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Should you invest in gold
- 3. Index 1. HistoricalPerspective–HistoricalGoldPricemovementforlast95years 2. CurrentGoldCache 3. DidyouKnow(Somefacts(Nuggets) aboutGold) 4. GoldComparativePerformance 5. GoldReturns 6. TailwindsandHeadwinds 7. RoleOfGoldinyourPortfolio 8. InvestingOptions 9. SovereignGoldFunds(SGF) 10. InvestmentProcedure
- 4. 10GmsofGoldPriceHistoryfortheLast95Yrs & in April, Year 2020 Gold Price is 45,750, Intl Price $ 1715 an ounce
- 6. Gold is the only metal that is yellow or "golden." Other metals may develop a yellowish color, but only after they have oxidized or reacted with other chemicals. Nearly all the gold on Earth came from meteorites that bombarded the planet over 200 million years after it formed. Gold is extremely ductile. A single ounce of gold (about 28 grams) can be stretched into a gold thread 5 miles long. Gold threads can even be used in embroidery. Whenreferringtodiamond, Caratreferstoweight.,i.e.onecaratweighsapprox. 0.2grams. InGold,Caratreferstomeasurementofpurityof Goldandnottheweight. GoldWeightismeasuredingramsorTroyounces. Goldhasbeendiscovered ineverycontinenton earthand75%ofGoldin circulationwasmined after2010 DidYouKnow? In560BC,The Lydiansproduced thefirstGoldCoin whichistheearliest recordeduseofgold asacurrency. In1912theOlympicGoldMedals weremadeoutof24CaratGold,in todaysOlympicstheyarerequired tobecoveredinjust6gramsofGold. Inthemiddleages drinkingmoltengold andcrushedemeralds wereusedasacurefor bubonicplague. Thelargestnuggetofgoldeverminedwascalled the“WelcomeStranger”andwasminedin1864 inCaliforniaandproduced2.248ouncesofpure gold. 9Carat Goldis actually only 37.5%of Gold Theworldslargeststockpileofgoldisstored attheFedReserveVaultsinNewYorkandit holds25%GoldReservesinonelocation. Goldhasmanyusesasidefromitsmonetaryandsymbolic value. Amongotherapplications,itisusedinelectronics,electrical wiring,dentistry,medicine,radiationshielding,andin coloringglass. Goldmetalflakesmaybeeateninfoodsordrinks,althoughit isacommonallergenforsome. GoldgetsitsnamefromtheAnglo-Saxon word"geolo"foryellow.ThesymbolAu comesfromtheLatinwordforgold, "aurum."
- 7. The chart ranks the best to worst performing indexes per calendar year from top to bottom Past performance may or may not be sustained in future. Indices Used: S&P BSE Sensex Total Return Index; MCX Gold Commodity Index and CRISIL Composite Bond Fund Index Source: Bloomberg 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD April Equity 49% Equity 49% Gold 26% Equity 83% Gold 23% Gold 32% Equity 28% Equity 11% Equity 32% Bonds 9% Bonds 13% Equity 30% Gold 8% Gold 24% Gold 18.38% Gold 20% Gold 16%Bonds 9%Gold 24% Equity 19% Bonds 7%Gold 12%Bonds 4% Bonds 14% Equity -4% Gold 11% Gold 5% Equity 7% Equity 16% Bonds 3.65% Bonds 4%Bonds 7% Equity -52% Bonds 4%Bonds 5% Equity -24% Bonds 9% Gold - 5% Gold - 8% Gold - 7% Equity 3% Bonds 5% Bonds 6% Bonds 11% Equity -18.38% Besttoworstperformingindexes Returns
- 8. Year Gold Silver Sensex 2020 YTD April 18.36 -15.88 -18.38 2019 24.1 14.1 22.9 2018 7.5 5.9 -2.1 2017 5.2 27.5 -1.5 2016 11.5 2 19.9 2015 -6.2 -5 -7.9 2014 -8.2 29.6 -15.6 2013 -4.9 8.5 -24.3 2012 12.1 25.1 12.1 2011 31.7 -25.1 8.8 2010 23.6 17.4 71 ReturnsIn%inThelast10Years *% change on a calendar year basis Returns Year Gold Level (Rs/10 gm) Sensex Level 2004(Aug) 5,954 5,170 2007 (Dec) 10,598 20,287 2010 (Dec) 20,728 20,509 2013 (Dec) 28,422 21,170 2016 (Dec) 27,445 26,626 2019 (Dec) 39200 41306.12 2020 (Apr) 46400 33712.62 SensexVsGold(AbsoluteValue) Year Value Returns % SENSEX 1980 100 16.42% 2019 41558 GOLD 1980 1330 8.74% 2019 37985 Sensex&GoldReturnchartfor39years(From1980to2019)
- 9. InvestmentinGold Tailwinds The 2020s expected to favour Tangible assets, especially Gold as currency debasement creates panic. Financial and Geopolitical uncertainty - Gold provides the perfect hedge against uncertainty and Equity. Central Banks buying Gold should remain robust also leading to spike in prices Limited supply and small asset base ( Total estimated Gold reserves in the world are less than 200000 Tonnes) China likely to increase / shift reserves in Gold due to increased US – China tensions. Historically, Gold performance spikes in era of negative or low interest rates. Headwinds Low Economic growth will impact the industrial demand negatively. Poor consumer sentiment, low income and high prices shall impact the Jewellery demand. Traditionally Gold has longer market cycle with large variation in Peak to previous Peak. E.g. Gold is still to touch the previous peak of $ 1920 touched in 2011.
