All That Glitters Is Not
Gold!
by Mr. B. Padmanaban, CFPCM
Certified Financial Planner
All that glitters is not gold is a
well-known saying, meaning that not everything that looks precious or true
turns out to be so. This can apply to people, places, or things that promise to
be more than they really are.
Unfortunately, Indians are fond of GOLD and
they always felt that GOLD prices keep moving all the times and whenever it
comes down, it is good to buy because it will go up any time. It clearly shows
that people are more emotional than practical!
My only submission here is GOLD is not at
all a good investment and when it comes to ornament, it is the individual wish
to buy or not. No comments! The reason for telling me is not a good investment,
I have given the gold prices data for the last so many years and one can easily
find out whether it is really moved or not! You are the best person to judge
based on the data given below.
|
Year
|
Price
|
Year
|
Price
|
|
1964
|
Rs. 63.25
|
1991
|
Rs.
3,466.00
|
|
1965
|
Rs. 71.75
|
1992
|
Rs.
4,334.00
|
|
1966
|
Rs. 83.75
|
1993
|
Rs.
4,140.00
|
|
1967
|
Rs. 102.50
|
1994
|
Rs.
4,598.00
|
|
1968
|
Rs. 162.00
|
1995
|
Rs.
4,680.00
|
|
1969
|
Rs. 176.00
|
1996
|
Rs.
5,160.00
|
|
1970
|
Rs. 184.00
|
1997
|
Rs.
4,725.00
|
|
1971
|
Rs. 193.00
|
1998
|
Rs.
4,045.00
|
|
1972
|
Rs. 202.00
|
1999
|
Rs.
4,234.00
|
|
1973
|
Rs. 278.50
|
2000
|
Rs.
4,400.00
|
|
1974
|
Rs. 506.00
|
2001
|
Rs.
4,300.00
|
|
1975
|
Rs. 540.00
|
2002
|
Rs.
4,990.00
|
|
1976
|
Rs. 432.00
|
2003
|
Rs.
5,600.00
|
|
1977
|
Rs. 486.00
|
2004
|
Rs.
5,850.00
|
|
1978
|
Rs. 685.00
|
2005
|
Rs.
7,000.00
|
|
1979
|
Rs. 937.00
|
2006
|
Rs.
8,400.00
|
|
1980
|
Rs. 1,330.00
|
2007
|
Rs.
10,800.00
|
|
1981
|
Rs. 1,800.00
|
2008
|
Rs.
12,500.00
|
|
1982
|
Rs. 1,645.00
|
2009
|
Rs.
14,500.00
|
|
1983
|
Rs. 1,800.00
|
2010
|
Rs.
18,500.00
|
|
1984
|
Rs. 1,970.00
|
2011
|
Rs.
26,400.00
|
|
1985
|
Rs. 2,130.00
|
2012
|
Rs. 31,050.00
|
|
1986
|
Rs. 2,140.00
|
2013
|
Rs.
29,600.00
|
|
1987
|
Rs. 2,570.00
|
2014
|
Rs.28,006.50
|
|
1988
|
Rs. 3,130.00
|
2015
|
Rs.26,343.50
|
|
1989
|
Rs. 3,140.00
|
2016
|
Rs.28,623.50
|
|
1990
|
Rs. 3,200.00
|
2017
|
Rs.28,130.00
|
|
|
1980
|
2017
|
Multiply by
|
|
Sensex
|
100
|
31,671
|
316.71
|
|
Gold
|
1,330
|
28,130
|
21.15
|
|
|
2012
|
|
|
|
Sensex
|
18,869
|
31,671
|
40.42%
|
|
Gold
|
31,050
|
28,130
|
-9.40%
|
As far as data goes, it is not encouraging
and let's look at how the future returns will look like. I agree with you all
that in our social life GOLD still plays an important role. But the point is do
we should accumulate only in terms of gold, or it can be some other investments
which should be in a position to buy the GOLD which we require it in the near
future, hope that makes more sense to one and all.
Internationally GOLD is bought against US
dollars. Gold is measured by Troy Ounce and it is 31.1 gram, for the
calculation purpose we will take 32 grams or 4 sovereign. The question, I leave
it to you all is what would be the currency gain going forward. Considering
make in India and other initiatives as far as my reading goes it will not reach
70 in the next 5 years and chances or rupee strengthening is higher and you
have every right to make your opinion on that. Opinion reserved for you.
It clearly shows in the international
market GOLD price will not move for decades. Considering the current situation
it is difficult to buy GOLD through cash, so things will never look like what
we had in the past.
|
Gold Price
|
||
|
Year
|
1 Troy Ounce
|
31.1
Grams
|
|
1980
|
$892
|
Rs.
8 per $
|
|
2000
|
$272
|
Rs.
48 per $
|
|
22-08-11
|
$1,917
|
Rs.
45.57 per $
|
|
04-10-17
|
$1,283
|
Rs.
65 per $
|
|
6
Years
|
-33.07%
|
42.64%
|
In the last 5 years, it has given negative
returns but how many know this fact, even if I tell you still many will not
accept! Take 10 years or any long term it proves not a great investment. On top
of it protecting GOLD is not that easy as well.
Let’s look at the other investment avenue
like mutual fund which can eventually generates good return though we don’t
know much or we don’t like much. Just because there is a statutory warning
everyone fears about Mutual Fund.
MF investments are subject to Market Risk,
read the offer document carefully before investing!
All the investments are market risk like
GOLD, Real estate. Even our bank interests also subject to interest rate risk.
Many could not find an opportunity to reinvest what they had invested few years
before. But, they never told about the risk, we consider it is a safe
investment!
For more details
Mr. B. Padmanaban, CFPCM
Certified Financial Planner, Chennai
98843 49173
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