Gold has always been a traditional form of investment especially for Indians as it is considered auspicious to buy gold in festivals. it would be though surprising to note that Gold has never gone down on year on year basis except for couple of years in last 30 years.
Considering this Gold is considered one of the safest investment and Indians who have been extremely bullish kabout the investment in gold
to reduce the risk their portfolio carries.unlike silver which is more volatile gold has seen steady growth as well as sporadic positive growth in the years gone by.
Though the returns offered by Gold has been in the tune of 8 to 10 percent, liquidity it offers makes it a strong investment proposition. For example options like loan against gold with subsidised interest rates offered by banks and the immediate liquidity it offers makes it a must in your investment strategy.
Gold funds which are available in market also needs consideration however in my opinion long term investment in gold still will outperform the returns offered by funds if one has the patience to hold it for a longer period of time.
For example I had done few investments in gold in 2006 wherein the rate of the Gold was around 8000 today post 7 years the rate stands at 30000 which is a sure 20 percent return on investment as of date. Though it looks attractive the returns may vary depending on how financial markets will perform.however the track record suggest Gold as one of the safest forms of investments.
The tax laws governing the gold purchase and sale is highly debatable as lot of Indians are also buying and gifting gold for traditional reasons like festivals and marriages etc’ than there may be few who might be using this as a tax evasion tool however now onwards on every purchase and sale of gold declaration of pan number has become mandatory and therefore some one trying to avoid taxes might face severe consequences therefore buying gold to evade taxes will not be a prudent decision.
Graphical View of Gold CAGR over 50 Years