- 10. RoleofGoldinyourPortfolio How Much Gold Should Be in Your Portfolio? Your portfolio should be structured in a way that helps you reach your long-term goals. Gold should be treated like an Insurance for your portfolio. Like, when you buy a car, you take an insurance which may cost 3-5% of the cost of the car, but in case of an accident, it will reimburse your damages. Similarly, One of the biggest reasons to include gold in your portfolio is to hedge against inflation. Some people believe that in the event of a totally unprecedented financial meltdown, gold could provide security while other assets are crumbling. Secondly, Gold often moves opposite to the stock market. So, if the stock market drops, gold often heads higher. If you want to add some balance to your portfolio, investment in Gold may provide the balance or hedge. One rule of thumb is to limit gold to no more than 5 to 10 percent of your portfolio. Depending on your situation and your risk tolerance, you might be more comfortable with a bigger or smaller share of gold in your portfolio. In the end, gold can make a fine addition to your portfolio—as long as you know why you include it, and it helps you reach your long-term financial objectives.
- 11. WarrenBuffetonInvesting inGold “I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side… Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States… For $7 trillion dollars… you could have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have a trillion dollars of walking-around money… And if you offered me the choice of looking at some 67- foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally… Call me crazy, but I’ll take the farmland and the Exxon Mobils. Interesting Economics & Observation: 1990 .....1KG gold = Maruti 800 2000......1KG gold = Maruti Esteem 2005......1KG Gold = Toyota Innova 2010......1KG Gold = Toyota Fortuner 2016.....1KG Gold = BMW X1 2020……1KG Gold = BMW 3 Series Keep 1 KG gold & wait till 2030....you may be able to buy a private Jet.... ***** The“WealthEffect” ofrisinggoldpricesalone, inIndia isworth$266bnoverthelast12-14monthstill Dec19 andanother$150bntillApril20. ThisShouldprovidesolacetobeleagueredHH balancesheetsandsupportconsumption. OntheContrarytoBuffet
- 13. SovereignGoldBondBenefits Hassle free: Ownership of gold without any physical possession (No risks and no cost of storage) Tax treatment: The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond. Tradability: Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI. Transferability: Bonds shall be transferable by execution of an Instrument of transfer in accordance with the provisions of the Government Securities Act. Sovereign Guarantee : Both on redemption amount and on the interest. SovereignGoldBondFeatures Eligibility: The bonds will be restricted for sale to resident Indian entities including individuals, HUFs, Trusts, Universities and Charitable institutions. Denomination: The bonds will be denominated in units of one gram of gold and multiples thereof. Minimum size: Minimum permissible investment will be 1 gram of gold. Maximum limit: Maximum limit of subscription shall be of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time Interest rate: The investors will be paid Interest on the amount of initial investment at the rate notified by RBI for a particular tranche at the time of its launch and is payable semi-annually. Tenor: The tenor of the bond will be for a period of 8 years with an exit option from 5th year onwards to be exercised on the interest payment dates. Redemption: Redemption price shall be fixed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited. Ease of Borrowing Loan : SGB can be used as collateral for loans.
- 14. SovereignGoldFund(SGF) No. Tranche Period of Subscription Date of issuance Issue price (Rs./Gra m) 1 2020-21 Series I April 20 -24, 2020 April 28,2020 4581 2 2020-21 Series II May 11 -15,2020 May 19,2020 4540 3 2020-21 Series III June 8 -12, 2020 June 16,2020 TBA 4 2020-21 Series IV July 6 – 10, 2020 July 14,2020 TBA 5 2020-21 Series V August 3 – 7, 2020 August 11,2020 TBA 6 2020-21 Series VI August 31 – Sept 4, 2020 September 8, 2020 TBA IssuanceCalendar Sovereign Gold Bond Scheme 2020-21 Series II will go live on NJ E-Wealth from Monday, May 11th, 2020. Issue Price: Rs.4,540/gram. Payment modes: Net banking & Auto Debit.
- 16. Call us today at +91-98728-04694 +91-98882-20088 For regular updates follow us on twitter.com/sahayakassociat fb.com/sahayakassociates www.sahayakassociates.in sahayakgurukul.blogspot.com Contact Mr. Sahayak for all your Investment Needs Thank You ! Happy Investing !