stock market investment strategies - invest in gold - an in depth analysis

Is it a good time to invest in Gold?

Gold has seen a huge upside in the last couple of years. Is it sustainable?

Well, the answer for this is not predictable. This is due to the recent listing of gold in stock markets. Now-a-days Gold is being traded so heavily in the stock market that the volatility that usually is associated with stocks is now seen in the rates of Gold.

However, Gold being a metal is seen as much safer option than stocks, since many believe that the value of natural resources cannot come down too much. There may be volatility but the price of gold crashing down like stocks is surely not expected.

If you see the normal trend, whenever the stocks go down then the gold prices go up. This is due to the fact that if stock is not reliable, people feel it better to invest in safer resources like gold. However, I feel this model is not going to last long. If ever there is a slowdown then the purchasing power of people also go down, so the price of gold will come down along with it. People who have gold at the time of slowdown also would like to demand money in exchange of gold contributing to the decrease in the price.

According to me, the role of Gold in your portfolio can be max of 20%. What is your opinion?

stock market investment strategies - e-gold and e-silver from NESL

If you are looking at investing in Gold or Silver then e-gold and e-silver offerred through NESL is a good opition.

In India, Gold is also traded in the form of Gold ETF's. However, in the case of silver ETF's are still not introduced. So you can look at investing in e-gold or e-silver.

Advantages:

• Investing in metals is a safer option as it is not affected by inflation
• Better than ETF's since the maintainence charges, vault charges etc are lesser.
• Option to convert to physical gold.

Disadvantages: 

• Need to open a new account for trading in e-gold, e-silver or e-copper.
• Doesnt have a long history, so procedures are yet to finetuned. You cannot convert to physical form in all cities etc. Information about this at the broking houses are also limited.

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Best Gold ETF in India

Gold investment options

India's best Gold ETF - Stock market investment strategies

Investing in Gold is the safest option because the price of gold is always increasing. whether it is a slowdown or the stock market is booming the prices are always going to go up. There is no better place than India for investing in Gold. This is because the consumption of Gold is almost 25% in India of the total consumption thorough out the world. According to the recent estimates if there is no new gold mine found then with the current comsumption all the Gold would have been extracted in another 9 years time. This makes investment in Gold a very good option.

With the government in India plunging into a minority it can be easily seen why Gold reached all new heights? With the festival season coming up Gold can be expected to scale new heights in the coming months. So why wait, grab a part of the Gold pie today.

Here is the list of Gold ETF's present in the market

Gold benchmark exchange fund (GoldBees)
UTI gold fund (Goldshare)
Quantam gold fund
SBI gold fund
Kotak gold fund
Reliance Gold ETF

Almost all of these are available in the form of ETF's (exchange traded funds). i.e. you can invest in these as if these were normal shares. So if you have a demat account you can invest in these shares.

The next question that comes to mind is which one of these shares is the best to invest in when there are so many options. Lets analyse these shares and then decide on the best ETF.

First lets look at the volumes. This is an indicator of the stability of the stock. The volumes of GoldBees is almost 60% of the total gold shares in India. The main reason for this is GoldBees was the first gold ETF to be ever introduced in India. It was recently acquired by Goldman Sachs.

The other criteria to consider is the expenses that is incurred in the maintenance of the Gold ETF. If you check this also Gold bees scores above the rest. Gold bees maintenance cost is 1% while the close second is Quantum gold ETF with 1.25%. This eats into the profits so this also should be considered while selecting a Gold ETF.

Leaving all the statistics aside, finally what matters is the difference in the performance of Gold ETF over a period of time. If you look at this as well the performance of GoldBees is the best followed by kotak gold ETF.

Another factor to look at is the price of units. This differs for each ETF although all are based on the price of Gold. All ETF is approximately the price of 1gm of Gold except Quantum gold ETF which is half gm of gold. This may not make much difference but for small investors this may be useful information.

Overall GoldBees by far looks the best Gold ETF at present. Kotak, Quantam and SBI look promising. What is your opinion. Any other factors that you would like to discuss while choosing Gold ETF's?

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