Should You Invest In Gold This Festive Season?

By Adhil Shetty | September 26, 2017

The festive season has already begun and is keeping people in high spirits. Considered to be an auspicious period, this season gives people the perfect excuse to indulge in big-ticket shopping like gold, property, and vehicles. The yellow metal sees huge demand around this time every year, especially in the form of jewellery. Despite its slacking performance in the last decade, the metal has been holding its ground as a preferred investment option.

Let us look at how worthy gold is from an investment perspective.

Gold Prices In Last Five Years

If we look at the price swings in the last five years, gold prices have dropped from Rs. 31,523/ 10 grams in December, 2012, to Rs. 27,000/ 10 grams as of today.

Time Average Gold prices for 10 grams
Sep-12 31,523
Sep-13 27,500
Sep-14 24,200
Sep-15 24,000
Sep-16 28,300
Sep-17 27,000

Should You Invest In Gold?

Gold has been known to be a hedge against volatility inherent in market-linked securities such as equities. What adds more weight to its value is that the Government of India keeps gold as part of its forex reserve.

However, gold has shown immense volatility in its prices in the last few years, making it a risky investment for growth. Nevertheless, it does make an excellent weapon for defense against unfavourable economic conditions.

If you are looking to purchase gold as jewellery, don’t forget to take into account the cost you incur in terms of making charge etc as it won’t be recovered at the time of selling. Also, the prospect of value appreciation is completely dependent on the belief that someone will be willing to pay a higher amount for the same quantity of gold in future.

However, if you are looking to purchase gold as a defense instrument against market fluctuations, it can be a good option.

Ways To Invest In Gold

Although people prefer to pick up jewellery or gold coins during festivals, a more meaningful purchase would be to go for exchange-traded funds (ETFs). You can invest in ETFs without having to buy physical gold. You can invest in ETFs through your demat account and the return is based on gold prices.

There is no fear of theft involved in this, as gold is stored in digital form. Investing in a digital form also gives you the convenience of buying and selling gold anytime without any entry or exit load.

This festive season how about celebrating with a new gold investment idea.

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About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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