I was recently asked in an interview if one can replace fixed income in a portfolio with gold. The answer is a BIG NO! Gold is a commodity and a separate asset class. It is not a replacement for equity or fixed income in an investment portfolio. To understand this, we should first appreciate how…

In a recent talk, I, as usual, discussed how risky gold is and said that only those who understand the basics of portfolio management should consider buying gold funds or ETFs. See: What you need to know about gold before investing in it. Also see: A checklist before buying gold or silver for”diversification”. Usually, this angers some…

So gold and silver prices are zooming up, and everyone wants a slice of the metals in their portfolio. Here is a checklist before you buy gold and silver for “diversification”. 1. Did you know that the worst time to buy an asset or commodity for the first time is when everyone is talking about…

Every time gold prices spike, everyone becomes an expert on the commodity. There is a lot of “I told you so,” “why gold is always the safest asset,” and “why its value never comes down.” If you are interested in investing in gold for its “return, ” there is a lot to consider before diving…

You hold two asset classes in your portfolio (say equity and fixed income). Now, you are tempted to hold another asset class (say gold, at the right or wrong time; it does not matter). Every choice comes with its consequences and responsibility. Once you have a 3rd asset class, the risk in the portfolio can…

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…

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…

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…

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…

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….

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…