Investing in Gold in India

Investing in Gold in India

Gold is the most precious and valuable asset class than any other asset class for Indians. Every year, Indians consume almost 800 Tonnes of Gold which is the highest demand in the world. India is world’s largest consumer of Gold and people Invest in Gold in various forms.

- Jewellery
- Gold Bars
- Gold Coins
- Paper / Demat Gold

Indians will never stop consuming gold. Almost 95% Gold holding in India is in private hands. This means that Indian people are very wealthy. Traditionally Gold has beaten the Inflation very well.

After 1971, President Nixon of USA has removed the gold standard and after that Dollar became a Free float currency. Means the US Federal Reserve can print any amount of Dollars without preserving gold any more. This is also known as Fiat Money. Recently US Government has printed almost $ 2 Trillion and pushed it into the economy. And because of this activity, the newly printed dollars have diluted the purchasing power of the existing dollars in the economy which has drive the gold prices to the sky high.

The more money will be printed by the Governments and Central Banks from all around the world, the Gold price will drive up more and more. Today you can invest in Paper/Demat Gold also known as Gold ETFs (Exchange Traded Funds).

If you Invest in Demat Gold (ETFs) in India than you will not have to pay any wealth tax on this paper gold. However, if you own a Physical Gold in any form, you will have to pay the Wealth Tax on that Gold.

Any Portfolio should have a Gold Allocation. However, Gold Allocation in anyone’s portfolio should not be more than 10% of the Total Portfolio Net Worth. Remember that Gold is to preserve your wealth. Gold is not for Capital Gains. For the Capital Gains you should invest in Equity.

Anyway, So Invest in Gold and stabilize the fluctuations in your portfolio.