Archive of our articles related to investing in gold
From time to time, investors want to buy gold for “returns” and “diversification” (or is it diworsification?). In our experience, many, if not most, buy gold without understanding the risks and with wrong notions about its returns. Here are six facts about gold you need to know before investing. 1. Gold prices do not always…
Continue reading →This article discusses how the INR to USD exchange rate affects gold prices. Tracking gold-price movements in terms of USD and INR is a simple but intuitive way to understand the strength of our economy. Here are some observations from staring at the historical gold price movement in USD and INR. The domestic price of…
Continue reading →A reader insisted that gold is a “safe ” instrument and should be considered part of a portfolio’s fixed income or debt. Nothing could be further than the truth: Gold is as risky as equity and not a debt instrument! Here is some supporting data. Let us start with the standard deviation of gold, equity*…
Continue reading →After repeated requests from users of our mutual fund and stock tracker, the freefincal team is happy to present a Sovereign Gold Bonds Tracker on Google Sheets. It can be used to track up to 30 SGB issues. Features: The sheet can accommodate one additional purchase and one sale per bond issue. The sheet considers…
Continue reading →A reader says, “The next trance of Sovereign Gold Bonds is now available for purchase. Can I buy these for portfolio diversification?” The short answer is: Don’t! In principle, gold can be used for diversification (that it is not of much use is another matter, see below), but the product should be liquid. We should…
Continue reading →An angry reader writes, “I searched all your articles on gold and found that you have repeatedly recommended against using Sovereign Gold Bonds in an investment portfolio. Why is this so? They are tax-free when held to maturity, and you get extra interest. No other gold instrument has these features, yet you are against this….
Continue reading →About 80% of those who ask us about Sovereign Gold Bonds want to buy them for the wrong reasons. I would wager that the number is about the same in the Facebook group Asan Ideas for Wealth, if not more. When not to buy Sovereign Gold Bonds! Those who want “some returns” from gold or…
Continue reading →A reader asks on Twitter, “Can we use Sovereign gold bonds for retirement planning?” For those who hate tax, the Sov. gold bond is an enticing investment. Buy and hold it for eight years and the returns (if positive!) are tax-free. So why not do this over a 20-25 year period when a typical investor…
Continue reading →Investors will be able to invest in Silver for the first time via ICICI Prudential Silver ETF (NFO period Jan 5 – 19 2022). Exciting as this may sound, investors need to appreciate several aspects of investing in silver and investing in it via ETF. A discussion. Before we begin, it must be understood that…
Continue reading →Anyone interested in money management would have, at some point in time, heard the saying that gold is a hedge against inflation. Does the data support this adage? Let us find out. For an asset to be considered an inflation hedge, an investor must have a reasonable chance of earning a return higher than inflation…
Continue reading →Over the last couple of weeks, three readers have asked me why their Sovereign Gold Bonds decrease in value and how they can lose their principal in a bond with a sovereign guarantee. So, what is sovereign about these bonds? First, consider a simple bond issued by either RBI or the central or state governments….
Continue reading →With the Sovereign Gold Bonds, 2021-22 (Series IV) open for purchase from July 12-16, 2021, a reader asks, “how much return can I get from these bonds”? The only honest answer one can offer is, we do not know. Gold is too risky an asset class to make a prediction. Here is why we have…
Continue reading →The finance ministry has announced the release dates of Sovereign Gold Bonds for 2021-2022. Six issues (tranches) are to be released. Thrice in May(!), once in July and twice in Aug. A discussion on when one can buy these when one should not. There are at least three distinct ways in which investors approach gold….
Continue reading →We there is a discussion on gold returns, someone tends to point that “silver has done better” or “silver has more upside potential than gold” or some such statement. In this article, we compare returns and risk associated with gold and silver from Jan 1979 to Aug 2020.
Continue reading →On Jan 2nd 1979, Gold per troy ounce (about 31.1 grams) was Rs. 1792.85. On 24th July 2020, 41 years later (41.6 years technically), the price was Rs. 142343.67. That is a CAGR or an annualized return of 11.1%. There is however a catch though.
Continue reading →