If you had to invest in gold a year back in India or even at the start of the year, you would have made solid returns. Take a look at how gold has been the best investment bet in the last 1 year.
Take a look at the returns of gold, shares and FDs for the Indian investor
|Asset Class||Returns in last 1-year|
|Mutual Funds||Most have given negative returns|
Gold on a roll
Two things have helped gold prices rally in India. the first is international prices have rebpunded sharply and second is the rupee has fallen past the 72 levels against the dollar. o, both these factors have worked in tandem to push gold prices in India higher, both spot gold as well gold ETFs and gold futures.
For a change, gold, especially Gold ETFs, which track gold prices have given solid returns of nearly 30 per cent. UTI Gold ETF has given returns of 30.77 per cent, while Kotak Gold ETF 30.71 per cent and most other Gold ETFs have generated similar returns.
The stock markets have been extremely damaging to wealth of investors. Most small and micap stocks have seen a severe collateral damage and mutual funds have given negative returns to investors in the last one year.
Most fixed deposits have generated returns between 6-8 per cent and they have at least managed to protect your capital, unlike shares and stocks.
Will gold continue to rally?
The question now is: would the rally in gold continue? It is possible that the upside maybe capped at these levels, though a sharp downside is ruled out. Investors are beginning to turn risk averse on fears that the global economy is slowing down. Some investors are even talking of a recession. Against this backdrop, it is difficult to believe that gold prices in India would fall dramatically from here.
Also, there are hopes that interest rates across the globe, particularly in the US would be cut. When interest rates fall, most investors tend to move money away from fixed income yielding instruments to gold.
In fact, gold is a perfect hedge during times of trouble and it would not be a bad idea to buy into gold. Most analysts advocate at least a 10 per cent holding in the form of gold. For the first time in many years, we are seeing returns as stupendous as 30 per cent from gold in India.