Minggu, 31 Januari 2010

Investing in Gold

Investing in Gold

Let us today discuss something about the gold investment. Gold is the precious asset class since the history of mankind and the gold was the real money before 1971 worldwide. Yes, the US Dollar and all the major currencies of the world were backed by the gold before 1971.

But after 1971, the President Nixon of USA has removed the gold standard and the US Dollar has become a free float currency and after the gold price has been rise from just $ 15 an ounce to $ 1000 an ounce today in 2010.

This is because the more money the governments and the central banks from all around the world will print and push in the economy, the purchasing power of the existing money (& the newly printed money) will be diluted which drives the commodity prices (Gold, Silver, Oil) higher to the sky.

Since past 5 years, gold has appreciated in 2 digits. Gold has given 2 digits return in the past. India is the largest consumer of gold around the world.

Gold in Portfolio -

Previously the preferred Asset class for any portfolio was Equity & Debt. But in the global financial crises, the paper assets are becoming worthless and gold has taken place in the portfolios of many smart investors. This is because the gold is hedge against the inflation. The gold can beat the inflation very well and give excellent returns in the long run.

However, any portfolio’s Gold allocation should not be more than 10% of its Total Net Worth. Remember, the gold is not for the Capital Gains but it is only to beat the inflation very will. In the long run, Equity has given highest return than any other Asset class in the world.

How to Invest in Gold? -

The obvious question is that, How to Invest in Gold? How many ways you can invest in Gold? Well, broadly there are 2 basic forms of investing in Gold.

01) Physical Gold (Gold Jewellery, Bars & Coins)
02) Demat Gold. (Gold ETFs or Paper Gold)

You can invest in Gold in the various above forms.

Gold Mutual Funds Versus Gold ETFs -

Gold Mutual Funds & Gold Exchange Traded Funds (ETFs) are both the different things. Gold Mutual Funds mainly invest in the Stocks of Gold mining Companies from all around the world while the GOLD ETFs actually invest in physical gold on behalf of you.

Physical Gold Versus Demat Gold -

There are several advantages of investing in the Demat Gold (Gold ETFs). Such as No Wealth tax on Paper Gold, Nothing to worry about Security of the Gold, you can sell it on the stock exchanges any time and many more.

Thus, Invest in Gold. Put the Gold in your Portfolio. Give the Gold a Place in your Portfolio to stabilize it against the wild fluctuations…!!!

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