Bullish View on GOLD continues.....

For thousands of years, gold has been valued as a global currency, a commodity, an investment and simply an object of beauty. A growing number of financial advisors are speaking out about the benefits of owning gold. Gold can be a good tool in developing a strong portfolio and reaping greater profits.
In an attempt to understand what is happening to the gold market and where it is heading in the near future, this interview gave me a lot of insight and thought it could be useful to you. Keyur Shah, Associate Director, World Gold Council (WGC) had this to say…..
Taking the long term perspective, will gold continue to stand as a safe haven for investments?
Gold has always been a time-tested safe asset class giving a reasonable rate of return in the long run. This intrinsic quality of gold gets highlighted during turbulent economic times such as now. At present amongst all asset classes, gold is the best performer. Hence, most analysts say that 10%-15% of ones portfolio should be allocated to gold.
What solution would you suggest against high volatility in gold market?
Price volatility is now market reality and one cannot wish it away; however it will not adversely affect investors with a long term view.
What is your take on gold exchange traded funds (ETFs)? How do you think ETFs affected gold prices?
While ETFs have taken off very well in western countries, in India it is growing at a slow rate. This could be because of cultural mindset of Indian consumers who would rather touch, feel and control their own gold instead of owning it in dematerialized form. It’s a myth that ETFs affect the gold price. Data shows that a major portion of investors in ETFs are sticky retail investors with a long term view.
Where do you think the Indian gold market is likely to head in the next few years?
In the past few years, India has been consuming an average of 700-800 tons per annum and we expect the same trend to continue and even improve especially in the light of current economic meltdown at a global level (consumer confidence in gold becomes stronger during such turbulent times).
What is WGC’s role in the promotion of consumption of gold jewellery in India?
India is the world’s largest consumer of physical gold and a very mature/ time-tested gold market. In India, WGC promotes consumption of gold jewellery via long-term strategic (brand building, development of youth segment, retail transformation) and short-term tactical (shopping festivals, promotion of festive occasions) activities.
What kind of a demand graph can we look forward to as we are nearing 2009? What factors will trigger a northward trend in the demand for gold?
While we are yet to collate the October-December 2008 figures, as per the last report released by us, India witnessed a 29% year-on-year rise, in tonnage terms, in the July-September 2008 period. Looking forward, we believe the uncertainties in the financial markets will continue, therefore driving investors towards gold because of its safe haven characteristic.




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