold ETFs over physical gold?