All that glitters now is actually gold
Many Indians believe that we are, as a nation, among the best investors in gold worldwide. But quite often, the difference between physical consumption and investment is lost. Interestingly, studies across the Indian sub-continent have found that there is a clear emotional connect between the yellow metal and its consumers. A gold loan financing company's CEO, I professionally interacted with, told me that irrespective of gold price swings, his company's delinquency ratio always remained minimal.
Other than commodity traders who deal in the precious metal and are not averse to selling it when found profitable to, the rest, by and large tend to hoard and pass gold down their generations. This has been the historic trend in India.
What has changed though is the growing number of younger investors who prefer to use gold as a pure investment avenue and accumulate it with the clear-cut intention of profiting from it at the appropriate time. Smart investors have historically used Gold as a natural hedge in their portfolios to their equity holdings as in periods of crisis, when equities tend to weaken, gold has surged.
This was clearly witnessed in the early months of this decade, when the first Covid wave swept across the globe. This trend has remained with Gold emerging since then as one of the outperforming Asset classes. While Covid was the catalyst, the periodic flare-ups in geo-political hotspots have ensured that the price of Gold has been north bound. Besides the purchase of physical gold, the more popular avenues used by those that invest in gold are Exchange traded Funds (ETFs) and Fund of Funds.
Gold ETFs are units representing physical gold in dematerialized form. One Gold ETF unit is equal to 1 gram of 24k gold and is backed by physical gold of very high purity. Gold ETFs combine the flexibility of stock investment and the simplicity of gold investments and are listed at the premier stock exchanges, and traded just like the stock of any company. A demat account is necessary to transact in Gold ETFs and the new 12.5% rate post two years of holding taxation rules are applicable on the realized gains therefrom.
Gold Fund of Funds, more commonly referred to as Gold Mutual Funds are open-ended funds which invest in units of Gold ETF. The returns of these funds reflect that of the underlying Gold ETF. While these funds are very convenient for making pre-set (e.g. SIP) purchases and sales in gold, the expense ratios levied by the fund houses running them, make them marginally costlier. Its taxation is the same as ETFs. Yet, besides the convenience of auto-pilot investing that it offers, it also ensures disciplined investing making it a popular choice.
A look at gold returns over the last five years suggests it has been not just a hedge option but also an out-performer. But, notwithstanding fears of a price correction, there is still smart money accumulating it, betting on the stupidity of mankind and its inability to live in peace.
(Ashok Kumar heads LKW India. The views expressed here are his own)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
40 minutes ago
- Mint
Israel-Iran war: DMart to Eicher Motors— Jigar Patel of Anand Rathi recommends 3 stocks to buy for the short term
Stocks to buy for the short term: Indian stock market benchmarks, the Sensex and the Nifty 50, crashed over a per cent each in intraday trade on Monday, June 23, as Israel-Iran war escalates further, crude oil prices rise sharply and investors dump riskier equities and rush to safe haven assets. As it is difficult to predict the trajectory of the stock market amid rapidly changing geopolitical scenarios, Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, advises traders to remain vigilant. "A decisive breakout above 25,300 could pave the way for a sustained rally toward 25,500–25,600. Conversely, any faltering near current levels could signal renewed caution. On the downside, immediate support lies at 24,700, with a stronger floor near 24,450. Until confirmation is evident, restraint remains prudent near resistance zones," said Patel. Jigar Patel recommends buying shares of DMart, Eicher Motors and Biocon for the next two to three weeks. Over the past month, Eicher Motors has witnessed a healthy correction of approximately 12 per cent from its recent peak of ₹ 5,906. Notably, the stock has established a firm base over the last 15 trading sessions, consolidating between its 50- and 100-day exponential moving averages — a sign of stabilizing price action. In the latest session, Eicher decisively broke out of a dual descending trendline, supported by a steadily improving Relative Strength Index (RSI), which has consistently held above the 40 mark and now stands at 61.42. "The confluence of favourable technical indicators positions Eicher as an attractive long candidate. Traders may consider initiating positions in the ₹ 5,530–5,480 range, targeting ₹ 5,900, with a stop loss placed below ₹ 5,300," said Patel. Eicher Motors Following a steep decline from its recent high of ₹ 4,557, DMart has entered a consolidation phase, forming a strong base around the confluence of its 50-, 100-, and 200-day exponential moving averages (DEMA). Notably, the stock has triggered a bullish golden crossover, with the 50-DEMA moving above the 200-DEMA — a technically significant development often interpreted as a precursor to upward momentum. Adding weight to the bullish bias, the stock has also broken out of a descending trendline, indicating a potential trend reversal. "Given this confluence of positive technical signals, traders may consider initiating long positions in the ₹ 4,300–4,250 zone, with an upside potential toward ₹ 4,700. A stop loss should be maintained below ₹ 4,100 on a daily closing basis," Patel said. DMart Biocon has recently established a robust base around the confluence of its 50-, 100-, and 200-day exponential moving averages (DEMA), signalling price stability after a period of consolidation. A golden crossover — with the 50-DEMA crossing above the 200-DEMA — further reinforces the emerging bullish sentiment. On June 19, 2025, the stock also formed a bullish harami candlestick pattern, accompanied by a close above the R3 Camarilla monthly pivot, strengthening the technical outlook. This alignment of key indicators suggests a potential upside move. "Traders may consider initiating long positions in the ₹ 353–348 range, with a projected target of ₹ 385. A protective stop loss should be placed below ₹ 332 on a daily closing basis to manage risk effectively," said Patel. Biocon Read all market-related news here Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
