Aug 09, 2010, 10.54 AM IST | Source: CNBC-TV18

How to make best investment in gold?

Gold is all weather investment. One can own it in the good times, the bad times, inflation, equity market crash and war. Here is more about what makes these markets take and how you can go about investing in them.

How to make best investment in gold?

Trading or investing in bullion often gets narrowed down to just gold but there are many other facets to it and of course precious commodities themselves represent quite an interesting avenue both in terms of investment and in terms of trading and making some money.

Gold is all weather investment. One can own it in the good times, the bad times, inflation, equity market crash and war.  Here is more about what makes these markets take and how you can go about investing in them.

In an interview on CNBC-TVs show Classroom, Rajan Venkatesh, MD of ScotiaMocatta, Naveen Mathur of Angel Broking and Anjani Sinha, MD and CEO of National Spot Exchange, share expert tips on how to make best investment in gold.

Here is a verbatim transcript of experts views on CNBC-TV18. Also watch the accompanying videos for the full show.

Q: How would you define gold as an asset?

Mathur: Any asset class which gives you a return is called as an asset ie, if it carried any financial value then it is an asset. Gold particularly is an asset class which acts as a safe haven, its a store of value kind of an asset class.

So you flock towards gold to have returns, you flock towards gold to act as a portfolio diversifier, you buy gold for your income, for insurance against uncertainties. Rightly said war, financial markets uncertainty, geo-political tensions all that are kind of incidents where people would definitely love to have gold in their portfolio and thats why it is treated as one of the asset classes in part of the portfolio.

Q: The question that comes up for something like gold though is pricing. I mean in 2008 we saw it go to that USD 1000 level and then we have seen it crash and rebound. Would you describe it as an extremely volatile commodity or is there a discernable trend in the pricing?

Venkatesh: Lets just step back and examine what really happened in 2008. In March of 2008 one of the big US equity firms Bearstones collapsed and that created a huge amount of panic in the global markets with the result that people started moving away from equity, from the debt market etc into gold and that was the reason for the upward spiral in the gold prices.

Now again if you look at July 2008, Lehman Brothers collapsed and that created another huge crisis of confidence globally. The immediate impact of that Lehman Brothers collapse was a 'sell everything and hold cash' syndrome. All the banks, the funds, the institutions everybody had only one motivation in mind and that was sell everything and hold cash as an asset. Not even stocks, not even bonds, not even gold.

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