Bangalore: Investors buy gold primarily as a safe haven. Gold has been one of the best performing assets over the last year, as prices have skyrocketed to record levels. Every week there's is a new record in prices. When the world has excessive liquidity (more dollars), its price will go up because people have more money to buy that same amount of gold and when the world has less liquidity (less dollars), its price will crash because people have less money to buy that same amount of gold. The reason why the capital will accumulate on the risk free avenues like government bonds and gold is because of the uncertainty in the equity markets globally poor visibility on when the U.S. economy and its developed counterparts in Europe will turn around. The World Gold Council's Gold Demand Trend has produced data for the quarter ended June. According to which, the investment in gold bars, coins and jewelery noticed a hike of nine percent and 12 percent year on year. The prospects for economic growth are fairly strong in India, as compared with the rest of the world. Economic growth has been slowing, but it is still above 7 percent and well above growth rates in most other countries. In addition, India does not face the same debt problems that Western economies face, and so safe haven concerns are minimal. According to Vishal Khandelwal, a stock market analyst, "When uncertainties prevail there is going to be a shortage of commodities and then we will find more people moving towards gold. Therefore, it is beneficial for an investor to have at least 10 - 15 percent investment in gold. As it definitely gives a good hedge against inflation and a good hedge against uncertainty. Investing in gold adds to your portfolio." According to an analysis done by the Standard Chartered bank, the gold price will triple due to shortages in gold production. The bank's research team looked at the production levels of 345 gold mines and came to the conclusion that the gold production will be only 3.6 percent annually over the next five years. And JP Morgan states that 'Gold could test $ 2,500 by the end of 2011.' RBI has been hiking interest rates so often and tightening monetary policy. In an attempt to reduce inflation, the RBI is reducing the amount of rupees in circulation. This should mean that in rupee terms, gold prices should be falling rather than rising, however the opposite is occurring. The gold demand from India is strong runs contrary to the usual explanations for rising gold prices.