After showing tremendous patience for the last 2-3 years, investors in gold have some reason to cheer. Gold is back with a bang as investors dump shares amidst global economic growth worries, China growth and a crude oil slump.
So far, gold has seen the best week in 4 years and the equity rout is forcing investors to dump shares and buy safe haven gold.
In India, gold is getting even more expensive as apart from international prices, the rupee is falling sharply. The rupee was last trading at Rs 68.30 to the US dollar, which is pretty close to its historic closing.
This is pushing gold rates in India to levels near Rs 29,000, to the delight of gold investors.
How far gold can go?
Nobody can safely predict either the price of gold or equities. One thing is certain though, that if there is global turmoil, gold would continue to rally. At the moment there is way too many problems for the global economy, and investors gradually seem to be losing faith in equities. Some have now begun comparing it to 2008, when markets across the globe plunged to absymally low levels.
So, the important question is: should we be buying gold? The precious metal is a good buy as an asset diversification measure. For example, if equities plunge, you can always fall back on your gold holdings. The worry now is that in India, if stock markets continue to post pathetic performance, investors may move money back to gold and real estate. You can check daily gold rates here
Looks like there maybe an asset churn in 2016.