Many of my young friends have asked me for tips on investing. So here is one. This is the worst kept secret. I will get no prizes for this one. It is invest in gold systematically. Now don’t put all of your money in gold. That would be foolish, no asset class deserves all your money. Always spread the risk. But Gold is always a good bet. Here are a few reasons why.
1. Gold can be worn. If designed and created aesthetically, jewellery can be pieces of art and heirlooms. And you know how ‘Art’ appreciates.
2. Gold can be gifted. I don’t think I need to add anything here.
3. Gold does not lose its shine.
4. Gold cannot be counterfeit. You can always check its purity and authenticity.
5. Gold is the commodity with eternal demand –supply mismatch.
6. Today Inflation is soon to touch double figures. So money is losing its value everyday. Gold is your bet against inflation
7. If you look at the domestic economic scenario today, the rupee is set to lose its value due to a looming large fiscal deficit. If the government is forced to print money, what happens to the price of gold?
8. If you look at the world economy today. It is a tale of greed and mismanagement. QE1, QE2 … QE3? QE4? EU crisis?. So let us look at the various scenarios. In case there is QE3 then I don’t think I need to elaborate. The value of the dollar will go down and Gold will be the safe haven. If there is no QE3, then what? Well, this affects growth, growth will slow down and returns will be miniscule. So where will all the money sloshing around the world go to? To safer haven, to speculative haven? Which is Gold once again. The EU crisis is already here, what can EU do? Well what else but print more Euros? And what happens to the Euro? It plummets and what happens to Gold? It rises.!
9. In India, we are suddenly sanguine that with no QE3, commodities will be down and Oil will be down and so our economy will be back on track. But we are forgetting that with no QE3, dollar will appreciate and this coupled with rupee devaluation ( refer to point 6&7 above ) will make Gold very very dear oh dear !
So my young friends buy gold
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