Quickly know if it is right time to invest in Gold or not

The women of India are so rich combinedly that they can buy 4 Pakistan or 6 New zeland or a entire Australia. You may ask how is this possible? Let me clear the concept.

Gold Economy

Women of India combinedly own about 21733 tonne gold. If we calculate the present gold price, it will be 1.3 trillion dollar which is almost half of the India`s entire GDP. In this article we will discuss in which factors the price of gold depends. We will also discuss if we should invest in gold right now or not.

Price of gold

If you see gold as an investment asset you will find that the price of gold is flattened for some years. This flattened price is confusing the people. In 2001 market crash, the price of gold increases quickly. Same happened in 2011 financial crisis. In the last year pandemic also the price of gold rises.

Relation with stock market

You may think what is common between these years. in every year stock market crashed. Thus people started to buy gold and therefore the price increases. It happen because people always try to find the assets which will give them highest returns. When the bull run happening in the stock market people tend to invest their money in market. 

In last year stock market gives around 50 percent returns. So flock of people attracted here and start investing in stocks and mutual funds. Thus they avoid financial assets like FD or Gold.

But when the stock market enters into bear market, people tend to move their money from stock market to FD and gold. We can see direct relation of gold price with the stock market movement.

Returns from Gold

If we calculate the returns from gold asset we will find it is almost 12 percent CAGR in last 15 years. It easily beat inflation rate. So when market crashed this type of financial instruments need for the investors of the country.

We know market crashed after the pandemic. But market recovered very quickly and presently in the bull run phase. So the price of gold remain flat as people are not interested in investing in Gold. For that the price of gold does not move much. But when this bull run will end, the demand of gold will rise again. Thus price will also increase in supply demand method. 

Final thoughts

But the problem is no one knows when will this bull run end. But it will be an intelligent work if you start to invest in gold slowly as bull run crosses long way. 

Nowadays it is not needed to purchase physical gold as that have some other charges. If you want to buy gold in pure investment way it is better to buy Digital Gold or Sovereign Gold Bond which is issued by RBI. There are no charges and you will get additional benefit from that.

The temples and the women have sufficient gold to eradicate problems like poverty. But the problem is this gold is sitting idle and not contributing much in our economy.

In our opinion you should not have 5 -10 percent gold in the portfolio. When other instruments will not help to create wealth, this financial instrument will help you survive and adapt in bad situations.

Leave a Comment