Should you buy gold this Akshaya Tritiya? Religare's take
Central banks own about 30,000 tons of which Reserve Bank of India has about 560 tons currently valued at about US$ 26 Billion and representing 8% of our forex reserves. The US owns more than 8,000 tons of gold. India is currently the largest consumer of gold in the world, closely followed by China.
We are Indians and we love gold. We buy gold when prices go down because they may go up again and we buy more when prices go up because they may go up further.
Central banks own about 30,000 tons of which Reserve Bank of India has about 560 tons currently valued at about US$ 26 Billion and representing 8% of our forex reserves. The US owns more than 8,000 tons of gold. India is currently the largest consumer of gold in the world, closely followed by China. The recent increase in prosperity in both countries has driven demand sky high. But Hong Kong has the highest per capita gold consumption. So the love for gold is clearly tilted towards the east. On the production side, China and Australia are the leaders, taking over from previous front-runner South Africa. But China is still a net importer.The highest sales of gold and silver across India take place on Dhanteras and Akshaya Tritiya. So should you buy gold this Akshaya Tritiya that falls on May 13? The unambiguous answer is yes. One of the things, which makes gold very useful in any investment portfolio is that it is historically not correlated to other financial assets like equities and bonds. Having gold in the portfolio increases diversification & security while reducing risk & volatility. It is considered as high security because it is liquid in any country in the world and is virtually physically indestructible. But it is highly malleable and one troy ounce can be stretched to 80 Km!Having gold in your portfolio is a must and the right mix would have between 10 to 15% of your investible surplus. You can buy gold in many forms – from your jeweler as jewelry or gold coins and bars. Gold can also be bought as financial investment from your stock broker as Exchange Traded Funds or e-gold or even mutual funds for those who do not have demat accounts. For those desiring leverage, the commodity futures exchanges are the platform to trade on. Buy any way you want but do not try and time the markets. Instead go for investment in gold via systematic investment plans that help you tackle the volatility in the price of yellow metal. Ask your stock broker, he will tell you more about it.Another question bothering investors is whether the price of gold will come down? It is an asset and prices do fluctuate. After a long 12 year bull run, it is showing early signs of flagging but who's to tell what might happen. There are many factors which affect the price of gold and not all are earth-bound. The asteroid Eros contains more gold than ever mined on earth and if we harness it, prices could crash!Also read: ICICI Bank to auction 11 kg of pledged gold to recover loans(The writer is President, Retail Distribution, Religare Broking) Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
