Gold (Chemical Symbol-Au) is primarily a monetary asset and partly a commodity.Gold is the world's oldest international currency.Gold is an important element of global monetary reserves.
The gold market is highly liquid. Gold held by central banks and other major institutions and in the form of retail jewellery is reinvested in the market.
Effective diversification during “stress” periods: Traditional methods of portfolio diversification often fail when they are most needed, that is during financial “stress” (instability). On these occasions, the correlations and volatilities of return for most asset classes (including traditional diversifies such as bonds and alternative assets) increase, thus reducing the intended “cushioning” effect of a diversified portfolio.
