“Invest in gold” is a stereotypical reply you must have heard from almost everyone you went for taking investment advice. There is a reason why almost every other celebrity, especially these new-age singers and rappers wear humongous gold chains, pendants and rings. But is it still worth it to carry all this weight onto you? Is “Invest in gold” still a great suggestion? Let us find out.
What makes Gold so special?
There are a number of ways one can say why gold is all what they need in their life and why they would invest in gold, but we will be talking about gold as an asset/investment today. Few things that make gold a great asset/investment are as follows:
1) Highly liquid asset
A great advantage of holding gold is that it can be cashed quickly and easily. So whenever one needs some extra money they can easily pawn it or sell it and get instant money.
2) Reduces risk
Gold is an asset which can be sold almost anywhere around the world. Its a highly demanded metal which is also makes it valueable.
3) Flashy
Every one knows having gold is like owning an expensive car or an expensive watch. You wear it to show it.
4) Great trading/investment instrument
Gold price shows high variations in its price as they are directly based upon on the demand and supply of gold all around the world. One can easily flip some gold buying it at cheaper prices and selling at higher prices.
Gold as an investment
It is very important to understand and realize the intent behind buying the gold. If an individual is buying it for wearing it as jewellery then he/she should not worry about its worth but if the person is buying it as an investment and expecting some returns out of it then they might want to rethink investing in gold once again.
The thing with investing in gold is that in earlier days it was considered to be a safe and great investment given the return it gave. But with changing times, days have come where other instruments such as equity are giving great returns which are no match to what gold used to or is giving at existing levels. On top of that for the equity, you don’t even have to go to a shop or find a buyer as in the case of gold. All can be done from the comfort of your home.
Gold Post COVID
Now the real question lies, should one invest in gold post COVID? The answer is a clear NO.
Let us jot down the reasons why.
It is very important to realize how the gold prices work. We all know that gold prices are completely driven by demand and supply. So let us try to understand what happened to gold prices during covid and now what after covid.
During COVID, everyone was in a panic mode. There was uncertainty almost everywhere. Nobody was sure where their investments are going to land. Best resort? Buy gold, since it is highly liquid and reduces risk. With everybody thinking the same, demand for gold rose and eventually its prices went through the roof.
But now what after the COVID lockdowns are lifted and everybody is getting back to normal? Clearly gold prices are meant to go down from the new highs back to normal. This is given to the fact that now people will be once again putting their money into investment instruments like equity and selling of their gold for the funds. This results in an increase of gold supply in the market which would result in a drop in prices. So if you are planning to invest now post COVID anticipating that prices might once again start going high, then you might want to rethink.
What not to do when investing in Gold
If the whole purpose of you buying the gold is to get returns out of it, make sure to buy it in raw form rather than in jewellery form. As an industry-standard, whenever you go buy jewellery, jewellers charge around 15% as making charges on the price of the gold. That means a straight loss of 15% of returns or in many cases a loss of even the principal amount invested. This is the kind of mistake almost every Asian country was doing so far whether it was India, China or any other country. Also, when buying gold in the form of jewellery, there are high chances of getting ripped off in the name of adulteration and karats differences. It is always advisable to buy in bricks or coins if one intends to sell it for a higher profit. Better to hold government gold bonds if possible.
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Disclaimer: Views expressed on MoneySymphony.com are just an expression of thoughts. To no extend we are or should be held liable for any losses or conflicts. MoneySymphony.com suggest users take advise from certified experts before taking any actions or investment decisions. User actions may carry risk. All decisions remain the sole responsibility of the individual only.
Great stuff. I Liked your clear stand on not investing in gold as there are many other people who always answer in it all depends.
Clarity of thoughts and welfare of the readers is all that we wish for. Thanks for liking the article.