Akshaya Tritiya: A Good Time To Buy Gold?   Apr 18, 2018


financial-asset-management

India is a country of customs and traditions.  People prefer to start any new activity on an auspicious day and a particular time, called the “muhurat”.

Mythological significance of such muhurats is immense for Hindus. Like some undying traditions, irrespective of how liberal a person’s outlook might be, but when it comes to a wedding, booking a new flat, gruha pravesh (shifting to a new home), buying a vehicle, or starting a new business activity, muhurat matters in all such cases.

But several days of the year are auspicious by their virtue and mythological relevance. Any activity started on these days usually doesn’t fail, as believed traditionally.

Akshaya Tritiya— the third day of Vaishakh month is one such day. This is the day in a year when the Sun and the Moon are at the acme of their brightness.

Buying gold on Akshaya Tritiya is a custom as it’s believed to offer good fortunes and eternal wealth. 

gold
(Source: pixabay.com)


Should you make any investment decision just based on the mythological importance of a day?

While there’s no harm in buying gold for symbolic purposes, avoid buying large quantities of it assuming its value won’t drop.

Before you buy gold, you should understand the basics of this asset class.

Factors affecting gold prices are:

  • The movement of the Indian Rupee (INR) against the US Dollar (USD) plays a crucial role in deciding the fate of gold prices in India

  • Political uncertainties make gold more precious

  • Low or negative real interest rates too drive the gold prices up and vice-a-versa

Except for the real interest rates, which are slowly inching up in the developed economies, other factors look favourable for gold for now.

Gold is already up close to 5% in India and is expected to exhibit a sheen in 2018.

According to the World Gold Council (WGC), the precious yellow metal has many reasons to gain. While central banks are likely to tighten policy rates, the increase will be gradual, owing to subdued inflation across developed economies.

“In the Indian context, the demand will bounce as rural income is set to grow. The government’s vision to double farmers’ income by 2022 will lead to a sharper increase in rural gold demand. We do not believe that India’s annual gold demand will be limited to 650-750 tonnes. It will bounce back to 850-950 tonnes in another 18 months”, expressed Mr Somasundaram PR, Managing Director (India) of WGC.

In 2018, the Union Budget 2018 has confirmed various positive initiatives for gold, including the development of a comprehensive policy and the creation of a gold exchange, encouraging the WGC’s optimism that the demand will stabilise at 700-800 tonnes.  

In addition, the following factors are likely to draw the attention of smart investors. Possibly, they will perceive it to be a safe haven, a storehouse of value…

  • Intensification of trade wars

  • Upside risk to retail inflation

  • Economic uncertainty in many parts of the world

  • Geopolitical tensions

  • Longer Brexit transition 

PersonalFN believes you should buy gold on every dip, as long as your gold holdings compose 10%-15% of your portfolio. People often make a mistake of expecting superior returns from gold. The role of the yellow metal is to provide diversification to your portfolio and not accelerate gains.

What should you do as an investor?

Before you buy gold this Akshaya Tritiya, make sure your investment decision is based on your personalised financial plan.

Want superlative professional guidance in charting your asset allocation and investment recommendations to achieve financial goals?

Yes?

Reach out to PersonalFN’s Financial Guardian on on 022-61361200.

You can also Schedule a Call with our investment consultant or even drop a mail at info@personalfn.com and we will get in touch with you.

PersonalFN is a SEBI registered investment advisor. The fundamentals we firmly believe in are:

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So, do not hesitate.

We will be happy to help you accomplish your long-term financial goals.

Happy Akshaya Tritiya!

Happy Investing!

PersonalFN Content & Research Team



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