Is Gold Investment Worth a Consideration?

gold price chart for 30 years
30 Year Gold Price History in US Dollars per Ounce

Gold investment is one of the most discussed topics on the earth. It is essential to understand the factors that influence price structure of gold if one is planning to make gold investments. One troy ounce is equivalent to about 31.1 grams in US dollars. The value of gold bullion fluctuates like bonds, stock and other commodities as it is linked directly to the market price of gold. The fall since April in the prices of gold has been reported as 13% and this has been the biggest two-session decline since 1980.

The advantage with gold

The advantage with gold is that the price of gold tracks the rate of inflation better than actual cash though it does not earn any interest on its own. Gold proves to be a diversifying investment. It adds to the portfolio and is regarded as a safe haven during times of economic and political uncertainty. It cannot be considered as a zero value object and holds some sort of value.

The difference with paper money and gold is that currency has only the value that is set by the government whereas gold has physical value. It is formed in the earth and cannot be replicated. Gold stocks are a good investment that does not require a place for storing gold. The value accrues on its own. Gold coins and bars are valuable and have to be stored carefully. People who are not too happy about hoarding gold may purchase this metal in exchange-traded formats and mutual funds. Many people prefer buying jewelry as a form of gold investment. Though it may hold value you will be able to sell this type of jewelry and receive only the melt down value. Instead of purchasing intricate jewelry it is safer to purchase gold chains that have a pure fineness as this will attract less wastage.

Gold can be stored in a bank vault or in your home safe?

Gold can be stored in a bank vault or in your home safe. You can sell it when the prices fluctuate or increase. The price may go down but eventually it will rise again. The right time to invest in gold and silver is when the prices are low. The cost of gold coins or bars is higher than the cost of “spot gold”. The cost of gold will go up when you pay shipping and handling charges. It is possible to update oneself on the daily price of gold by checking the price in the “Live Market.” The prices change regularly and do not refer to the actual cost of gold when it was purchased. Gold investment will prove worthwhile when the markets fall and inflation is high.

Gold and tax benefits

Gold does not have tax benefits in India and suffers capital gains tax as per the IT Act. Branded jewelers give bills but most of the gold jewelry that is traded in India is unbilled. This is not good for people looking at gold investment. Gold does not fare well when compared to shares or real estate but will always be a safe investment to hedge inflation. Many people prefer to invest in the form of ETFs at it is not only convenient to hold but may prove to be beneficial in the long run.