Why Gold will outperform. . .

Now with the US facing its worst economic problem since 1929 or perhaps worse of all time, it is important to note certain things:

1) US economy is the world economy's engine of growth if it stops then world economy stops to grow. . .

2) Not only US but Europe are in deep trouble. . . and Japan has been in a trouble now for 30 years that makes it worlds top economies in trouble all at the same time. . . this is not good news.

3) The banking and financial industry have collapsed in the west, this has never happened before as earlier there were industries that went bust but never the support for these industries i.e. Finance industry itself. . .

So what lies in store moving ahead. . . Governments all over the world are using the available options to them, namely on the fiscal front by creating newer projects and secondly on the monetary front by printing in more money . . . and printing in more than ever before. . .not exactly knowing what the impact of printing money is going to be in the long term and worse not knowing whether printing money would finish this crisis in the first place. . .However what this printing is leading to is lot of side effects associated with them. . .One for starters that we see is currencies of these countries heading southwards. . .U.K being one prime example wherein a pound has touched an all time low and in my opinion should fall even more. . .

Currently we are insulated from the monster called inflation as commodity prices have crumbled due to recessionary fears and fall in demand, however with so much money going into the system, inflation might come back with full force (not necessarily in India though, as we have been cautious in our money printing). Also major economies do not have too much flexibility with respect to the interest rates are currently the interest rates worldwide already are near zero (India again stands to gain again as we still have lot of space to maneuver on the interest rates). With so much money sloshed into the system, countries would tend to focus on 'real assets' or gold standard. Gold would tend to outperform, with more and more money getting printed in the system. The first signs of this are already visible with gold touching unprecendented heights lsat week. . . Hence when rejigging ones portfolio it is important that due attention is given to gold . . .