Is investment in Gold worth it?

investment in gold in India

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Today I am going to write on a touchy topic for Indians in general. The question which arises in most of Indian people’s minds is ‘Is investment in Gold worth it?’ or ‘Is it good to invest in Gold?’ Well, I would certainly not give an answer to please you. In this article, I will look at all dimensions before coming to a conclusion.

A Passive Investment

Gold has been a part of our social and cultural as well as our religious lives from thousands of years. Gold was used as a means of exchange and as a currency in the past. Fact of the matter is that Gold was and is still considered in India as an indicator of wealth. Traditionally, Indians have invested in Gold because it can be bought easily and liquified easily. In 1964, Gold was costing Rupees 63.25 per 10 grams. In 2012, it increased to Rupees 31,050. Personal experiences may vary from person to person, but overall, gold has been used in emergency times like hospitalization, death, marriages, getting rid of debt, etc.

No dramatic rise post 2012

But, post 2012, there has been no dramatic rise in the prices of gold, which again makes us question, how can it be considered as an investment? Many will disagree with me. But looking at gold price as of today is hovering around Rs. 31,000 to Rs. 32,000, I would certainly refrain from investing in Gold. In 2015, gold price came down to Rs. 26,343.50 which brings us in dilemma whether investment in gold is a good option.

An alternate form of Currency

Gold can be trusted as an alternate form of currency. If we look at the world history, several times, paper currencies have lost their values. But Gold has always been considered valuable, in spite of change of circumstances. So for that reason, gold can be looked as an investment.

Invest in other forms of Gold

Gold Exchange traded fund is a good option if you want to buy gold as an investment. They are mutual funds that invest in Gold and are traded on the stock exchange. Gold ETFs are very easy to trade. It makes easy for accumulating the gold for long term. There is no fear of theft. There is no question of purity. You can invest small amounts in Gold ETFs through a Systematic Investment Plan(SIP). But keep in mind that here you do not buy physical gold but when you invest in Gold ETFs, the gold of same value is bought in the fund and kept by the custodian.

Sovereign Gold Bonds

This is an alternative to investment in gold physically. This is also a good investment option for Indians. Sovereign Gold Bonds are issued by Reserve Bank of India and hence are safe and secure form of investment. The Bonds are sold at Post offices and various banks. The maturity period for these bonds are 8 years. In a single fiscal year, you can invest in 2 gram to 500 gram gold’s value. You will receive an annual interest of 2.75% which is better than physical gold which lies in your homes idle giving you no interest. The risk in this bond is when there is a price fall of gold in the market, there can be a capital loss, but it does not affect the units of gold for which you have paid. Looking at the long term nature of investment, it is less likely to incur loss.

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Final Words

Gold is timeless. It has passed the testing times in the course of history and has served as an alternate form of currency. Gold can be bought and liquified easily in times of need. Gold has no doubt, been a good investment until recently. There are other options available in case you want to invest in Gold like Gold ETFs and Sovereign Gold Bonds which are safer as there is no storage of physical gold and hence no risk of theft.

To answer the question, ‘Is investment in gold worth it?’. My answer will be ‘Yes’.

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