This post is actually the summary of what Anand Srinivasan mentioned in his video on gold in 2023.
Basically, FED will continue to rise rates until the first half of 2023. It means gold prices will correct in world market. It may not correct in India as INR may fall further. However, once FED pauses the hikes in interest rates, gold may start to cost higher in India as INR may continue to fall. This may happen starting from July 2023 at least until April 2024. Then, the price movement will depend on the policies of the government that comes to power in India.
Gold can be purchased in multiple ways.
Gold coins: The common method is to buy physical gold as coin. My niece buys one gram of gold monthly to get a jewellery of her choice months later. The disadvantage with this method is that we can’t usually get a loan against gold coins.
Jewellery: Physical gold can also be bought as jewellery. This is very useful, particularly if we need to get loan on emergencies. The disadvantage with this method is the safety. If you have plenty of money, then there are methods to safeguard it. However, for a common man, such costs are not affordable.
Gold ETF: If you are looking for liquidity, then buying gold ETF via stock market is the best option. The inconvenience with this method is that one has to have a demat account and one has to bear the brokerage charges. Even though, the charges are usually negligible in nature, they add-up in the long run.
SGB: SGB are issued by Reserve Bank of India. You may know more about it at https://sovereigngoldbonds.rbi.org.in/ . There is a lock-in period of minimum of 5 years, though. Also, you can’t keep a bond for more than 8 years!
Investing in companies and banks
Companies that sell gold: Gold is sold by companies that are also listed in stock exchanges. So, investing in such companies is an option for people who trust gold and its prices.
Banks and Companies that provide gold loan: While most people go to a bank to get a gold loan, they eventually look for a company that provides a higher loan than the banks. So, it is wise to invest in both banks and companies that provide loans against gold.
The above information is basically a note to self and is shared here only for educational purpose. If you’d like to invest your hard earned money in gold or in stock market, please consult a nearby SEBI registered investment adviser!