Is Now a Good Time to Invest in Gold? Here’s Everything You Need to Know

Gold has historically been treasured and considered auspicious in India, making it one of the world’s greatest marketplaces for precious metals. Gold is firmly ingrained in India’s cultural past as a symbol of richness and wealth. While the gold market initially fell due to the mandated lockdown at the start of the year, demand for gold has increased worldwide since the outbreak. It is projected to increase as the festive season approaches since gold consumption is projected to play a key role in India’s economic recovery.

When compared to other assets such as equities, gold has always been a loyal ally amid financial struggles and is a less volatile asset. You can buy gold since it is regarded as a low-risk, safe investment option-especially during uncertain times. There is no particularly good time to buy gold for investment objectives. Gold, according to experts, should be included in every investor’s portfolio. Gold consumption is primarily driven by necessity, such as weddings or religious activities, but given the global economic slowdown this year, it is even more important to enter this asset class now and buy gold to your investment portfolio.

What are the Few Reasons Why Now is the Good Time to Buy Gold?

The following are a few of the reasons for investors to invest in gold:

• Hedge against inflation that has worked in the past: With rising inflation and a weaker dollar, the gold prices usually rise in tandem . As a result, as investors realize that they are losing their money, they might consider to buy gold as a hedge asset. When the worth of the dollar declines, gold’s value often stays the same or even rises. For more information about currency hedging, visit our website.
• Preservation of one’s wealth: Many investors have put their faith in gold because of its ability to preserve wealth. We all know that gold is a valuable metal. Gold has a unique position in any Indian household and is seen as a family’s wealth; for example, when you buy gold jewellery it is passed down through the generations as a legacy and a symbol of family riches.
• Liquidity: One of the most enticing aspects of gold investing is its easy and quick liquidity, which is useful in times of need and financial disaster. Let us compare this to real estate to obtain a better idea. It’s challenging to sell a real estate property for cash, especially if you need money right away. If the owner doesn’t have any other options, he may be obliged to sell it for less money. If you buy gold, on the other hand, you can quickly sell it for cash without losing any money because the prices are purely decided by current gold prices.
• Tangible Assets: It is considered to be a real-world investment when you buy gold. Natural disasters such as fire and flooding do not affect them. It also doesn’t necessitate any more investments to keep it safe and maintain it. Furthermore, it is immune to the same digital security issues that internet investing methods are, i.e. Gold is unaffected by both hackers and natural disasters. Gold is advantageous even in times of commodity crises.

How to Diversify Your Portfolio with Gold?

The investment portfolio of a person is made up of all of their various investments. According to market experts, some of the best investment portfolios are those that include investments made in a variety of ways rather than those where all of the investments are concentrated in one or two sectors. Some of the most common investment industries are mutual funds, stock markets, real estate, and gold. Buying gold is the only one of these assets whose value is unaffected by market movements, as previously stated.

Market analysts feel that diversifying investment portfolios is advantageous because if one of the investment sectors undergoes a crisis, other investments can provide a hedge against the crisis, and when you buy gold it acts as the ideal hedge in these situations due to its stable price. Because gold has never lost its value and has never dropped to zero, it is one of the best ways to diversify your investment portfolio while minimizing the risk associated with other assets, as it is not correlated with market performance.

What do you mean by Gold Investment ?

Although there are many other precious metals, gold is widely considered to be one of the best investments. Due to various influencing characteristics such as a high degree of liquidity and the ability to exceed inflation, gold is one of the most recommended investments in India. Coins, bars, jewellery, gold exchange-traded funds, sovereign gold bond schemes, gold funds, and other forms of gold can all be purchased. 

Although markets occasionally see a decline in gold prices, it rarely lasts long and always rebounds to a strong upward trend. Once you’ve decided to buy gold, you’ll need to think about how you’ll go about doing so. There are numerous advantages to investing in gold nowadays.

How is the Best Way to Invest in Gold?

The best way to look at an asset class is from the standpoint of its allocation in the portfolio. One reason for assigning assets to different asset categories in the portfolio is that, in an ideal world, asset classes would have a negative correlation, allowing your portfolio to remain balanced. In actuality, there is no such thing as a negative correlation, although a low positive correlation is preferable. 

