Gold is believed to brings auspicious and brings prosperity for the buyer. That’s one of the main reasons that gold is bought during the period of dhanteras.
It’s considered as a hedge for inflation there is no research to prove the same.
If the gold is bought during the period of one dhanteras and valued by the next dhanteras the average return it has given is around 7%.
The recent price of the gold has been more or less stable and along with that the increase in import duty has lead to dampened demand for the same.
Once the price starts moving positively we can expect huge buying happening in gold.
On a comparative basis if one would have invested the same amount in HDFC diversified fund the returns would have been in the range of 15% way less than that of the gold.
The average return in the last 9 years or so has been very muted.
Also, when the world economy is performing poorly the gold acts as a safe heaven. It’s during this time that the demand for the yellow metal would increase substantially. The International Monetary Fund is further downgrading its outlook for the world economy, predicting that growth this year will be the weakest since the 2008 financial crisis primarily because of widening global conflicts.
When there is uncertainty in the market’s gold becomes the most favored
- Subdued Global Economic Growth
- Crudeoil Price is unstable.
- Geopolitical tensions.
- Delay in Brexit, drop in the value of the Pound.
- High Volatility in the Equity Market
- Low overall global production capacities additions.
- Manufacturing negative growth.
- Lack of Investment Growth
- Poor Performance of Stock Market
- Bond Defaults
On the back of the above points, gold looks very favorable.
Looking at the risk across the globe with the current markets even the Governments have their own reserves of Gold.
Gold was often limited to the physical form earlier but the options are numerous with many products. Investors are also investing in companies that deal in gold and retail gold. Also, there are companies that give Loan against gold which have been performing well in the last decade.
Sovereign Gold Bond
Investing in gold is much more easy and convenient now. With the Government of India’s Sovereign Gold Bonds Scheme, you can earn an assured interest rate eliminating risk and cost of storage
So should you buy gold this Dhanteras?
We believe Gold should be part of every portfolio and it has many advantages. The amount and quantity one should buy should be consulted with your personal financial advisor.
Seeing the slowing of the world economy we are expecting positive movement in the gold prices. SEBI registered analyst Chintan Chheda has given a target of Rs. 1000,00 for the the year 2025.