Lesson 8: Investing in Gold

Gold is not new to us. Come marriage and there is the shameless talk of gold for dowry. We still have some auspicious day to buy gold. The shining yellow metal has attracted humans (especially indians) a lot and there are good reasons for that. Gold has always been equated to the status symbol. It does not get rusted or for that matter loses its shine. It is extremely ductile and can be easily converted to another form (jewellery).

Well we can go on like this and a chemist can give much more information like its symbol (Au) and what not. But let us focus our attention to its investment oriented features. Gold can be readily converted to money (sell/pawn). But the best feature is that it is a good hedge against inflation and it does not lose its value as the years go by, like an idle cash does. It is also accepted throughout the world. But it also does not generate returns (Two gold coins does not give birth to another one).

So what then. Diversification is the key. Have some amount of your money in gold. Of course if you are buying jewellery then your wife should be very happy about it. But we are not talking about jewellery. We are talking of pure gold coins . Jewellery gold may not be pure and also we need to face loss in the form of ‘Making charges’ and ‘Losses while the jewel is made’. When we resell, the person buying it may again ask for losses as he will have to recast the jewel to some new model. So it is loss all the way. Instead we need to buy gold from reputed sellers like ICICI bank, where you get a nicely packed gold coin along with its purity certificate. It is available in 5g / 8g / 10g. So next time, gift your wife with a beautiful gold coin.  And you can be happy that you have invested in gold too….

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