Financial Guru's have historically suggested that you should have gold in your portfolio, as an insurance and as a diversifier. Its a good hedge during times of financial crisis.
But nobody saw gold as something that can give returns relative to the inflation rate.
Off late its the depreciating dollar and the problems that EU is having, that has caused central banks like India and China to move their reserves into gold instead of paper currencies, which has caused the recent run.
Nobody can say where the price of gold is going. Just treat it as an asset class that should be in your portfolio. How much of it? I wouldnt put more than 10%.
Being an Indian I already have significant exposure to it by way of my wife's jewellery. She keeps asking me when she will get her next necklace and I tell her when the gold price moves below 1000$. Not sure whether that will happen though.
