I was surprised to hear when one of my old aunt bought Gold somewhere in year 2005. People were making lot of money through exceptional returns in real estate, stocks, and mutual funds. Gold on the contrary was not yielding much and the return was ok if not bad. An investment in Gold at that point of time was something which was way too much outside the realms of understanding.

I called up to find the reason and to ask if my aunt wanted any financial planner to help her get good returns. I was surprised to hear that she was very happy with investment and cited me many cases where families got ruined in stock markets. She also didn’t considered real estate as there was no one available in her family to look after it. According to her Gold is the best thing that can be bought and something which made her felt more secure than anything else in this world.

I talked about this with my Dad and he gave me a different perspective. He told me that that my aunt came from the times when only investment available was Gold. Also Gold was used to determine the social status of the families in the society.

But the best part was the subsequent analogy he gave me. During war, when Japanese invaded china, a big landlord had to flee his home in order to save his life. Before fleeing he took all the Gold Jewellary by stuffing them into his wife and children’s clothes. The currency was almost not acceptable as no one was aware of the future developments. Also the real estate value was almost zero as there was no buyer at all. In those times Japanese forces was controlling all the supplies and was all over the place. The Japanese army men were particularly fond of women and used to spend a lot on gifts. The best gift that could be found at that time was jewellary. Japanese was prepared to shower all type of favors even for small piece of jewellary if they could get it from someone. The landlord started to sell the jewellary to Japanese and in turn got favors in the form of food and preferential treatment. He managed to maintain his status and as soon as the Japanese returned he regained his control on his area.

This was small but excellent perspective into histories of the many countries. Even today we see politically unstable areas where no one can predict the future. The inflation of some countries is too high and their currencies are almost non-tradable.

Continued Below.........

Today the Markets have crashed and so is the trust on real estate and stock markets. Gold which was considered to move in line with crude prices is now moving against it. Areas of India which are in Indo-Pak border have lost their real estate value and the villages look deserted. Taliban has occupied the SWAT valley and they are closer to Islamabad in Pakistan. Infact there are so much disturbing issues that when we look at our investment , Gold in physical form make a strong case for being part of your portfolio.

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