My grandfather use to say that in our time gold use to be 10 Rs/- per ten gram, and today price has increased like anything. If we could have purchased gold at that time today we could have earned lot of money. Learning from this talk is gold is really good investment. Many of us use to invest in gold, thinking gold is not only visually appealing, but also valuable.
We believe that yellow metal Gold is safe heaven it can hedge against inflation. This belief is also backed up by facts like Gold price history shows always increasing trend. For reference you look at gold price detail of past 60 years given below.
Gold as investment can be viewed from Individual investor level or Economy level.
Gold Investment from Individual’s Viewpoint:-
Many Gold investors & trader have earned lot of money by investing in gold. Hence gold is good investment class for majority of investors from individual viewpoint. But on other hand we have other type of investor who doesn’t believe in gold.
They says that gold is appreciating asset no doubt about it, but truly speaking Gold is nonproductive in nature. If we talk about investment guru warran buffet he heats gold like anything. Gold has very limited industrial usage and for individual gold is just used for wearing if it is in form of jewelry but if it is in form of coin or e-gold it is nothing but dumb investment if it appreciate you will gain something else nothing.
Individual believing that gold is good for investment are more compare to others believing gold is bad for investment.
Gold Investment from Economy Viewpoint:-
Recently you must have gone through news finance minister of India requesting Indians about Don’t Buy Gold for Economy’s Sake. This is because if we purchase gold it directly impacts current account deficit and in turn our economy. Let’s understand this in detail.
Today dollar price is close to 60 Rs/- Gold price has direct relation with dollar. India imports gold from international market. To purchase gold we need to pay dollars for which our FOREX get affected. Gold purchases are one of the biggest contributors to India’s current account deficit.
Our major portion of Forex reserve is used for importing GOLD from outside. To invest in gold for personal benefit our other requirement of economy like metal, consumable other imporated items are going for toss. Study shows that India use majority of Foreign exchange reserves for purchasing gold. That is the reason government keep on saying us not to purchase gold if it is not required. But as a human nature we keep on purchasing gold.
Gold price is going up because people are buying it, and people are buying it because it’s going up. The day when people stop purchasing it gold will crash.
Remember gold has no production capacity & no usage it is just used for wearing in terms of jewelry or used for keeping in locker till it value appreciates.
So if you are believing that gold is good investment one day it will appreciate and I will sell it sounds good for individual but not good for economy.
What is your viewpoint ‘Gold as Investment Good or Bad’; post your comment in section given below.
Md Minhaj Alam
Gold is bad for investment