Investing in Gold

Investing in Gold

Investing in Gold.

This yellow metal has been on the center stage of admiration for centuries. India has the unique distinction of the largest consumer of gold in the world. It’s no wonder. India needs gold. India needs gold to celebrate Akshaya Tritya, Deevali, Weddings Birthdays and so on and on. Many Indians consider gold as an investment. This is primarily due to rising of gold prices.  

Why the price of Gold is on the rise.

The Government debt is on the rise.  This finally has a toll on Dollar which is one of most important currencies in the world. Many believe the value of dollar will  probably fall in value, and gold's price will continue to climb higher.

In addition to the above banks too buy and sell gold depending on the monetary policies and situations. The Banks will continue to do so in the future too. It is almost certain that gold will play a very important role when it comes to investments.

Can this really be considered an investment? 

Is investing in gold a sensible option what are the pros and cons of this type of investment. Opinions differ from one person to another. 

The most common way the people invest in gold is Jewellery. Now this cannot be called a good investment. Event though it accumulates value it lays idle for years in possession of the investor. He or she does not want to sell it, because he considers it as an asset not an investment. But here too a long term holding can be called an investment due to its accumulation of value. If a short term investor wants to sell his gold he will stand to lose some money. The gold rates that is displayed everyday refers to pure gold. The value the investor gets after deductions for wastage will be eating into the profit of the investor. 

  

Investing in gold bars

Compared to gold Jewellery buying Gold bars is a good investment plan. Here the gold is more or less pure. It can be sold at the market price without much difficulty and fetch maximum price. Investing in gold bar has one problem. The investor has to find a way to safely store them. One good way is Bank Lockers.  The investor incurs some expense here because Bank Lockers come with a price tag. Most banks may even insist on a fixed deposit. A monthly charge for rent has to be paid. Otherwise buying Gold Bars is certainly a good investment option. Of late many Banks have started selling gold Coins too. This also can be bought as an investment option.

Investing in ETF or Exchange Traded Gold Funds.

ETF carries several benefits. It is within the reach of small time investor. He/she can buy in small quantities through a stock broker. ETF has its popularity due to the ease of transaction. There are ways of investing like a Systematic Investment Plan or SIP. This works like a Mutual Fund.

There is a famous saying ‘Don’t put all your eggs in one basket’. Gold can form a part of your investment. Say about 10% I suggest this because there are equities which has given good returns in the long term. It is always better to diversify your investments.

To summarize gold as a investment is good when it is done properly. Investing in gold should find a place in every investors portfolio.