Mint
43 minutes ago
- Mint
Sensex crashes 900 points; why is Indian stock market falling after the US attack on Iran? Explained with key factors
Indian stock market witnessed significant losses in early trade on Monday, June 23, with the Sensex crashing over 900 points, and the Nifty 50 falling below 24,850 on a broad selloff amid weak global cues. The Sensex opened at 81,704.07 against its previous close of 82,408.17 and touched an intraday low of 81,476.76, falling over 900 points, or more than 1 per cent. The Nifty 50 opened at 24,939.75 against its previous close of 25,112.40 and dropped over 1 per cent to an intraday low of 24,824.85. The BSE Midcap and Smallcap indices also fell by almost a per cent each. The overall market capitalisation of BSE-listed firms dropped to nearly ₹ 445 lakh crore from about ₹ 448 lakh crore in the previous session, making investors poorer by about ₹ 3 lakh crore within the first 15 minutes of the session. Here are the five key factors that could be behind the market selloff: Fresh escalations in tensions between Israel and Iran have dealt a blow to market sentiment, shattering the belief that the war between Israel and Iran may not linger for a longer period. The US on Saturday struck Iran with a surprise assault on three of Iran's nuclear facilities, which added a new turn to the evolving situation in the Middle East. Experts highlight that the Iranian response to the US attack will hold the key to how the Israel-Iran episode shapes up. "Even though the US bombing of Iran's three nuclear facilities has worsened the crisis in West Asia, the impact on the market is likely to be limited. The uncertain factor now is the timing and nature of the Iranian response. If Iran targets and damages the US defence facilities in the region or seriously hurts US military personnel, the US response can be huge, and this might further worsen the crisis," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited. According to media reports, Iran's Supreme National Security Council is exploring the possibility of closing the Strait of Hormuz, an important global energy route. According to Bloomberg, roughly one-fifth of global oil supplies pass through this route daily. A closure of the Hormuz Strait would significantly disrupt crude oil supplies, shoot up oil prices, and severely damage the economies of major oil importers like India. Experts believe that crude oil prices above $80 per barrel for an extended period will negatively impact India's fiscal math, distorting its trade deficit. Elevated crude oil prices can also raise inflation, weaken the rupee, increase companies' input costs, and dent their profitability. Brent crude jumped over 2 per cent to trade near $79 a barrel on Monday morning due to heightened concerns of global supply disruption after the US on Saturday attacked three nuclear facilities in Iran. Meanwhile, the Indian rupee declined 17 paise to 86.72 against the US dollar in early trade on Monday. The dollar index jumped nearly half a per cent, weighing on stock market sentiment. A stronger dollar increases the risk of foreign capital outflows, especially at a time when geopolitical tensions make riskier equities less appealing and investors flock to safe-haven assets. Even though the Indian economy is driven largely by domestic consumption, concerns are mounting that it cannot remain completely immune to global developments, and the country's growth dynamics could take a hit as a result. Jaspreet Singh Arora, Chief Investment Officer at Equentis Wealth Advisory Services, pointed out that geopolitical tensions increasingly appear to be the new normal. "It began with the Russia-Ukraine conflict, over two years ago, followed by the Israel-Hamas war. In between, there were flare-ups between India and Pakistan, and now tensions are escalating between Israel and Iran,' said Arora. Besides, tariff-related uncertainties persist. While several major economies have been engaged in negotiations with the US administration since President Donald Trump announced reciprocal tariffs on US trading partners, significant uncertainty remains about how these negotiations will ultimately unfold. Read all market-related news here Read more stories by Nishant Kumar
Time of India
an hour ago
- Time of India
First export consignment of fresh Jamun sent from Karnataka to London
Live Events India's trade ties with the UK just got a little sweeter. On Thursday, the first shipment of the Indian Kundana variety of fresh Jamun was flagged off to London, even as the two countries continue the legal vetting of their free trade agreement (FTA), announced on May only frozen and powdered Jamun had been Agricultural and Processed Food Products Export Development Authority ( APEDA ), under the commerce and industry ministry, flagged off the maiden export consignment of fresh Jamun from Karnataka to the said the fruits were sourced directly from a Farmer Producer Organization (FPO).'Local farmers typically get ₹50-60 per kg for the fruit in domestic markets. From this export consignment, they are earning an average of ₹110 per kg,' said an fruits were packed at an APEDA and Plant Quarantine-approved packhouse, set up by the Karnataka Department of Horticulture.
