Skip to main content

Gold ETFs help Portfolio diversification

 


   THE investible potential of gold as an asset class has been a function of jewellery and industrial demand, inflation outlook, strength of the dominant currency, geo-political stability and the gold supply variable. Given the historical and contemporary pervasiveness of gold as a store of value, and to a certain extent, a medium of exchange, gold has adopted a tendency of behaving like a natural currency. Therefore, the investment demand for gold tends to rise in the case of adverse economic conditions, rising inflation, weakening dollar, or general socio-political instability.


   The 15.45% CAGR run-up in gold prices since 2000 was largely attributed to the surfeit liquidity in the early part of the decade, while in the latter half, the turbulent economic conditions, post the sub-prime crisis, contributed to the gold rally. However, despite the teetered recovery in the global economic environment, the optimistic outlook on gold remains unchanged. And here's the reason why.


   Today's geo-political climate has become increasingly volatile, given the ongoing wars in the Middle-east, and the pursuit of nuclear arms by autocratic regimes. This uncertainty has increased further on account of rising tensions in the far-east Asian region.


   Meanwhile, the woes of the global financial economy remain subdued at best. The world's major economies have taken on extensive amounts of debt to keep their economies afloat. To add to that, the economic hardships of Western Europe haven't gone away either. The US economic performance, too, remains modest, with the unemployment situation continuing to worsen.


   Albeit the fear of a double-dip recession in the US and the EU may be unwarranted, yet there is a rising speculation, bordering to near certainty that the Fed-led quantitative easing may be on cards. Consecutively, the key global debt markets continue to remain defensive and maintain a relatively-high risk perception, which in turn, fuels the investment demand for gold.


   Also, traditionally, the gold demand has a seasonal flavour with the intra-year peaking in around November-December. This is attributable to post monsoon festivities in India, corresponding gold inventory expansion by American and European retailers, and the week-long national celebrations in China. Besides, the central banks (bankers) continue to remain net buyers of gold. The interplay of these factors provide a potent case for investment in gold.


   But, from the retail investor point of view, the physical investment in gold has a minor side-effect. Buying physical gold involves the risk of theft, misplacement and potential wrong-pricing. Additionally, when an investor needs to sell his physical gold, again at that point, he/she has to go through the inconvenient route of valuation, bargaining, transaction and delivery.


   All these angles involve risk, skill, and time — making the whole process inconvenient. But thankfully, an alternative method to invest in gold exists. That too without the inconvenience of the physical transaction — that is the Gold Exchange Traded Fund (GETF).


   Gold ETF is nothing but pure gold, traded online through a medium of exchange. Normally, each unit of a gold ETF is worth approximately 1 gram of gold at any point of time. The investors' take-away from GETF is that it allows the investor to invest in gold without bothering for the purity, security or liquidity of gold investment that is attendant with gold hoarding. GETF's online tradability and transactability is exactly like any other stock scrip, making buying and selling an almost intra-day day affair — an idea quite difficult with physical gold.


   In other words, what GETF does is that it gives you the ability to buy, sell, or hold gold at convenience. This idea, though relatively new in India, is quite popular elsewhere in the world. (has caught majorly elsewhere in the world). In India too, with rising awareness, Gold ETF is gaining ground.

 

Popular posts from this blog

Surrender ULPPs

  ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments.   Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies w...

ICICI Pru Constant Maturity Gilt dividend

Invest ICICI Prudential Constant Maturity Gilt Fund Online ICICI Prudential Mutual Fund   has announced dividend under the following schemes: Scheme Dividend ( R /unit) ICICI Pru Constant Maturity Gilt-DQ 0.26543239 ICICI Pru Constant Maturity Gilt Direct-DQ 0.27171609 ICICI Pru Q Interval Plan I-D 0.10617296 ICICI Pru Q Interval Plan I Direct-D 0.10703967 ICICI Pru Q Interval Plan I Ret-D 0.10617296             The record date has been fixed as June 13, 2016.   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) ...

Sundaram Mutual Fund new plan Sundaram Fixed Term Plan CJ

Sundaram Mutual Fund has announced the launch of a new fund named as Sundaram Fixed Term Plan CJ. The new issue will be closed for subscription on January 30. --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.   Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   These Application Forms can be used for buying regular mutual funds also   Some of the best Tax Saving Mutual Funds available are: 1. HDFC TaxSaver 2. ICICI Prudential Tax Plan 3. DSP BlackRock Tax Saver Fund 4. Birla Sun Life Tax Relief '96 5. Reliance Tax Saver (ELSS) Fund 6. IDFC Tax Advantage (ELSS) Fund 7. SBI Magnum Tax Gain Scheme 1993 8. Sundaram Tax Saver   -...

Group Health Insurance

Buy Group Health Insurance Online   For Human Resources, the biggest challenge today is to decide whether medical benefits should be offered to employees or not, what type of plans should be offered, what will be the cost and how will the cost be split between employees and employer. Well, most of these are subjective and would depend on a lot of factors including company size, average employee salary, etc. However, this article will give you a fair idea on how you should go about deciding these factors: 1. Why offer group health insurance benefit to employees : Studies have proved that retention rates among employers offering GHI are much higher than the ones who are not offering. Moreover, the cost of providing this benefit as a percentage of salary is very low as compared to the perceived value. As an example, say if average salary of an employee in your organization is 4 LPA. If you decide to offer a health insurance benefit to him for a Sum insured of ...

Choose gold ETF over Physical Gold

Investing in gold is overall a good portfolio hedging strategy as long as gold does not account for more than 5-10 per cent of your investment portfolio. Between physical gold and gold ETF, investing in gold ETF is a better proposition because these funds invest in physical gold making them the closest to investing in physical gold at no risk of holding physical gold.   You will need to have a demat account to invest in gold ETFs and there is little to choose between any of the gold ETFs, you can pick any fund that you wish to as long as you pick the fund with the lowest expense ratio.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Reliance Mutual Funds: http://prajnacapital....
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now