Gold glitters again: Is it time to hold?

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

Gold has hit another peak, both internationally and back home in India. Domestic prices crossed Rs 26,000 per 10 grams. So, is gold the best asset to hold now? CNBC-TV18's Sonal Joshi reveals.

A housewife Vasundhara in Thiruvananthapuram went to sell off the gold jewelry she had bought a few years ago. But peaking gold prices sent her back. "When my daughter got married 13-years ago, the price of gold was around Rs 3,000. Now it has shot up manifold. Since I don't invest in mutual funds, it makes sense for me to invest in gold," she said.

If you bought silver worth Rs 1 lakh January 2010, it is valued today at Rs 2,25,000, which is a 125% increase.  The same amount invested in gold would now be worth Rs 1,45,000, which is a 44% increase.

Rs 1 lakh invested in an equity mutual fund a year ago, will bring you a gain of just 27% or Rs 1,26,000. While a fixed deposit in a bank, assuming an average rate of 6.5%, would have yielded just Rs 1,11,692.

Also, more importantly, Rs 1 lakh invested in equity will give you a profit of under a percent to about Rs 1,00,763.

However, the question remains with gold is selling at over Rs 26,000 per 10 grams; so, is it still a good time to buy?

"When there is uncertainty, people buy gold that drives the price up. Hence, as long as this uncertainty continues people should continue to buy gold," adviced Jayant Mangli, president (commodities) of Religare.

Experts suggest investing in Gold Exchange traded funds or E-gold, rather than jewellery.  'I consider investing in E-gold as the best way to invest in gold. In the spot market you can buy gold as low as 1 gm and it works exactly the same way as equity markets, so you get your gold delivery in demat form within two days into your account," said Mangli.

While global markets are showing little signs of recovery, the euro-zone debt crisis adding to the US unease and equity stares at uncertainty, and amid all these it seems to be the right time to invest into the yellow metal. 

Get the latest gold prices here http://www.moneycontrol.com/commodity/