Tuesday, August 27, 2013

Should you Invest in Gold Mutual Fund or ETF as Rupee is falling down?

Well, I am not an analyst, who can say that whether it's right time to invest in gold or not, but since I am a common man like many others, which follows some simple rules while investing money and follows principle of diversity, I made to think that is it right time to buy Gold? Well, many people will say, YES, buy gold, the price is lower from the peak, invest in gold, it's the perfect time to buy gold etc. It's natural to think like that, and everybody can think like that, which makes me a little worry, because if everybody can guess anything, which means there is not much value on that task. So in my opinion, it's not the best time to buy gold, at least for some time, except the Systematic Investment Plan (SIP)  part, which always continues, despite market conditions.

My rationale for not buying gold is simple, it's volatile now, there is no guarantee that it will not fall anymore and given the current price, it's still too high for Gold. Though it's possible that Gold may jump few thousands before going down again, but it's worth waiting. Especially if you don't know much about why Gold price has declined in past and why rupee is falling down so bad.

A couple of months back, prices of gold are almost 15 to 20% below than current price, but the recent decline in rupee value has increased its price in rupees. People are buying more gold in fear of paper currency losing value, which is both good thing and bad. Investment in gold is good from the diversity point of view but it's just a store of value, which can also decline as we have seen in the last couple of month.

Buying Gold based on Market Condition

If you are not part of big investment banks, I doubt you can take advantage of the market because when it comes to common man, most of the advantage are already taken, so timing market is not for common man, it's for someone, who has more resources, more specialization in that field. For a common man, systematic investment in Gold is the best policy, because it's store of value. With every quantitative easing in the US, the value of paper money declines, and in this uncertain economic situation, having some exposure on Gold is the must for any investment portfolio.

Should you invest in Gold as Rupee is falling down

At the Same time, Luck always has some part in investment decisions, but it's big leveler as well, so if you earn money in equities and fixed deposit, you may lose in Gold and vice-versa. This means, don't expect always making a profit, think differently, try to create a well-balanced portfolio instead of timing market. The more I think, the more I realize that systematic investment is the only best strategy combined with diversity.

Saving is good, always remember, one penny saved is one penny earned :). By the way, many elder people have always suggest you that every time is good for buying property and buying gold. So do your own research before buying gold. For long term investor, SIP on Gold exchange traded fund e.g. Goldman Sachs Gold exchange traded fund is the best option, as it's automatic, systematic and convenient. For buying a lump sum gold, I think you should wait for couple of more months, when rupee settles and market become less volatile.


  1. I think for long term investor, SIP on Gold exchange traded fund e.g. Goldman Sachs Gold exchange traded fund is best option, as it's automatic, systematic and convenient.I made to think that is it right time to buy Gold? Well, many people will say, yes, buy gold, price is lower from peak, invest in gold, it's perfect time to buy gold etc.

    farmland investment funds

  2. what about fees?. In the USA we have completion between GLD and IAU and the fees are very low . In India we do not have many no load and low fee funds. What is the lowest fee Indian Gold ETF?

  3. Gold Mutual Fund! I am not an ETF basher and you did an excellent job on this article, but i did find an article that wen't over the Risks of ETFs that you might want to check out here http://www.mutualfundstore.com

  4. There are several investment options available nowadays in market, like Mutual Funds, Stock market, Gold etc. Gold is most popular investment options nowadays. While investing in gold you can look for gold coins and gold bars as these are most popular options. If you don't want to invest in either of these you can go for shares of gold mining or production company as well. Get more tips at : http://www.jtjinvestments.com/how-to-invest-in-gold/


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