Time has been a steady increase in the prices of yellow metal. The exponential increase in the prices is clearly evident and does not need to be proved.
The increase in prices has been equal if not more than its investment counterpart ‘Property’.
Time has seen Gold from being an item of displayto being the most lucrativeInvestment option. Gold today is being considered as the safest bet by mutual fund and portfolio managers world over.
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While most of the business class is busy with their existing businesses, the salaried class does not have time to devote in markets. The studies world over show that while the business class earns on an average 20-25% return on capital employed, the salaried family class saves around 10-15% of what they earn. This analysis has greatly benefited most of the Mutual Funds which provide a slightly better return than the prevailing bank fixed deposit rates.
Figures alone are enough to prove that the mutual fund returns have been continuously lesser than that of gold and silver. This is due to the mere fact that the mutual funds have to operate on a diversified risk setand not gold alone. Also, there are huge costs that the mutual funds bear in terms of salary and rent related costs which is eventually passed on to the investors and affect the ACTUAL RETURNS.
Furthermore, gold is the most liquid asset. It can be pledged to get cash loans.
The best opportunity however, which gold provides is that if purchased in bullion form, it can be lent as such against interest, thus providing a DUAL BENEFIT of a regular interest income besides providing opportunities of heavy capital gains.
Gold or Silver?(The Investment dilemma)
There have been divided loyalties between the investors of white and yellow metal. While for most part of the century both metals have been head to head in terms of price gains, the last few years have seen the white metal outshining its glittery senior. However the current steep fall of the Great White from 75 k to 50k level has again brought the metals head to head.
With the increasing purchasing power of the people and the ever growing ‘display friendly’ markets,the ornamental use of the White metal has substantially decreased. The major use of Silver has now been restricted to the industrial purposesand the current economic slowdown does not support any promising future for the Industrial metal.
Another reason why gold is considered as a better investment option is that worldover various banks keep gold and silver as reserves. Silver being more bulky of the two is soon likely to be left apart because of the ever increasing holding costs.
Is it a right time to buy gold?
The country’s all round the globe have been witnessing a situation where the poor are getting poorer and the rich richer. Such situation has been because of the ever decreasing value of money or in other words, the decreasing purchasing power of common man.Unlike the rich, the commoner has a limited scope of investment opportunities and therefore is highly affected by the rising inflation rates. The best way to avoid falling into the ‘poor getting poorer’ category is by investing in something which grows at a rate greater than the country’s inflation rate. Gold is often cited by many as the best inflation hedge i.e. gold prices will riseatleast to the extent of rate of inflation in the country.
“Every time is a right time to buy gold.”Even at Current gold prices experts consider it being priced too low. Gold hit a record high of $875 an ounce on Nymex in January 1980, about two months after the start of the Iran hostage crisis and less than a month after the Soviet Union invasion of Afghanistan. That’s equivalent to about $2,318.84 an ounce in today’s dollars.
Where to buy?
The only reason why the common investor does not invest in Gold is because of lack of trust in the minds of the investors. There is a dearth of jewelers who provide genuine trustworthy jewelry. Even if some big jewel houses do, they charge very high prices for it because of the large staff involved and heavy fixed costs associated with it.
The best way to overcome such situation is to buy from some trusted wholesale dealerswho provide Hallmark Jewellery or are approved from the BIS.
“Well, all that glitters is gold.”