1. Gold can be an investable asset
Its price can rise or fall and it is widely held as a store-of-value and diversification asset.
Tip: Gold has market risk even though it feels tangible.
2. Gold does not produce earnings by itself
Unlike a business or bond, physical gold does not generate profits, coupons or rent. Investor return depends mainly on future price.
Tip: No cash flow means valuation relies heavily on market demand.
3. Jewellery is consumption plus gold exposure
Making charges, design, wastage and resale deductions mean jewellery bought for wearing should not be treated like a clean investment product.
Note: Jewellery has utility value but can have high friction cost.
4. Gold works best as part of allocation
A modest allocation can diversify other assets. An extreme allocation can sacrifice growth and income.
Tip: Use gold for a portfolio role, not because price just went up.
5. Quick check
What is the main return source of physical gold?
Answer: C - Physical gold does not generate operating cash flow by itself.