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Should you invest in Gold this Dhanteras?

gold investment

Dhanteras, one of the auspicious days in India where people follow the tradition of buying gold as a part of our culture. Traditionally, there has always been preference for gold as most people look at it as a strong investment option, status of wealth and feel secured when they have parked their money in it.

The surge in gold prices over last one year have drawn lot of attention of investors. In 2020, the gold prices have increased by 30%. Historically, the demand for gold increases during events like Covid-19 pandemic and Financial Crisis of 2008 as people prefer to invest and hold gold across the world. During uncertain times investors prefer gold over any other asset class.

So, this Dhanteras should invest in gold or give it a skip this time.

Gold is usually looked as an investment that you would like to hold for long time. Let us look at how gold investment done on Dhanteras ten years ago (2010) have performed on the same auspicious day over years.

As on 9 November 2020, returns from gold investment done on Dhanteras of 2010 would be 8.35% p.a. which also include 28% rise in gold prices in last one year.

Dhanteras DatePricePer troy ounce (INR)Return* On Investment done on Dhanteras of 2010
9-Nov-20 1,37,821 8.35%
25-Oct-19 1,07,304 6.36%
05-Nov-18 90,102 4.84%
17-Oct-17 83,425 4.43%
28-Oct-16 85,019 5.50%
09-Nov-15 72,344 3.22%
22-Oct-14 76,130 5.44%
02-Nov-13 81,666 9.81%
12-Nov-12 95,387 24.04%
25-Oct-11 81,980 34.04%
05-Nov-10 61,702
Source: World Gold Council *CAGR Return

As on 9 November 2020, returns from gold investment done on Dhanteras of 2010 would be 8.35% p.a. which also include 28% rise in gold prices in last one year.

The more we look at returns from gold on the same auspicious day from 2010 to 2019, barring the year of 2011 and 2012; the annual return from gold have been in single digit. Gold has the tendency to do well during crisis and then remain flattish for quite some time. You must keep in mind that gold as an investment over a period have given returns around inflation. Hence, gold can be a small allocation in your overall portfolio, but short term returns and rising prices should not tempt you to go overboard on gold.

This Dhanteras if you are buying gold as a ritual, then you should go ahead without thinking much as it is a part of the tradition. But, if you are planning to buy gold as an investment, you can keep following in mind:

  • If your existing gold allocation is reasonable or if you have invested in gold in last one year, it would be better to avoid investing further as it could be futile.
  • If you want to start investing or increase allocation in gold, investing monthly in good gold savings fund or digital gold as per your comfort would be better considering present gold prices and its historical volatility after crisis get settled. Here, you can start your monthly investment in gold on the auspicious day of Dhanteras and then invest every month over a period rather than going for one-time investment right now.