Gold price has had a tremendous run in 2019, much to the surprise of investors. The precious metal has outshone all asset classes by a distance.
Returns from select Gold ETFs
|Scheme||Returns – year to date|
|Axis Gold ETF||22.58%|
|IDBI Gold ETF||22.07%|
|SBI Gold ETF||22.27%|
|ICICI Prudential Gold ETF||22.07%|
|Quantum Gold Fund||21.93%|
|Kotak Gold ETF||22.10%|
|UTI Gold ETF||21.98%|
If you see the table above, you would realize that gold ETFs or exchange traded funds, have recorded phenomenal returns, beating even equities by a distance. Gold ETFs track gold prices and are traded like shares in the electronic form. Even if you had to buy physical gold last year at the same time, you would have ended-up with almost similar returns.
The run in gold has been on account of a number of reasons. The first is that there is immense liquidity around the globe, thanks to easy monetary policy, which has pushed investors into buying a safe haven asset like gold. Secondly, there were some concerns on the US-China trade tariff barriers, which promoted investors to buy into gold. Generally speaking, investors tend to use gold as a hedge and park money in the safe haven asset.
Will the returns continue?
The only way you can make money is buy low and sell high. At the current prices gold is not very cheap.
Gold will rally, when there are some tensions, including geo-political tensions. We have already seen a phenomenal rally in the many months and it remains doubtful that the trend would continue. For investors looking to buy, a right strategy would be to do so on dips. At the current market price, chasing gold, is unlikely to fetch you any great returns. In fact, if you have made money from gold, it would be time to book profits, if not completely than at least partially.
It is highly likely that gold prices would dip and it is at that stage, it would be a good idea to buy.