1. Traditionally gold has been a form of investment for many. People buy gold for the women in families on various occasions. Women fancy it and people also think of it as an asset. It tends to be passed on to daughters during their marriage. I have seen many people often accumulate gold as it is required to marry off their daughters.
2. So lets see how much gold has grown. In 1995 the gold price was Rs 4700 per 10 gm. In Nov 18 it is around 31-32 k. Let s say 32 k. So from 4.7 k to 32 k in 24 years is around 8% growth. The growth might be different in last 10 yrs compared to previous. But this is average growth. This is not considering making charges which may be a loss if gold is bought in the form of ornaments and then sold later.
3. So if we see gold has grown on a average at which the salaries are growing or may be slightly less. That will remain the trend. If the rate grows more than that then not everyone will be able to afford gold and gold trading will reduce.
4. One issue with gold is keeping it safe. Keeping gold at home is risky. So people tend to keep it in lockers in bank. Then there is risk while transporting it.
5. I wont say gold is a good avenue from investment point of view.
6. If one really want to get benefitted from gold price appreciation then one should invest in Sovereign Gold Bonds. In this you get the same appreciation as gold plus 2.5% interest. This interest is tax free. You cannot redeem your money before 5 yrs in SGB.
7. Warren Buffet’s take on Gold sums up Gold as an Investment. Read it below.
