Gold has never failed to favour investors in India on a long term basis and it is one of the most popular commodities to invest in. Throughout the years it has gained a commendable pace mainly due to intense inflation rates. Gold has delivered even more than 54,000% return to investors in the last 75 years in India. Gold price post-independence has leaped from around Rs. 88.62 per 10 gm to around Rs. 48000 per 10 gm in the retail bullion market.
Anuj Gupta, Vice President - Commodity & Currency Trade at IIFL Securities commented to a leading English daily, "Gold has been a favourite investment option among Indians and it was a lucrative and revered investment instrument when India became an independent nation on 15th August, 1947. The average gold price for the year 1947 was around Rs. 88.62 per 10 gm and today it has peaked up to near Rs. 48,000 per 10 gm in the retail bullion market - logging around 54,000% return post-independence."
Hence, gold investors are quite happy now about the market and when the equity market does not support they eventually vouch for gold. Additionally, investors who hold portfolios mostly in equity funds, are also inclining towards gold for diversifying their investments.
During the independence in India, the economic situation was not at all favourable. Stuck with a food crisis and very poor employment opportunities, people could not look out for gold much. Only industrialists and few investors thought it might offer good returns later and stored it for the time being. These investors proved to be lucky in the future in terms of a steady price hike of gold. Gold prices are decided in the international market depending on multiple factors like US dollar valuation, interest rates and inflation, and demand-supply impression. The global economy has favoured the market for gold and eventually in India.
Gold is mostly used for jewellery and in very limited ways for few industries. It has utilities only because it is a precious metal. The supply of the metal is limited, depending on the mining levels. As the demand for gold has gone to its peak in the last year, the supply of gold is rising too.
Should investors look for gold now?
The answer is a straight yes. The gold prices fluctuate every day and the prices are not as high as the 2020 level now. August is also seeing 4-5 months of low prices as the economy started to get momentum. Since independence gold prices have gone too far. At a time gold was quite affordable but the situation has changed for some people. Even if it is not possible to invest in gold in large amounts, investors should focus on the gold portfolios in small amounts. Along with diversifying the funds, it will secure the investors' portfolio in the long term.
Today on 16th August the international gold prices on MCX (FUTCOM, 5th October - expiry date) is standing at Rs. 46848 till 12.15 pm (IST) with a 0.21% downfall and Rs. 100 sink since earlier trading day. Investors can look out for the yellow metal now in this range as the precious bullion metal can reverse course positively in the coming months.