Best Way to Invest In Gold

If you have been thinking of buying gold for your portfolio either to protect your hard earned wealth from the perils of fiat currency printing by central banks or to simply boost your portfolio return, then there are many different ways to have an exposure to the shiny metal beside the age old way of buying gold jewelry. 

Following are 3 different ways to invest in gold with their respective pros and cons. We will also tell you the best among the three, that we prefer, if you have long term bullish outlook on the metal.

History of Gold Price in India in Rupees per bhari since 1964

History of gold price trend in India since 1964. Prices in both bhari* (Indian metric system) and per 10 grams.

This chart contains the average annual price for gold from 1964 in gms

Performance of Real Estate vs Stocks vs Gold in India - 2011 to 2016

When it comes to asset allocation, majority of Indians prefer Gold and Real estate over Stocks as they provide tangibility and sense of security. But sense of security is not sufficient as far as investments are concerned as savings in any form need to beat inflation for creating wealth.

So lets check how each of these asset classes have performed over last 5 years and whether Indians are right in their judgment of allocating majority of their investment capital in Real estate and gold:

CPI INFLATION IN INDIA

CPI Inflation has averaged around 8% in past 5 years

History of Gold Bull and Bear Phases

Are you in the camp of believers who think that Gold prices never fall and just moves in upward direction with very small correction on it's way? Whether your answer is Yes or No, following snapshot is going to stun you for sure. Like equities Gold also encounters heavy correction and periodically gets into bear phases. 

No asset class can move in only one direction which is a wisdom known to all of us but due to short term myopia and memories of recent past most of us now believes that Gold will never correct because in the history of Gold price recording the current bull run has been the longest in terms of time frame and has brought the best returns during the last five decades.

The Gold Bubble

George Soros, the billionaire investor, believes that the gold which is in super bubble phase since past 11 years could crash and go into bear market when the bubble bursts.

George Soros of Soros Fund Management, has networth of $22 billion as per Forbes billionaire list 2011.

Check out the following video of George Soros on gold.




http://www.youtube.com/watch?v=u5bQKvvnH3U

Gold Price Outlook: 2012

Investors who invested in gold at the start of 2011 has pocketed very handsome return in 1 year as the yellow metal has delivered 32% absolute return in Indian currency in 2011 in contrast to equities which delivered negative return (-25%) in India.

Now the million dollar question is Can gold, which has been in solid bull market since last 10 years, deliver superior returns in 2012 as well?

To answer this question lets look at both the fundamental and technical aspects of the metal.

Pros and Cons of Gold ETF Investment

Gold ETFs are relatively new option and are not as popular as physical Gold. Investors who usually invest using demat account are aware of this option. They provide easy access to gold investment without having the burden of physically owning it.  

Gold prices hit all time high on euro zone crisis

Gold prices touched fresh high of Rs 29,091 per 10 grams today, as concerns about slowing economic growth and Europe's debt crisis spurred demand for the precious metal as a safe haven investment.

Market analysts attributed the skyrocketing gold futures prices, which hit an all-time high, to a firming trend overseas as renewed fears over the euro zone debt crisis and concerns about stalled global growth boosted the attractiveness of the precious metal in investors' eyes.  

1 Year / 5 Year / 10 Year / 20 Year / 30 Year Gold Technical Chart

Gold Technical Analysis Charts - Short term and Long term

Gold Historical Charts 10 / 20 / 30 / 40 Years

Gold historical chart: 2000 - 2011