Indian’s have an insatiable desire for GOLD. Indian middle class love gold with a passion which will embarrass the hell out of any Romeo Juliet or Laila Majnu.
From centuries gold is considered to be a great store of value. Traditionally gold is an auspicious gift given to daughter’s /daughter in laws at weddings.
Indians have a culture of considering gold & silver as status symbols.A lot of dieties are also adorned with ostentatious gold ornaments.
Why is that ?
Gold is virtually universally accepted currency. Gold can be liquidated anywhere in the world at a standard price which is known to most people. It also appreciates in value, anyone can buy or sell, doesnt require any any great level of intelligence or literacy.
Women are the biggest consumers of gold ornaments which are a source of pride & joy .It is a rare Indian women who doesn’t love her jewels….
In this post we are talking about Gold as an investment. It is an all round accepted maxim & perception that gold gives a great return on investment. Not many put numbers to their buy & sell price and calculate what actually was the return.
Gold certainly does protect principal . When Indians buy gold it is never with a short term view. Typically gold is bought to never be sold except at dire circumstances.
There should be a distinction between gold bought as an adornment and gold bought as an investment.
As an investment when gold is bought the return should be accounted for as we have seen that there are other options too where capital is safe and the return beats inflation.
Gold used be the preferred option when people needed to utilise and put away large sums of cash.
What is the downside of buying gold?
1. There is no standardised format of the purity of gold. When you are buying gold you are not sure of what exactly are you buying and its level of purity.
2. If you are buying gold ornaments then the making charge is steep. Normally on sale making charge is never reimbursed.
3. Storing gold is like storing cash. Safety is a concern. Finders keepers.
4. Returns on gold are not very attractive. This can be debatable. But we will discuss this part later.
Gold is losing its allure as millennials dont have much affinity to it.
Next post will be on Stocks.
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