Gold Investment big news: Gold has seen a rise of more than 20 percent in the last one year. The price of 24 carat gold, which was around Rs 60,500 on June 21, has now reached the range of 74 thousand. Why is this happening and should we invest in gold in such an environment? We will discuss this question later, but first let us know what is the main reason for the rise in gold?
Main reason for rise in gold
The US dollar is the world’s most prominent international currency. Most global trade is done in dollars. But the way Russia’s dollar assets were seized after the war broke out between Ukraine and Russia has seen a big change in the world’s perspective. Many countries are now emphasizing on increasing their gold reserves. They are doing this with the aim of reducing their economic security and dependence on the US dollar and gold further diversifies their foreign exchange reserves.
Due to geopolitical tensions and economic fluctuations, central banks of many countries including the Reserve Bank of India (RBI) have bought gold in large quantities and are continuously buying it. This stance of central banks has increased the demand for gold, which is a major reason for the jump in gold prices. Increasing investment in gold ETFs and gold funds has also worked to increase the price of gold.
What steps should be taken for investing in gold
Even though the price of gold is somehow volatile at the time in the short term but investing in it in the long term has generally been very safe and profitable in many ways. For example, the price of 10 grams of gold, which was only around Rs 5,800 in 2004, has now crossed Rs 74 thousand after 20 years. During this time, gold has given positive returns most of the time. Actually, the investment in gold seems attractive as it is long term and a safe way to invest some bucks a safer side. In such a situation, for investors whose investment horizon is long term, gold can be considered a good option even at the current levels. The thing to understand is what can be the best way to invest in gold as an investment option.
How to invest in gold
For those who want to invest in gold, Sovereign Gold Bond can be called the best option. By investing money in it, you not only get the benefit of the increase in gold prices, but also get interest at the rate of 2.5 percent per annum. Also, there is no worry of keeping the gold safe. Apart from this, if you keep it for 8 years, then the amount received on maturity is completely tax-free. In this respect, it is a better investment than physical gold or gold ETF. This is a very good option especially for those who are not investing in gold till now but want to start now.
How much to invest in gold
How much of one’s investment portfolio should be invested in gold depends on his investment goals and risk profile. Generally, 5 to 10 per cent of your portfolio can be invested in gold to reduce risk and diversify investments.