Gold is the only precious metal which is accepted as a currency worldwide. It has got a unique feature that no one can manufacture it and is available in finite qty on earth. It’s daily availability is going down buts its demand on other hand is increasing day by day. In the recent times we have been through the age of turbulence in financial markets and have realized how things can go wrong. Although cash is not the king it has been printed at a pace in order to resolve the credit crisis or sovereign debt crises.

Therefore we believe that Gold is an asset class that is relatively free of credit risk and can have a potential of performing in bad times. We are also exposed to exchange rate risk. If the Rupee appreciates against the dollar the gold price falls in rupee terms (assuming the Gold price is constant in dollar terms) we recommend that one can have a 10-15% asset allocation to gold of the total investments in financial markets and the best way to achieve that is though Gold funds.