Gold has always been an integral part of Indian culture. No special or auspicious occasion is complete without the yellow metal. Indian families have always believed in investing in gold for a rainy day. Gold prices moved up by 0.2% post a low in over two weeks. It is now at $1,308.80 an ounce. Geopolitical tensions around North Korea seems to be a reason for this climb. The price again went down 0.2% just ahead of the Federal Reserve meeting making it $1,310.93 an ounce. As the festive wedding season approaches, the question is, should one be buying gold? Here's what analysts say.
“Wait for the right price, don't buy right away," suggests Biren Vakil, CEO of Ahmedabad-based Paradigm Commodities. "The returns may not be high,” he adds. “But if you are looking to buy it as an investment, youngsters or those in their 30s should have minimum amount of their savings in gold whereas those above 50 can have 10-20% of their savings in gold. This is because, in the long run, gold is an insured form of investment that wont be affected much by natural calamities, political tension or financial crisis.
Experts may not foresee an upward jump in gold prices soon, but it is still considered a safe bet. Unstable political situations, weakening dollar and change in climate seems to be the reason for this. “It has been a positive streak for gold on the whole since the last three years. Even now, in the last couple of months due to political instability, things look good. This is a good time for investors to shift from equity to gold. However, buy it in a bullion form,” says Ajay Kedia, managing director of Mumbai-based Kedia commodities. Gold and dollar seem to share an inverse relationship. A weak dollar has meant good news for gold investors.
It doesn't seem like gold-buying habits have changed much in recent times in India. “We imported 550 tonnes last year and this year too, we have imported 550 tonnes or even more,” Kedia adds. “E-gold, a bullion or coin or a government bond is a safe way in which you can invest in gold,” he suggests.
Harshal Barot, research analyst at Motilal Oswal, a Mumbai based asset management company says, “Gold has been undervalued, but it has good scope and value. As long as the Federal Reserve System is not able to increase interest rates, the atmosphere is conducive for gold. 10-20 % of a person's investments can be in gold. This is because, gold remains a safe investment despite market fluctuations and natural calamities.” According to Barot, the Government's Sovereign gold bond scheme is a good way to invest in the yellow metal as opposed to jewellery. “Other form of e-gold like gold ETF (exchange-traded fund) is also a good idea as the returns are in money and not physical gold that you will have to exchange. Jewellery is always made from 18-20 carat gold and isn't 100 per cent pure,” he adds.
