Gold has hit a 3 year Low in India and was trading at Rs 25,900 in the Delhi markets. Gold is falling and falling fast. In the international markets gold has hit a four and half year low of $1155 an ounce, but did manage a rebound on Friday. But, every rally in gold is being sold into.
It's not a bad idea to buy any commodity when prices decline. In fact, the known mantra to make money is to buy low and sell high. The only problem being we do not know what low means. In the Sense is the current market price of Rs 26,000 low or would it go further down.
Let's therefore see what the fundamentals suggest
For one, gold always rallies during times of economic stress or strife like wars, internal worries etc. At the moment gold is falling because there is nothing to worry about. There are no serious wars, economies around the world are showing improvement and economic data from the US is getting better by the day. There is an equity bull rally across global markets. As long as all these good things continue, it's unlikely that gold will rally. Gold prices only thrive when there are worries around, which is why it is gold a safe haven bet.
Buying in small quantities is not a bad idea
Equity markets are rallying and things are improving, but it does not take a moment for things to change. It's here when you would have always wanted to at least partially bet on gold as an investment. It's always therefore advisable to buy into gold at these lower levels. There is always going to be a probability that at some stage global economic growth will falter and gold will rally. A vertical rally in economic data or stock markets can only be a myth.
So, buy gold in small quantities and you may reap the benefits when things are not going good.