Give your savings a Gold Hedge

The fed a week back came out and said that the economy is coming slowly out of recession. Thats great news , but the biggest issue that i see is the fact that unemployment still is very high- reaching almost 9%.

Slowly but surely also the commodity prices are shooting up, and with drought hitting the Indian fields and quite a few other country fields quite hard it is only going to head North. One good example is sugar and coffee prices are going through the roof in most countries.

This will lead the country to higher inflation levels. Already the WPI has started becoming less -ve. It was mostly due to the high WPI levels earlier last yr that the nos are -ve. However if one goes out to the market it is quite clear that the CPI index ( consumer price index) is shooting through the roof.

So , with higher commodity prices, drought in the country, I am betting that we will see higher inflation soon enough. Gold is a clear good bet against inflation.

Gold prices are also very much dependent on US currency. As the US currency depreciates, the cost of buying gold in the US goes up. hence the cost of gold will go up globally.

I am not saying that you put your entire nest egg into gold, but look at a certain allocation to gold as one moves forward-- maybe around 5-10%.

One good way to invest is to use ETF-- kotak gold, Quantum gold etc. One simply needs to buy it online using a demat account and can sell at any day.

there are clear benefits of buying etfs vs hard gold-- but lets save that for another post.

happy shining!