Question: Investing in Gold, NOT a good idea anymore?
YES, maybe a good idea, If:
- You’re NOT expecting great returns on your investment.
- You have ample arrangements to store the Gold you bought, safely.
- You’re buying only pure Gold and NOT Gold jewelry.
- You’re 100% sure about the purity of the Gold you’re buying.
- Possessing Gold is a Pride for you OR you have some emotional feeling about it.
NO, it may not be a good idea, If:
- None of the above points are applicable to you.
Well, generally it’s advisable to invest in Gold too, since it normally holds its value well; but its percentage in your investment portfolio should be just about 5% and nothing more. Because, there are other investment options in the market like Mutual Funds, Equity etc. that yield much higher returns than Gold alone.
There is a saying “If India sneezes, the gold industry will get cold”. You know what that means? Indians are one of the biggest consumers of Gold in the World and as of now people in India hold thousands of tonnes of Gold together. Can you now sense what is the risk? Neither theft not any natural calamities; just recall how the real estates markets crashed in many developed countries, not very long ago. If for some reason Gold crashes similarly, then all the hoarded Gold will turn into just another metal. Appreciation of Rupee against Dollar is one such reason, which is good for our country but NOT for Gold. If you think logically, leaving behind your emotional attachment towards Gold, you’ll realize that people buy Gold NOT for its looks, but for its value in the market. Because now a days even imitations look exactly like gold.
In earlier days people used to buy gold whenever they had some surplus money because it is a proud possession, holds its value really well and in case of an unforeseen financial crisis in the family, the accumulated gold used to be blessings in disguise. We Indians, especially women still think in similar way although the situations are totally different now:
- Gold prices are stagnant for years in a row.
- No huge jumps in gold price even during Dhanteras/Deepawali/Diwali.
- Buying gold jewelry in particular is the worst thing to do due to the high making charges, wastages added by the jewelers now a days. When you sell it after year also, I’m afraid, you may not get even a profit of 5%.
- Theft/snatchings can make you lose a lot of money in a flash. You can’t flaunt your exotic jewelry even if you have a lot.
If you have gold that was bought about 30 years ago or more (I remember it used to cost Rs 5000 approx for 10 grams in my childhood), then you may sell it now for huge profit. But don’t even think of buying gold again with that money, buying jewelry is even worse, you’re going to only lose. Rather, with professional advice, invest that money in Equities or Mutual Funds, you can potentially earn much more.
Refrain from exchanging gold jewelry, that’s a great business for the jeweler and greatest loss for you, even if you don’t realize. You pay making charge, wastage while buying the jewelry and while selling the jeweler is going to pay you for the gold minus the wastage, I don’t really understand the logic. All jewelers may not be doing that, but that’s my experience and they don’t offer a logical explanation.
Don’t believe whatever I wrote about gold above? Read more below:
Buying gold surely is an investment, though not profitable anymore. Looking for alternative investment options? Read about your options in the articles below:
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DISCLAIMER: These are opinions of the writer. Feel free to defer.