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Wednesday, January 16, 2013

Factors that make Gold a safe investment

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    Gold is considered to be the safest investment by investors all around the world.  What makes it so?.  There are lot of factors at play.  Foremost is the slow but steady return offered by this yellow metal during the time of distress.  When all other avenues of investment falters, normally it is the Gold which come to the rescue of investors all around the world. 

Factors which make Gold investment

First let us see the price appreciation of Gold in Indian Rupee term from 1975 to 2011.  In 1975, one gram of Gold costs around Rs.43.22 and in August, 2011 it is Rs.2685.  A whopping return of 6112%. Which commodities gave you that much return?.  It is this slow and steady returns which make this yellow metal a great investment.                                                               

1)      There is no major volatility in the price of Gold on day to day basis. 

2)     The history of Gold which starts from BC 3600 onwards is a assuring factor for the investors all over the world.  Most sought after metal among the investors, countries, IMF, mutual funds etc...

3)     Up to this point of time, supply always lesser than demand.  Amount of Gold that is mined is always decreasing.  Mines all over the world started journey from full capacity to diminishing stage.  

4)     It is a hedge against inflation. 

5)     It is the investment with highest liquidity.  You can buy and sell Gold in many forms. You can liquidate your investment in Gold within minutes without losing much time and money.

6)     Industrial uses of Gold is increasing day by day.  Apart from being a investment metal, other uses of this metal keeps its price intact.

7)     Culture of India, which hosts second largest population, is strongly correlated with Gold.  This affinity of Indians towards Gold will always keep the price of intact.

8)     Proven returns of Gold at times of financial distress, wars, uncertainties, when all other investment falters, make the investment in Gold great.

9)     Countries are investing their reserves in the form of Gold to protect their reserve.  As more and more countries invest in Gold, its price can only increase..

10)  Acceptance of Gold as an investment all over the world.

11)   Zero interest rates in US and current uncertain Europe and decreasing economic growth of all countries tend to increase the price of Gold.

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