May 17, 2013, 01.00 PM IST
The main way to tap into investing in Gold stays the traditional method of buying physical bullion / coins from your jeweler. Not as convenient as investing in an ETF or a Gold Fund but definitely safer.
Gold is the money of kings, but last month witnessed a takedown of the king from its pedestal. In less than 2 days the price of Gold tumbled over 225 USD or 15 percent triggered by short selling in the futures market. Reason for dump are plenty ,Amidst all the noise and research , one key fact emerges that the big support for the precious metal stands at USD 1200 an ounce , which is really the cost of production for the largest producers in the world, South Africa.
Argument against investing in Gold is not invalid. It produces nothing, pays no dividends, it's inherently subject to theft and incurs negative carrying costs, but that is the price you pay for tranquility.
In a world of undercapitalized banks, over leveraged sovereigns and political ineptitude wherever you look, it is prudent to allocate a portion of one's capital to an asset that is not someone else's liability An ounce of Gold is an ounce of Gold has to go up in relation to paper money . To what price depends on the pace of inflation and we all know that inflation will continue.
While the short term trend for international Gold prices stays bearish a weaker rupee will prevent domestic prices from crashing.
The main way to tap into investing in Gold stays the traditional method of buying physical bullion / coins from your jeweler. Not as convenient as investing in an ETF or a Gold Fund but definitely safer. For the more sophisticated investor there is always the futures and option market.
We've always maintained that monthly SIPS are the best way to protect any investment, irrespective trends, charts, emotions and sentiment. That view holds true for Gold as well. SIP every slip should be your investing mantra.
Perhaps the best tribute to a SIP lies in the fact that even your grandmother could make money from her investment in Gold.
And she never understood markets.
Authored by Rajiv Goel, C.E.O. of BCS
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