Amidst Diwali celebrations, gold takes the spotlight, not just for traditional reasons but also due to global uncertainties like the Israel-Hamas conflict. The question arises: is gold purchased for sentiment or as a strategic asset? In a recent Moneycontrol Twitter Spaces discussion on November 9, experts Vikram Dhawan and Poonam Rungta focused on the digital methods of gold investment. Here are the key insights:
Gold's Ascension:
Vikram Dhawan highlights why gold prices are on the rise:
1. Central banks, including China and Russia, are increasing gold reserves to counter potential US-related challenges.
2. Physical gold demand remains strong.
3. Growing awareness of gold as a sound investment.
4. Geopolitical tensions could further boost gold prices.
5. Gold lacks credit risk and is a liquid asset.
Optimal Gold Investments:
Vikram Dhawan recommends Gold ETFs and Silver ETFs for their liquidity and standardized underlying gold bars. Physical gold involves higher costs (making charges, GST) compared to ETFs.
Poonam Rungta favors Sovereign Gold Bonds (SGBs) for being tradable in demat mode, suggesting a necessary lock-in period for discipline.
Digital Gold for Asset Allocation:
Poonam Rungta notes a shift in mindset, especially among young investors, who view digital gold as part of strategic asset allocation (5-10% of the portfolio).
Investment Strategies:
- SIPs are not available for ETFs but can be considered for gold mutual funds, which invest in gold ETFs.
- Multi-asset allocation funds provide diversification, with fund managers deciding allocations among equity, debt, and gold.
Caution on Gold Accumulation Plans:
Poonam Rungta discourages investing in unregulated gold accumulation plans offered by jewelers, emphasizing the reliability of SEBI or RBI-governed products like Gold ETFs, mutual funds, and SGBs.
Vikram Dhawan echoes this sentiment, stressing the importance of choosing regulated investments for dispute resolution.
