Last Updated :
19 February 2009 at 23:25 IST
Go for ETFs to cash in on Gold boom
Commodity Online
MUMBAI: Did you miss the bus as far as gold is concerned? If you failed to buy gold when its prices started moving up and now ruing your hard luck then it seems you have not lost everything.
According to experts who give their advice through various magazines and newspapers across the globe, small investors can still make a killing from gold if they opt for gold exchange traded funds (ETFs).
Investors could still benefit from periodic investments into gold ETFs, which are backed by the underlier and to that extent afford comfort to buyers, who seek to possess physical gold.
An ETF is the right instrument for a retail investor who wants to ride the gold wave as every unit is backed by physical gold and Indians traditionally prefer holding the commodity.
Small investors should not put in more than Rs 1,500 per week, or Rs 3,000 a fortnight in a gram of gold, for a continued period of time, an expert told a leading newspaper in India.
This way, even if gold falls, the investor would not be affected. Since buying physical gold is very difficult at current prices, the best way to invest in gold would be through a systematic investment plan. An investor should hold 5-10% in gold because it is the best store of value.
Small investors would continue buying one or two grams at regular intervals, irrespective of prices, with a view to diversifying their portfolios and since buying gold as part of a social obligation is etched in their psyche.
With gold prices in India shooting to over Rs 15,500 per 10 gm this week, experts do not expect any physical buying now.
In the light of the global meltdown in asset classes, investors and speculators around the world are turning to two eternal safe havens — gold and the dollar.
This has pushed gold to a 7-month high, above $960 an ounce. Since India imports over 80% of its gold consumption each year, it is a price taker. Domestic prices take cues from the New York and London markets.
Experts said gold’s prospects look up so long as financial instability in global markets persist.
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