Yellow Fever of Investment in Times of Blues

When we think of gold, images of gorgeous jewellery pops in our mind. Yet, while gold has almost become a staple investment for jewellery today – that is not the only thing it is good for but much beyond.

Dating as far back as 700 BC, gold has always been a source of power and economic gain. From coins to bars to jewellery; gold has remained a source of power and wealth accumulation for many. People of the past and people of today, both have long considered gold an important metal to have due to its quality of being a wonderful investment, rather than only as pieces of adornment in special occasions.

If you are married, your mother might have given you gold jewellery on the wedding day, with the traditional one-liner saying: “This gold jewellery is not just for your wedding day. It is for your secure future.” You might not have understood what your mother meant then – but realised now.

Gold is a great investment, and a metal you can depend upon in troublesome times. When income falls low, other currencies seem depreciated, or in times of crises – like the Covid-19. Gold has stood by us.

Let’s have a look at why gold makes for such a good investment:

Historical Trends

Gold is not only precious, but has maintained its reputation as long as we can remember. In the past, gold was often buried along with the dead, to provide them with wealth and security in the hereafter (or when reincarnated). Today, gold is gifted within families, from fathers to daughters, mother in law to daughter in law, and so forth.

This is simply because gold is emotional, caring, secured and has a reputation of being a highly valued noble metal that does not corrode or tarnishes unlike silver– making it just the right component for jewellery and investment for the future. You can be rest assured that small accidents, like gold being drowned in the water or tumbling down the stairs will not cause any harm to the value of gold.

The MF’s Or Bonds Are Not Always A Viable Investment

During the bear market, the price of gold almost tripled! Had you invested in gold instead, you would’ve seen your investment grow massively. Therefore, investing in gold is a good alternative to currency investment. Although the price of gold also has hikes and slumps, the same as that of a bond/fund, you are able to tell a general trend more easily – thus making for secure and lesser risk in investment.

Gold Prices Rise in Times of Crises

Why gold makes for a wonderful investment especially during the current pandemic, is because of the way gold behaves during a crisis. While currencies may face a major depreciation in times of a financial crisis, gold prices rise instead – or at least this is what the past trend displays. This is because when currencies depreciate, people switch to other means of investment instead i.e. gold. As a result, increased demand for gold results in increased prices.

Therefore, those who would have invested in gold earlier – would have made a good profit! If you want to therefore purchase gold in the Covid-19 crisis, a wise option can be to purchase a 100 per cent real gold coin; the 24Kt Gold Coin of 10 gm.

The Law of Demand and Supply

When one studies Economics, the fundamental taught is the law of demand and supply. A combination of higher demand and lesser supply results in – high prices. When considering gold, both of these aspects have come into play, thereby making the purchase of gold, a good investment.

When we consider nations that consume gold, India ranks high in the list. With the upcoming wedding season in October, it seems the demand for gold jewellery will shoot up. In addition, gold is now widely being bought as a form of investment – also leading its demand upwards.

There are less gold mines and their production has been declining. Paired with shutdowns during Covid-19 the supply of gold has seen a stumble.

As Liquid As It Comes

Perhaps the biggest plus point of gold as an investment – is its liquidity. If you have gold jewellery, and suddenly face a financial crunch, you can hypothecate or head to your nearest gold jewellery store and trade your jewellery for great returns. This means gold is not just mere means of adornment, but “a friend in need is a friend indeed” when times get tough.

The author is Director at “150 years C Krishniah Chetty Group Of Jewellers”

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.