The gold price has gone down considerably down for the past few days. Is this the right time to invest in gold? Will it continue to go down or rise to new heights? I was planning to take a personal loan and buy as much as gold possible since its price is declining everyday. Please give me a good suggestion.
The gold has plunged steeply and retracted from the bottom as it was trading in a excessive oversold zone. An investor should always use his rationale in deciding on his portfolio but that doesn’t mean that one can ignore the trend going on in the markets. The trend is that heavy outflows of Gold are going on by Gold ETFs. The outflows are a sign that the big funds are booking profits in Gold as they think that it is the right time to become cash rich.
It’s important that you understand the purpose of your investment in Gold. If your purpose is to get a respectable return then this is a time to put money in phased manner. So at this level you can start a SIP in the gold ETF. If you want to keep adding bulk Gold in your assortment than do that after some waiting time as the prices can move further down from here. If you are a long term investor worried with what is happening in the bullions world, stay cautious and be watchful.
The gold has great importance while it comes to hedge the inflation but expecting a return over 16% at this juncture looks unattainable. The interest rate under personal loan is charged around 16%, however the gold is expected to provide a moderate return of 10-14% in the medium to long term. So, borrowing at higher cost and investing for a lesser return is not advisable.
It is not a good idea to use Personal Loan for buying gold. It is best to invest in gold using your income or savings. You should be very careful while buying gold jewellery. Making charges are associated with every piece of gold jewellery, and the measure essentially represents the cost of labour involved in creating it. The price of a piece of jewellery consists of the gold price plus the making charges. So, if you aren’t aware of the gold price on a particular day, there’s a possibility you could end up paying a high amount in making charges. Therefore, acquiring information about the latest gold and silver rates is essential. Insisting on fixed making charges could make gold purchases cheaper and is definitely a smart way of purchasing gold.
Unlike the old days, machine-made gold jewellery has become quite popular in recent times. Since making charges are all about the labour costs involved (like we mentioned earlier), charges are lower on machine-made ornaments as compared to hand-made ones.
In India, gold jewellery is more often than not sold on the basis of its weight. Therefore, the heavier the piece, the more it costs. Since most of us love bling, precious stones like diamonds and emeralds are often added or infused with gold jewellery. This makes the jewellery heavier. Jewellers weigh a piece in its entirety, which means that you might end up paying for gold which isn’t actually there. This is exactly why you need to be more careful while buying jewellery, especially if it comes with additional precious stones.
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