Striking gold: Exploring the top 10 factors driving gold investment

Summary: 

Gold's enduring value and stability span centuries of human civilization. Even today, it is a sought-after investment thanks to the fact that it remains a high-priced, high-value asset, despite market fluctuations. Unlike fluctuating assets like stocks and real estate, gold’s versatility as an inflation hedge, a source of generational wealth, and an asset that can yield quick loans further solidifies its position as a valuable and secure investment option.

Few assets have stood the test of time quite like gold. Approximately 209,000 tonnes of gold, valued at around INR 9,97,16,970 crore ($12 trillion), have been mined throughout history. Whether you're a seasoned investor or just beginning to explore the world of financial markets, the yellow metal never loses its gleam. Gold has always been a dependable choice when other assets stumble, causing prices to surge in times of market turbulence or geopolitical tension. Its globally consistent rates add to its attractiveness. However, many investors are cautious about investing in physical assets like gold, mainly due to its lack of interest generation.

Through a range of innovations, the practice of gold trading has transitioned from the traditional physical form to the realm of virtual trading. The global gold bullion market value is expected to reach a market size of INR 8,69,864 crore ($ 104.68 billion) by 2028. Here are ten reasons why you should invest in gold.:

• Supports inflation-proof investment planning: The word “inflation” is usually a harbinger of tough times ahead. Inflation makes your money lose value over time, so in a growing economy like India, just keeping cash can be risky because its value may decrease. Gold, on the other hand, has a fairly solid history of outpacing inflation. It increases in value when your cost-of-living increases. Think of it like your inflation-fighting shield against the value-killer of inflation.

• Promotes smart savings: Saving money when you have a regular income is really important. But investing small amounts can be tricky, especially in real estate. So, why not invest in physical gold? It's like a safety net for your money, and it could even give you good returns over time. Buyers can also opt for the gold coins that many banks offer. They're like the gold standard, with a guarantee of quality. Remember, even though banks might not buy back gold from you, they might offer loans with gold as a guarantee.

• Enables easy buying, easier selling: Getting your hands on physical gold is a breeze—just pop by a local jewellery store. But it's smarter to go to trusted jewellery professionals who give you a guarantee certificate with your gold. Or, of course, buy them from a bank that sells gold coins. When you buy from reputable sources, you can rest assured that you’re getting an authentic product with an official receipt. Just do a quick check of the day’s gold price from reliable sources, make sure you’re buying at the current rate, and you’re sorted. Now, when it's time to sell gold, since it's always in demand, you can quickly liquidate them at a jeweller or a trusted loan firm for instant cash

• Requires minimal maintenance, delivers maximum value: If you invest in gold, you are investing in the low-maintenance superstar of investments. You don't need to lift a finger to take care of it. On the other hand, if you put your money into a property, you have to put in significant effort and resources on maintenance, upkeep, security, and more. As long as you have a locker at home or at your bank to stash away your gold, you can almost forget about it for years until you need it.

• Offers price stability: When you look at the price of gold compared to other investment options, it's like the reliable rock in the storm. Even when things get crazy, gold doesn't sink or soar. In fact, whenever the financial world is in flux, many people flock to gold. And if you’re looking for further stability, you could invest in sovereign gold bonds (SGBs). They are essentially government securities measured in grams of gold and seen as alternatives to owning actual physical gold. They come with government backing, are linked with the gold price, offer a 2.5% interest benefit, and provide tax advantages.

• Adds to the inheritance you leave your children: Having gold in your investment mix sets you up for a smooth handover to the next generation. You've probably seen it often—gold ornaments are gifted during weddings, births, and other big life events. It's like a wealth heirloom that you hand down to the next generation that does not depreciate in value, in the long term. 
  

• Streamlines gold-backed loans: Your gold investment can be a handy asset to have when life takes an unexpected turn and you suddenly find yourself in need of money. You don't even have to rush to sell them off as many banks offer you a loan against your gold. 
  

• Boosts your portfolio: Gold can be the steady rock in the middle of your volatile stocks, real estate, and other investments. It's like adding a safety net to your investment mix, especially for families. Your investments are safe and sound in the long haul.
  

• Upholds investment security: No need to lose sleep over your investment when you go for physical gold. Take a peek at today's gold price, then look back in time, and you'll see the stability it offers. Additionally, section 54F of the Income Tax Act of 1961 grants a tax exemption on capital gains obtained from selling assets such as gold, shares, or bonds, provided the gains are reinvested in buying a house. This exemption is valid when the profits from selling gold investments are used to purchase a house within one year before the sale or two years after it. Moreover, if the proceeds are used to construct a house within three years of the sale, they are also eligible for tax exemption.

• Offers time-tested resilience: Unlike some other investments, the value of gold doesn't deteriorate over time. It's like the ageless wonder – its value doesn't fade as it gets older. Even your old gold ornaments will fetch you the same price as shiny new ones in the market, as long as the gold is pure. You can also trade in your old jewellery for fresh pieces for yourself or your children or your children’s children, down the line, much like a timeless style upgrade that holds its value.

To summarize

In a world of investment choices, gold shines brightly. It’s your steadfast anchor. Its resilience against inflation, simplicity as a savings tool, and security in times of need make it a wise addition to any portfolio. With a history of stability and a range of benefits, investing in gold can contribute to your long-term financial success. All that glitters, indeed, comes to life when you invest in gold.

Disclaimer

The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.