GOLD- A SAFE HAVEN DURING A GLOBAL CRISIS?


Gold has always been perceived as a safe haven to invest in during times of global crisis. So it is not surprising that in the current times of the covid pandemic and fears of a long drawn global recession gold prices have been on an uptrend and in spite of gold currently being at an all time high of around 4600 per gram, the demand has still not reduced. Those who have already invested in gold may exit other asset classes like equity, debt etc, but most of them hold on to their gold assets, as they are considered to be always a “valuable” investment for the long term.

What are the various ways in which you can invest in gold?

  • Physical Gold – bars, coins, Gold investment schemes run by jewelry shops etc
  • Gold Exchange traded funds
  • Gold funds by Mutual fund companies
  • Funds which invest in Gold mining companies – These assumes higher risk, and is a slightly indirect way of taking exposure to gold, but has potential to generate high returns.
  • Sovereign gold Bonds – These open for a short window regularly from time to time.

While most of them track the price of gold, it is imperative to understand how they work – how to invest, what is the minimum amount required for investing, the ideal time horizon, the exit and withdrawal rules, charges and the applicable taxes. While all this information can be obtained from the internet through some research, what is the most important is to understand which of these is the most suitable for you.

We financial planners sit with our investors and clients, and apart from giving them in depth details of each of the above investment options, we also arrive at which one is the best suited for their personal profile, what should be the percentage to be allocated, depending on how much exposure they already have to this asset class, and aligning this investment to their financial goals.

This is something which one cannot find on google or you tube!

Irrespective of how the economy is doing  or where the prices of gold currently are, we have always advised that gold should always be part of any investment portfolio because it a unique asset class which is  uncorrelated / negatively correlated to other common ones like equity and debt.

Have a query/an opinion/a comment to make? Would love to hear it !

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