There are many reasons why we shall look beyond conventional Fixed Deposits , PPF and high growth Shares and Mutual Funds. Gold is always seen as a thing to own and only for consuming as ornaments , for jewellery but seldom as an investment purpose , in fact silver also for that matter.
But now there are many reasons to invest in GOLD , just like people invest in Shares , Mutual funds, PPF, NSC and Fixed Deposits.
- Reason 1: Stock Markets are becoming risky and uncertain. Stock Markets are in Bad shape for at-least short or medium term at-least. No one knows what’s going to happen in 6 months or 1 year or 2 year. Long term may be good but still medium term perspective is not very clear. Not only Stock Market , but whole of financial Markets are uncertain , if you consider problems like Inflation , dip in projected GDP growth of economy etc .
- Reason 2 : It acts like hedge towards Inflation and Foreign currency As Indian currency is gaining against Dollar and other currencies , Rupees is set to become more strong in coming years. Gold has inverse relation with Dollar. In future as Dollar weakens , GOLD will become more strong.
- Reason 3 : Its a relatively less known investment option and has high potential in future. Looking at history , and every time we see that a investment option starts becoming popular and by the time most people know about it , it already gives most of its returns and becomes a talk of past. GOLD has started gaining attention as investment option and becoming popular and still in its middle stage , if not early. So its the time to ride the boat.
- Reason 4 : Future High Demand and less supply. In future gold is going to in high demand and its already in less supply , so according to the demand-supply logic the prices are bound to go up in near future. Indians account for 23% of world’s total annual consumption and overall global demand has increased 15% Year on year. Gold demands were on all time high in 2007 and expected to increase in coming years due to mismatch in demand and supply.
- Reason 5 : More Diversification. Before some time back , diversification of portfolio was limited to Equity , Debt and Real Estate and some cash , so that your risk is spread across different class of assets. GOLD has evolved as another asset class and not it help in diversifying your portfolio.