All that Glitter is GOLD…. But is it TIME to invest More OR book PROFITs??
Today Gold Prices have reached an astonishing Rs 54350 in India (Mumbai prices). In last one year alone Gold has given an impressive returns of 50%. The returns look even more enticing given the fragile condition of stock markets.
In uncertain times, thanks to Covid-19 pandemic and geopolitical tensions, when other asset classes such as stocks and real estate are plummeting, investors both long and short term, find it difficult to look away from the yellow metal.
Source : Google charts
The BIG question now is: should we
buy more gold now or the gold prices have peaked?
So, I will show you bigger
picture.. Gold prices for last 10-12 years
Credits: https://www.macrotrends.net/
prices are in USD
As can be seen, we are seeing a
rally similar to what we saw in 2008 onwards. In those days also Gold doubled
in matter of 2 years. But then what happened? Gold prices remains subdued for
next 7-8 years till 2020. Rather we have seen Gold price correction for last
many years. Note prices are in USD in “10 years chart” but even in rupees term,
we saw correction both price wise and time wise.
So, prices of gold will not move
in a linear manner. The same is applicable in other asset class too.
Gold prices may remain steady in
days to come due to ongoing uncertainty and pandemic. However we may not see repeat
of such spectacular performance now i.e. 50%+ growth on today’s prices in next
year or so and prices may stabilize going forward.
Gold remains one of the best asset classes over long term basis and is hedge against inflation. We recommend allocation to 5-15% of investible amount to Gold. Exposure towards gold should be built over a period of time, just like SIP in mutual funds. Investing during periods of low / no returns is very important to make good returns.
If you are long term Gold holder
holding gold for years then you must be sitting over a good profit. Its always advisable
to book profits / partial profits in any investments and gold is no exception.
This will minimize losses in case gold heads lower.
If you wish to invest in gold
now, you should look at alternatives to physical gold. Physical gold is a low liquidity
option which entails additional cost such as safe storage (bank safe, insurance
etc). Following options can be
considered for investments
a) Gold Exchange Traded Funds
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