In India, gold prices on the Multi Commodity Exchange (MCX) jumped by over ₹2,000, touching levels close to ₹1.38 lakh, raising concerns among retail buyers. However, experts believe that understanding gold as an investment asset can help investors make informed decisions rather than reacting to short-term price movements.
A recent report by the World Gold Council (WGC) highlights several lesser-known but crucial facts about gold that explain why it continues to play a vital role in global financial systems.
Over the past five decades, gold has recorded an average annual return of nearly 8 percent in dollar terms. This performance places it close to equities and significantly ahead of traditional bonds. While short-term price fluctuations are common, gold has proven its ability to preserve wealth over long investment horizons.
This is one of the key reasons why gold is often recommended as a strategic asset in long-term portfolios.
Gold tends to perform well during periods of economic uncertainty, inflation, or geopolitical conflict. Whenever global markets become volatile, investors usually move funds toward gold to protect capital.
According to global financial data, gold has now become the second-largest global reserve asset after the US dollar. The European Central Bank confirmed that by June 2025, gold had surpassed the euro in importance as a reserve asset, reinforcing its status as a global store of value.
One of gold’s most unique characteristics is that it is completely recyclable. Unlike many natural resources, gold never loses its quality. The World Gold Council estimates that nearly every ounce of gold ever mined is still in circulation today, whether in the form of jewellery, investment bars, industrial components, or medical equipment.
This makes gold not only valuable but also sustainable from a long-term resource perspective.
Despite its many advantages, gold does not provide regular income like dividends, interest, or rental yields. Investors profit from gold only when its price rises and the asset is sold at a higher value.
Because of this, financial advisors often recommend using gold as a portfolio stabiliser rather than a primary income-generating asset.
Liquidity is another major strength of gold. As per the WGC report, during the first half of 2025, gold recorded an average daily trading volume of $329 billion. The total value of gold held by investors and central banks globally is estimated at $5.1 trillion.
This means the gold market is more liquid than many major stock indices, including some of the world’s largest equity markets, allowing investors to buy or sell gold with ease.
Experts suggest that while gold prices are currently at elevated levels, its role as a hedge against uncertainty remains unchanged. Long-term investors should focus on diversification and avoid panic buying during sharp rallies.
