Off-late I've been getting quite a few queries from people on investing in Gold - makes me wonder if the Greater Fool Theory (http://en.wikipedia.org/wiki/Greater_fool_theory) is at work here and if we've reached a peak already !
However, to me Gold's still quite far away from its top...atleast it's difficult to say purely on technicals what the "Top" could be. With USD 0.6 Tn worth of QEII coming in fresh into the system, and central banks worldwide re-iterating their "buy" position on Gold, it seems fairly unlikely that Gold has reached a top.
Moreover, for people who're buying Gold in any of the emerging market currencies (Yen, CNY, INR, SGD, etc.) , the bearish outlook on dollar (more on that in another post) underlines that fact that even if Gold were to go nowhere in the next one year, but if dollar were to depreciate wrt these currencies, the owners of gold in such currencies would still end-up gaining.
This said, I usually tell people to get in into gold with a longer term perspective (3+ years), for bigger gains - and not worry to much about the impending 10-15% correction (there'll an 80%+ probability of this at any time, anyways!) in the short term.
In India, I recommend people to go with Benchmark GoldBees - listed on NSE. Its one of the most liquid Gold ETFs available. It can bought in units of 1gm each just like shares.
I'm trying to keep these posts simple, so as not to scare / overwhelm my audience by showing graphs depicting M3 with Gold Price, or Gold as % of overall investments over the last 40 years or so...etc. I'm in the process of updating my reading list. For those interested in a more in-depth analysis of such topics, can always go through them.
And yes .... a quick disclaimer: I may have positions in Gold / vested interest in influencing opinions of larger public in a way that benefits me most ! So do your own research and take your own decision. Thus far, I've never heard of good returns with "no-risk". There is no such thing as free-lunch. So stop expecting one ! Happy investing. And Happy Diwali.
Please do send in your comments / suggestions / complaints etc. I'll try and address as many as I can.
No comments:
Post a Comment