Experts suggest that at least 10 % of your investible portfolio should be in gold. As it happens, for many Indian families gold often represents a large percentage of the family assets, given the socio-economic and cultural factors in play.

Following are the purposes for buying gold:

1. Consumption: In the Indian cultural, families always give a lot of significance to gold, typically in jewellery or ornament form.

Gold symbolizes value and wealth, and is a sign of prosperity. We are one of the few cultures in the world where gold is not just an investment, but rather used for consumption through daily usage in ornaments and jewellery.

Whether its festivals like Diwali or Akshaya Tritiya or events like weddings and child birth, gold is considered very auspicious. It’s likely that you are buying gold when you have the money and will have no actual use of the gold till the wedding or the religious occasion, which could be years or months away. The best you can hope for is some capital appreciation if gold prices move upwards from when you bought it.

2. Investments: All over the world, including India, gold is seen as a safe store of value. For instance, the Reserve Bank of India and almost every country’s central bank, keeps a part of their reserves in gold. Similarly, the common man also buys gold bars, coins and bricks for investments.

Gold can be used to provide some stability and diversification to an investment portfolio. At times when other assets like equities might be volatile due to economic recession, geopolitical trouble or inflation, gold might be a steady store of value for your portfolio.

3. Liquidity: Gold is a widely traded precious metal. Whether at the local jeweller, pawn shop or in the investment world, you can readily and conveniently convert your holding in gold into cash.

4. Safety during financial crisis: At times of a financial crisis, high inflation or wars gold prices shoot up as there is a flight of investors towards safe assets like gold.

For instance, during the sub-prime crisis in 2008 gold was a very good performing asset that rose in price, even though the equity markets were collapsing. Similarly, when the Gulf War occurred in 2003, gold prices shot up.

If you feel that the global situation is poor and that rather than leaving your cash in your bank which will lose its purchasing power due to inflation you want to be in a safe asset, you might want to consider purchasing gold. While it might not yield any income as discussed above, it will keep your capital safe and will likely not depreciate in value due to inflation.