As a result, your portfolio will be less volatile, as all of your investments will not rise or fall at the same time. The idea for investing in gold is the same: allocate certain funds to it so that your portfolio’s volatility is reduced to that level, i.e., low positive correlation with other assets. The advantage is that risk-adjusted returns, or returns adjusted for volatility, will be significantly higher. 

Gold allocation in your portfolio should be based on your investment objectives, profile and the investment horizon. It should however be kept to a minimum and should not make up a significant portion of your portfolio. The most frequent asset classifications are debt and equity; equity is designed for long-term wealth production as well as economic expansion; debt is designed for short-term wealth generation and more stable returns. If you have some gold in the portfolio, you will have less overall volatility than if you simply had stocks and debt.

Investing in Gold Isn’t Rocket Science?

One of the unpleasant truths of most financial investments is that to create successful returns, investors must have some previous knowledge, which is why many people avoid making financial investments. When you buy gold, on the other hand, it does not require any prior knowledge, special expertise, or an investor’s mindset, making them suitable for anyone wishing to take their first steps into the world of finance.

Another benefit of gold investments is that determining the performance of gold returns is simple because all that matters is the price of gold. As a result, investors will have to be far less concerned about their investments and will only need to keep an eye on the good time to buy gold.

Is Gold a Viable investment option to choose now?

Gold is an asset which will never go out of style. Due to uncertainties in the entire global markets last year, gold was among the most sought-after assets in 2020. It is one of the rarest common metals available on the planet. Owing to the spike in gold prices, people investing their funds in the gold saw their returns skyrocket in 2020. Buying gold funds have returned an average of 26.84 percent over the last year. With 11 percent returns in the Jan-March quarter, gold funds led the return charts.

Gold has risen significantly in value over the previous two years for a variety of reasons. However, it has failed to reach the 2011 high point.

What are the Numerous Elements that Could Have an Impact on Gold’s Price in the Future?

• Covid’s reappearance
• The situation of the World Economy
• Value in US Dollars
• Inflation/Interest Rates Inflation/Interest Rates Inflation/Interest Rates Inflation/Interest Rates Inflation/Interest Rates
• Other Factors

In general, gold prices will be determined by the seven criteria listed above. Although Covid-19 immunization has begun to reach the marketplace, the introduction of a new form of Coronavirus could cause gold to rise. In general, any epidemic will devastate the world economy, and gold’s price will rise during these uncertain times. Although the likelihood of this situation occurring soon is remote, one never knows.

If the global economy is doing well, investors will ditch gold in favor of other asset types that offer better returns. With the modification of Covid-induced lockdowns, economies are currently in a good mood, and gold may be on the rise in the near term. However, there are other more variables in gold’s favour.

The price of gold is heavily influenced by the value of the US dollar. The dollar may weaken in the short term as a result of the flow of dollars to emerging countries, driving the price of gold higher. This has already begun to happen, and it may continue to do so in the short to medium future. The dollar’s weakening could help gold prices rise.

Even before the epidemic, one of the causes for the rise in gold prices was the US-China relationship. However, under the next US President, tensions are expected to decrease. Nonetheless, the relationship will not be fully smoothed out. As a result, there is still a chance where you can buy gold at its peak.

The United States and other governments around the world are printing trillions of dollars to bolster their economies. Inflation will be stoked as a result of this. Inflation is gold’s buddy, and it will raise its price. This is a strong potential in the current circumstances, and gold prices may rise as a result. Aside from money printing, general inflation will also assist the price of gold rise. As a result, gold prices in countries like India tend to rise over time.

Other factors that influence gold prices include gold mining and gold reserves owned by several central governments. We don’t expect countries to sell their gold holdings soon. Many countries, on the other hand, have boosted their holdings. As a result, these other variables are unlikely to put negative pressure on gold prices.

Gold has been a part of history for over 3000 years and will not disappear for the same period of time in the future, nor has its value ever fallen to zero. When the economy is hit by a financial catastrophe, gold will be the last thing standing as a shield. Overall, what we want to express is that if you want to buy gold but are hesitant to do so for a variety of reasons, we hope that the information presented above has swayed your opinion in the correct direction. Finally, remember to get financial guidance from your financial counsellor before making any financial investment.

You Might Also Like: A Gripping Pandemic and Its Effect on the Yellow Metal

FAQ