The marked downward trend of the stock
markets after reaching its peak, due to various reasons, has
definitely set the investors thinking.
Should you be investing in gold right now
The marked downward trend of
the stock markets after reaching its peak, due to various reasons,
has definitely set the investors thinking. Under the given
circumstances, the investor is looking for investments that would not
eat into his savings. In times of such crisis the only safe place to
park your money would be 'gold'. Gold is a real, tangible asset whose
value does not go down like that of paper money. On the contrary, its
value increases in tandem with the inflationary trend. In fact, the
gold reserves of a country are an indicator of the country's economic
strength. According to finance gurus gold has and will always remain
a safe investment option not only as a hedging instrument but as a
highly appreciating asset as well. So is this the right time to
invest in gold?
The recession in the US,
the strengthening of the rupee and the increase in oil prices set the
stage for the gold rates to increase in the coming months. Coupled
with this is the Indians ongoing love affair with gold which only
helps in pushing up the ever increasing demand for gold.
Incidentally, India is the largest consumer of gold. The return of
18% that gold has yielded in the first two months of 2008 only goes
to prove that this is the right and opportune time to invest in
gold.
Under the current market
conditions gold provides good capital appreciation. Although the
sensex has taken a deep dip, the gold Exchange Traded Funds have done
very well, yielding a return of more than 25% in the last three
months. Investing in ETF's is a safe long term bet as you have the
added advantage of no wealth tax being attracted and no concerns of
the purity of gold as well.
This is also a good time
to invest in mutual funds that invest in shares of mining companies
of precious metals. Due to the growth and profit factor of companies
the shares will yield you much higher returns in a short period
itself.
Major players in the
world gold market like investment banks, bullion traders and gold
funds only buy gold of a guaranteed quality. For this reason it is
advisable to invest in gold coins and biscuits rather than
jewellery.
So, this seems to be the
opportune time to invest in the glittering metal. However the entry
time is important. Some analysts feel that there may be a correction
by 7 to 8 %, and ultimately the value of pure gold may stabilize at a
higher rate in next few months. That may be the right time to start
investing in the yellow metal.
Addi Sharma is a well known author and
has been writing content for iTrust. iTrust is the leading personal
finance portal in India providing excellent financial
planning, real estate services, and best home
loan in India.
