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Wednesday, October 04, 2017

All That Glitters Is Not Gold!

All That Glitters Is Not Gold!

by Mr. B. Padmanaban, CFPCM
Certified Financial Planner

All that glitters is not gold is a well-known saying, meaning that not everything that looks precious or true turns out to be so. This can apply to people, places, or things that promise to be more than they really are.

Unfortunately, Indians are fond of GOLD and they always felt that GOLD prices keep moving all the times and whenever it comes down, it is good to buy because it will go up any time. It clearly shows that people are more emotional than practical!

My only submission here is GOLD is not at all a good investment and when it comes to ornament, it is the individual wish to buy or not. No comments! The reason for telling me is not a good investment, I have given the gold prices data for the last so many years and one can easily find out whether it is really moved or not! You are the best person to judge based on the data given below.

Year
Price
Year
 Price
1964
Rs. 63.25
1991
 Rs. 3,466.00
1965
Rs. 71.75
1992
 Rs. 4,334.00
1966
Rs. 83.75
1993
 Rs. 4,140.00
1967
Rs. 102.50
1994
 Rs. 4,598.00
1968
Rs. 162.00
1995
 Rs. 4,680.00
1969
Rs. 176.00
1996
 Rs. 5,160.00
1970
Rs. 184.00
1997
 Rs. 4,725.00
1971
Rs. 193.00
1998
 Rs. 4,045.00
1972
Rs. 202.00
1999
 Rs. 4,234.00
1973
Rs. 278.50
2000
 Rs. 4,400.00
1974
Rs. 506.00
2001
 Rs. 4,300.00
1975
Rs. 540.00
2002
 Rs. 4,990.00
1976
Rs. 432.00
2003
 Rs. 5,600.00
1977
Rs. 486.00
2004
 Rs. 5,850.00
1978
Rs. 685.00
2005
 Rs. 7,000.00
1979
Rs. 937.00
2006
 Rs. 8,400.00
1980
Rs. 1,330.00
2007
 Rs. 10,800.00
1981
Rs. 1,800.00
2008
 Rs. 12,500.00
1982
Rs. 1,645.00
2009
 Rs. 14,500.00
1983
Rs. 1,800.00
2010
 Rs. 18,500.00
1984
Rs. 1,970.00
2011
 Rs. 26,400.00
1985
Rs. 2,130.00
2012
 Rs. 31,050.00
1986
Rs. 2,140.00
2013
 Rs. 29,600.00
1987
Rs. 2,570.00
2014
 Rs.28,006.50
1988
Rs. 3,130.00
2015
 Rs.26,343.50
1989
Rs. 3,140.00
2016
 Rs.28,623.50
1990
Rs. 3,200.00
2017
 Rs.28,130.00

1980
2017
 Multiply by 
Sensex
100
  31,671
316.71
Gold
           1,330
  28,130
21.15

2012


Sensex
         18,869
  31,671
40.42%
Gold
         31,050
  28,130
-9.40%

As far as data goes, it is not encouraging and let's look at how the future returns will look like. I agree with you all that in our social life GOLD still plays an important role. But the point is do we should accumulate only in terms of gold, or it can be some other investments which should be in a position to buy the GOLD which we require it in the near future, hope that makes more sense to one and all.

Internationally GOLD is bought against US dollars. Gold is measured by Troy Ounce and it is 31.1 gram, for the calculation purpose we will take 32 grams or 4 sovereign. The question, I leave it to you all is what would be the currency gain going forward. Considering make in India and other initiatives as far as my reading goes it will not reach 70 in the next 5 years and chances or rupee strengthening is higher and you have every right to make your opinion on that. Opinion reserved for you.

It clearly shows in the international market GOLD price will not move for decades. Considering the current situation it is difficult to buy GOLD through cash, so things will never look like what we had in the past.

Gold Price
 Year
1 Troy Ounce
31.1 Grams
1980
$892
Rs. 8 per $
2000
$272
Rs. 48 per $
22-08-11
$1,917
Rs. 45.57 per $
04-10-17
$1,283
Rs. 65 per $
6 Years
-33.07%
42.64%

In the last 5 years, it has given negative returns but how many know this fact, even if I tell you still many will not accept! Take 10 years or any long term it proves not a great investment. On top of it protecting GOLD is not that easy as well.

Let’s look at the other investment avenue like mutual fund which can eventually generates good return though we don’t know much or we don’t like much. Just because there is a statutory warning everyone fears about Mutual Fund.

MF investments are subject to Market Risk, read the offer document carefully before investing!

All the investments are market risk like GOLD, Real estate. Even our bank interests also subject to interest rate risk. Many could not find an opportunity to reinvest what they had invested few years before. But, they never told about the risk, we consider it is a safe investment!

For more details
Mr. B. Padmanaban, CFPCM

Certified Financial Planner, Chennai 
98843 49173


All That Glitters Is Not Gold! Reviewed by S. Chitra on October 04, 2017 Rating: 5 All That Glitters Is Not Gold! by Mr. B. Padmanaban, CFP CM Certified Financial Planner www.fortuneplanners.com All that glitte...

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