Gold Investing


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Gold Investing

  1. 1. Why gold prices are rising ??
  2. 2. <ul><li>Gold Prices in recent past has out-performed every other Asset Class. </li></ul><ul><li>So,after hitting Rs 16,000 per 10 gm in September 2009, gold prices zoomed to touch the Rs 18,000-mark in November. </li></ul>
  3. 3. Reasons for the rise: <ul><li>Dollar crisis : A weak dollar in the wake of the recession has forced people to invest in gold which in the long run would fetch more returns.  Dollar is likely to weaken further leading to a further rise in gold prices. </li></ul><ul><li>Low saving rate : With banks offering lower interest rates, fixed deposits make little sense. It is cheaper to even borrow money to invest in gold. </li></ul>
  4. 4. Reasons for the rise: <ul><li>Inflation: Gold has always been a good tool to fight inflation. Rising inflation rate appreciates gold prices. With inflation rising to record highs, gold will prove to be a safe bet. </li></ul><ul><li>Economic crisis : Gold has always given high returns over a long term. As the crisis triggered a fall in markets across the globe, many investors wary of investing in stocks or bonds, found refuge in gold. Gold is globally accepted and easily convertible into cash. </li></ul><ul><li>A fall in gold supply : Gold mining is decreasing and the demand for gold is increasing. Gold supply has decreased by almost 40 per cent as the cost of mining, legal formalities and geographical problems have increased which has led to a fall in gold mining. </li></ul>
  5. 5. Reasons for the rise: <ul><li>US interest rates : The interest rates affect gold prices. Whenever interest rates fall, gold prices rise. Lowering interest rates increases gold prices as gold becomes a better investment option. </li></ul><ul><li>Political concerns, crisis : Whenever there is a crisis, war, terrorist attack etc, investors rush to prevent erosion of their investments and gold as a safe haven. After 9/11 terror attacks in the United States, the demand for gold had gone up. </li></ul><ul><li>Festivals: Indians are among the largest consumers of gold. Gold has been used as ornaments and gifted during festivals and weddings.  So there is a huge demand for gold during the festive season. </li></ul>
  6. 6. <ul><li>High value and liquidity : It can be converted into cash and hence it is a highly liquid asset. </li></ul><ul><li>Good security : It is easy to  get a loan banks since banks accept gold as security. </li></ul><ul><li>Investment in gold bonds : The other option is to invest in gold bonds or certificates issued by commercial banks. These bonds generally carry low interest rates and a lock-in period varying from three years to seven years. On maturity, depositors can take the delivery of gold or amount equivalent depending on their options. </li></ul>Why invest in gold?
  7. 7. Why invest in gold? <ul><li>No income tax : Since there is no regular income from investment in gold, the income will not be subjected to tax. </li></ul><ul><li>Stable investment : Gold pricing is not volatile so it remains stable. It is more stable than currencies. </li></ul>
  8. 8. So When you have doubts regarding Investment in Gold - Just remember ……
  9. 12. <ul><li>Now If you have made your mind…….Let’s show you - ‘How to Invest in Gold’ </li></ul>
  10. 13. How to Invest in Gold.. <ul><li>Gold bars, coins : It is better to have 5-10 per cent of your net assets as gold. You can invest in gold bars and coins. You may not get a good price for jewellery because of making and processing charges involved in it. Smaller bars are more expensive than large bars but are easier to sell. Bars carry a higher price premium than coins. </li></ul><ul><li>Hallmark : Look for hallmark or BIS sign on gold bars and coins. It is a sign of quality and purity. Buy only from a known dealer or bank.  It is better to buy gold coins and gold bars from banks like HDFC Bank, State Bank of Mysore, Bank of Baroda, Canara Bank, Corporation bank, ICICI Bank etc. </li></ul>
  11. 14. <ul><li>Bullion Derivatives: </li></ul><ul><li>Derivatives for contracts such as gold forwards, futures and options, currently trade on various exchanges around the world and over-the-counter (OTC) directly in the private market. </li></ul><ul><li>Investors in India can take exposure in U.S. based Commodity exchanges through hedge positions or directly invest money through Indian Commodity Exchange like National Commodity and Derivatives Exchange (NCDEX) and MCX(Multi-Commodity Exchange) . </li></ul><ul><li>Gold ETFs </li></ul><ul><li>There has been a rise in the Gold Exchange Traded Funds (ETFs). ETFs are mutual funds that stock up gold and then issue units for the same value for investors to trade.  </li></ul><ul><li>ETFs allow normal investors to hold gold electronically in paperless form. </li></ul><ul><li>According to World Gold Council estimates, ETF demand for gold in the first half of 2009 stood at over 500 tonnes, three times their annual levels five years ago. </li></ul>How to Invest in Gold..
  12. 15. How to Invest in Gold.. <ul><li>Gold Certificates & Bonds </li></ul><ul><li>A certificate of ownership can be held by gold investors, instead of storing the actual gold bullion. Gold certificates allow investors to buy and sell the security without the inconvenience associated with the transfer of actual physical gold. Some counter that, due to the difficulties of owning and storing a significant amount of gold, a government backed and guaranteed product is the most convenient and cost effective route to take. </li></ul>
  13. 16. <ul><li>A Money Fair Initiative </li></ul><ul><li>Happy INVESTING!! </li></ul>