at Phillip Capital.
A market expert who did not wish to be named said that over the next five years rupee is expected to depreciate and that only augurs well for gold investors in India.
Should you buy gold this Diwali?
Even though gold in Diwali is bought mainly because it is condsidered auspicious to buy the metal during the festival, a number of individuals also buy it from an investment point of view. The festival becomes an auspicious occasion to buy gold to meet future financial goals such as marriage.
The gold prices may seem high and the government too has done its bit by raising the import duty on gold to 10 per cent now from 2 per cent towards the beginning of this calendar but experts feel that you must continue with your purchase and follow your asset allocation.
"You must route 10-15 per cent of your investment into gold. Investors will not only see better returns in the long run but also hedge themselves against inflation and currency depreciation," said Jain.
There are others who feel that anywhere between 5-10 per cent should be routed into gold and investors should not go overboard while investing into it following any rise in prices.
What is the best way to invest?
Gold prices have remained volatile in the past and there is a likelihood that they will remain volatile in the near future. In such an environment it is best to through systematic investment plans (SIP) or monthly allocation of fund into gold so that you average out your cost of acquisition and benefit when the prices rise on the overall investment.
As far as the mode of investment is concerned, exchange traded funds (ETF) of mutual funds score over your traditional jewellers gold coin not only in terms of pricing but also in terms of purity and the price you can fetch at the time of sale.
The exchange traded funds’ also score over the bank’s bar or coins on pricing and liquidity as bank’s are not allowed by regulation to buy back the gold from the customers.