Is it worth investing in Gold in this modern era of investment?

by Avisekh Sharma / June 11, 2021

Gold is not only considered precious but also is quite close to Indian sentiment. They consider gold as a lucky charm and one of the safest investments as well. Businesses and markets do not value sentiments and they have their own rules of operation. The modern era of investment provides many profit-making tools like stocks, mutual funds, SIPs, and ETFs, etc. Hence, we will discuss in this article whether investing in gold is still worth in this recent era of the global market especially after the pandemic?

Performance of Gold in the past decade

  • Gold has returned more than 116% in the past 10 years.
  • The Indian market has witnessed the journey of the price of gold from Rs.18000/10 gms in 2010 to Rs. 39000/10 gms in the next years.
  • The market has also witnessed a whopping 35% increase in gold return in the year 2018.

Hence, the short and simple answer to the question we are trying to figure out is “YES”. But as I mentioned earlier market has its characteristics and one must aware of the following facts before investing in gold,

  • Unlike bonds or, stocks, gold does not generate a return at a regular interval in the form of profits, interest incomes or, dividends.
  • Gold has an inverse relationship with the market opposite to debt or, equity.
  • When the market is steady and the stock & equity prices are moving towards the north direction, the price of gold lies low and stagnant.
  • The price of gold can shoot steeply high when the market is volatile and other profit-making tools like stocks, mutual funds, and equities are facing a deep fall.
  • Gold can return you a lump sum one-time profit at the time of selling especially when the financial market is under stress. The burning example of such a situation is the present post-pandemic era.
  • Gold can also return a very low percentage for consecutive years like early 2015 to the middle of 2019. But the surge in the gold price in 2020 has squared up the lower growth of the past four years.

So, if you are planning to invest in gold, remember that patience is the key to make a profit. Gold is a player of the long rally and is free from the risks associated with other investment tools. Besides being safer it has returned 116% in the last 10 years as compared to Nifty’s 135%.

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