gold though would be best in providing stability to a portfolio so the question is whether the upside continues or not longterm investors need not worry about price as the upsurge in bullion will continue as long as interest rates rise to bring real rates into positive territory in order to discourage investing bullion but investing in precious metals is more about diversification and reducing portfolio volatility along with maximising returns many investors believe their portfolios are diversified if they contain a mix of stocks bonds and cash unfortunately correlations between traditional asset classes have been on the rise resulting in portfolios that are not adequately diversified strategic asset allocation ensures a fullydiversified investment portfolio by properly balancing asset classes of different correlations in order to maximise returns and minimise risk in the past portfolios diversified into precious metals have produced superior returns to those not diversified this suggests that the unique riskreward profile of precious metals renders them as a useful diversification tool in strategic asset allocation with the potential to improve the rewardtorisk ratio in conservative moderate and aggressive asset allocations by including precious metals with allocations of 71 125 and 157 respectively priti gupta ed commodities anand rathi financial services