[blackwasp]

Gold and silver prices moved higher today in Indian markets amid a global rally. On MCX, gold futures hit a new high of ₹55045 per 10 gram after it rose 0.9%. Silver futures edged 0.9% higher to 70,422 per kg. In the previous session, gold futures on MCX had rallied about ₹900 or 1.7%, hitting ₹54,612 at intra-day high. Silver had surged ₹4200 or 6.4% in the previous session.

In global markets, gold prices hit a new high by rising above the important $2,000 mark. A weaker dollar, expectations of more stimulus and rising coronavirus cases boosted the safe-haven demand of gold.

Spot gold was up 0.2% at $2,022.42 per ounce after rising above $2,030 in early session. US gold futures rose 0.9% to $2,039. Among other precious metals, silver fell 0.5% to $24.88 per ounce while platinum dropped 0.9% to $928.95.

This year, gold prices have surged 33% in global markets, also benefiting from record inflows into gold-backed exchange traded fund or gold ETFs. Unprecedented stimulus from central banks have brought down the interest rates, which has benefited non-yielding gold. Further supporting gold, the five-year U.S. Treasury yield on Tuesday hit a record low, while the benchmark 10-year Treasury yield fell to a five-month low.

Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

Source

[Dieseltuned]

Hi,

I have been contemplating investing on the sovereign gold Bond. But with the good prices trending high is this a good time ? I understand that there are many factors which impact the price of gold including buying by countries, dollar valuation,etc. But if we look at legacy of gold prices they have never come down.

Regards
Ritesh

[SmartCat]

Originally Posted by Dieseltuned

I have been contemplating investing on the sovereign gold Bond.

When you invest in Sovereign Gold Bonds, you are not buying real Gold. You are just getting price exposure. The manager of SGBs takes positions in derivatives contracts to mimic the price of Gold. Since there are no storage charges, Government can even afford to pay you 2.5% interest per year. But when you invest in Gold ETF/mutual fund, the fund house actually purchases physical Gold and stores it in vaults (usually in a foreign country).

Not that it matters for an investor though.

But with the good prices trending high is this a good time ?

As long as US interest rates are held close to zero, money will flow out of US fixed income, and into stocks (because of dividend yield) and precious metals (Gold & Silver). The party is likely to stop when United States sees rising inflation, and US Fed is forced to raise interest rates.

I understand that there are many factors which impact the price of gold including buying by countries, dollar valuation,etc. But if we look at legacy of gold prices they have never come down.

Like all commodities, gold prices can go down temporarily too. But if you hold for long enough period, it is likely to go back up again. Because there are only 4 major assets that an investor with liquid cash can invest in - Stocks, Bonds, Real Estate and Gold/Silver. Surplus cash keeps jumping from one asset to another over time.

Meanwhile, India's Gold imports are actually down 25%, probably because of low-key weddings and lack of discretionary jewellery shopping.
https://economictimes.indiatimes.com...w/77344872.cms
But investment demand (Gold ETF/mutual fund, Gold sovereign bonds etc) is zooming. Mutual funds have started advertising their Gold funds on CNBC TV18.

[DCEite]

And for the first time ever i would advise against investing in SGB.

Sovereign Gold bonds have been my default investment route for Gold and have recommended the same to my near and dear ones.

But at this price its simply not worth it.

[GTO]

Gold is on a tear! The prices have just gone up, up, up . Good for those of us who have been investing in gold on a regular basis through the years .

Depending on which jeweller you speak to, they insist that it's going to cross 60,000. One learned dude recommends a long-term hold and says 70,000 isn't too far away.

I see gold as a good investment & diamonds as the worst investment.


Source

[m8002?]

How liquid is this investment? My understanding is that this rate is applicable when you want to purchase it. If I try to sell the physical gold to someone ( Jewellers? ) will I get the same rate or atleast 99% of this rate?

I rarely see someone willing to buy the gold. They are only willing to exchange old gold for new.

[v1p3r]

Man, I bought some wayyy cheap. 70k is a good number to wait for, if at all.

Originally Posted by GTO

I see gold as a good investment & diamonds as the worst investment.

Diamonds tend to be difficult because of opacity in the market. They lack liquidity and price discovery, both of which are essential to commoditize anything. However, if you follow it closely enough, you'll see that it's beaten the bond markets in the US historically, which is enough to classify it as an asset class, however low yield. There are a few ambitious projects working on building in this direction.

[SmartCat]

Originally Posted by m8002?

