Golden Investment

This article is about Gold, more specifically about my position on Gold as an investment or insurance product.

Gold is the ultimate ULIP product for me. Incase you are unfamiliar what an ULIP is, here’s what an ULIP means ‘A ULIP, or Unit Linked Insurance Plan, is a financial product that combines life insurance with investment opportunities, allowing policyholders to grow their wealth while also providing financial protection for their family.’ (as per google)

Why do I call Gold as the ultimate ULIP product? Simple, because it acts as an investment and insurance entity.

Price increasing = Investment ✅ 
Uncertain markets = Insurance ✅

Gold ticks both the boxes perfectly and which is why I allocate a good portion towards Gold. Previously I invested in Gold using government run Sovereign Gold Bonds, but now that they seem to be gone away, Gold MF’s and ETF’s seem like the best option for me and ofcourse physical gold investment like any other middle-class Indian household. Here’s nice chart to show different ways to invest in Gold in India.

Here are 4 things about gold that every reader should know,

• GOLD as an asset class: Unlike equities or bonds, gold does not guarantee any dividend or price appreciation. A profit is not guaranteed in Gold. Gold tends to act as an insurance policy for your portfolio. When things turn gloomy gold shines.
  
  

• GOLD in interest rates cycles: It is said that when interest rates rise, gold does not perform and when interest rates go down gold starts performing. I believe there is little truth to this, here’s what I mean,
  
  When inflation is rampant, central banks increase interest rates. Now this inflation is a big reason Gold does not start falling instead holds up or maybe even start rising. On the flip side when inflation eases and interest rates start falling investors are no longer inclined to hold onto low yielding bonds and they move to Gold. So both ways gold is in demand
  
  

• Gold in unstable times: Gold thrives in chaos. Wars, Pandemics, financial crashes and other unstable environments propel gold and lately we’ve seen extensively unstable geopolitical environment globally which has pushed gold higher in last 18 months.
  
  

• What’s next for Gold? Like any other investing product, gold has it’s cycle as well. Gold will not keep going up infinitely, it will face corrections either in price or in time. The idea is to hold Gold through multiple cycles and more so during bull phases.

Never thought I’d get to see around 100% returns by investing in Gold.

As I'm about to publish this article, I’m noticing gold has given a nice breakout today, so here comes its leg up in the coming week, I guess.

That’s it for today.

-Manish Chandre