How liquid is this investment? My understanding is that this rate is applicable when you want to purchase it. If I try to sell the physical gold to someone ( Jewellers? ) will I get the same rate or atleast 99% of this rate? I rarely see someone willing to buy the gold. They are only willing to exchange old gold for new.

Just Google "Sell Gold <CityName>". Example:



Muthoot and Attica Gold are big brands in this space
https://www.muthootgoldpoint.com/
https://www.atticagoldcompany.com/

OR

Invest using "Digital Gold" account -

https://www.motilaloswal.com/technol...ital-gold.aspx
https://www.bajajfinservmarkets.in/I...ital-gold.html
www.bullionindia.in
https://www.augmont.in/app/

You can buy/sell "digital Gold" online and also get delivery in physical form (if you want to caress your Gold bars )

OR

Just invest in Gold ETFs or Mutual Funds, and redeem it anytime
https://www.valueresearchonline.com/...uspended-plans

[groom]

Kitco showed that 2200USD is not too far away.

Considering the uncertainty in US elections and the way the Corona virus might progress, 70k to 80k in gold is possibility.

https://www.kitco.com/news/2020-08-0...-analysts.html

[Dieseltuned]

The current sovereign gold bond series 5 is rated at 5284 per gram when bought online. There is a blocking period of 5 years and all gold trends are pointing towards an upwards projectile. Even at high rates and 2.5% interest payment, this looks like a good option to diversify your portfolio. I generally deal with only PPF and FDs and RDs as safe bets for my money but this now is looking like an option to diversify.

[m8002?]

Thanks SmartCat! I thought places like Muthoot only give out loans with Gold as collateral. I just checked the online rates for 22 Ct gold Attica.

Selling rate: 5180 per gram
Buyback rate : 4845 per gram

Thats a 6% margin. If people are interested in accumulating physical gold, they need to take this difference into account as well. The gold bonds seem like a much better bet.

[SmartCat]

Originally Posted by m8002?

Selling rate: 5180 per gram
Buyback rate : 4845 per gram

Thats a 6% margin. If people are interested in accumulating physical gold, they need to take this difference into account as well. The gold bonds seem like a much better bet.

That's not too bad actually. Gold ETFs and mutual funds have expense ratio and slippages (gold storage & handling charges) of 1% per year. This adds up to a lot over time. For example:

Rs. 1 Lakh invested in a typical Gold ETF or mutual fund 10 years back would now be worth Rs. 2.7 Lakhs. But physical Gold would be worth Rs. 3 Lakhs. And when you sell this physical Gold and you are losing just 6%, you are still better off than Gold ETF/mutual fund investor.

But yeah, nothing beats Sovereign Gold Bonds in terms of returns. Not only is there no manager's expenses, gold storage charges or slippages, you get 2.5% pa kicker over Gold returns too.

[Behemoth]

There is also another option to buy virtual Gold on Paytm (search for Gold in the search bar). They sell MMTC Gold 99.99% - though rates are on the higher side. They also hold the Gold virtually in the MMTC lockers and if you want, you can take Physical delivery, else it remains in the virtual locker. When you want to sell, just sell the Virtual gold and you get immediate payment at the current rate. Off late I have been using this as my investment method for gold.

[alpha1]

Depending on what you foresee as the severity of the economic impact of Covid/lockdowns/distancing - the stock markets may not perform as great as the current prices seem to foretell.

Ultimately when demand for goods and services drop, the firms will lose their profits and will resort to layoffs and other cost cutting measures (like re negotiations with vendors, real estate owners etc).

This situation will lead to recession, for which the Govt's will first cut down the interest rates and then resort to some kind of easing.
(crashing the stock, bond markets, and consequently the real estate)

While things progress this way, people will start parking their monies into assets that they feel will be insured from all this "devaluation". Fortunately or unfortunately, since the written history, precious metals and have held this esteemed status, mainly because of the rarity and the fact that no-one can (yet) "create" them at will.

The prices of gold will only rise, till there comes a certainty in the world that value of other assets are going to increase (a good leading indicator would be when most sales organizations restart talking about double digit y-o-y growth forecasts and achievement).

[aniketi]

Our forefathers used to say to keep investing in Gold. How true it was. One should always have some money put in gold as investment. Normally we should put 10-15% in gold as a investment. Over the period you will get returns.

Always remember to give Gold as gift to your wife on all auspicious days like Dussera, Diwali. This way you can make sure your wife is happy, mostly all women love gold. Also it will not depreciate. Other things like Cloths, Mobile etc will become of zero value in some time. While in Gold, your money will be intact as it is, in fact over the years it will increase only, in long term many times. It's like Double Dhamaka I am following this for years now !!