Should You Invest In Gold? Here's What Experts Say

Returns from gold in the past few years have not been encouraging. Historical returns in gold in the last 3-5 years do not look that encouraging, said Lakshmi Iyer, CIO- Debt & Head of Products, Kotak Mutual Fund. Gold prices also remained flat on Akshaya Tritiya today. Gold prices went up by Rs 30 to Rs 32,380 per ten grams at the bullion market in Delhi, largely due to token buying by jewellers but a subdued trend overseas capped the gains, according to Press Trust of India.

Ms Iyer expects gold prices to remain range-bound. "With anticipated rise in US rates, it (gold) may remain range-bound. But gold as part of asset allocation does good when uncertainty increases," Ms Iyer said.

Global gold prices remain highly sensitive to rising US interest rates. Higher interest rate increases the opportunity cost of holding non-yielding bullion.

Financial experts advise a small allocation towards gold as a hedge towards volatility and uncertainty.

The overall trend in gold prices is possibly set towards an upward bias, said Dinesh Rohira, Founder & CEO, 5nance.com.

"Gold as part of asset allocation does good when uncertainty increases. Hence, a small allocation could be considered at all times, though not with the intent of making money out of it, but more as a 'risk cover' on one's investment portfolio," Ms Iyer of Kotak MF said.

Abhinav Angirish, founder of www.investonline.in, also advises a portfolio allocation towards gold.

"Gold always was and will remain a useful asset class as it's a hedge against inflation and uncertainties. One should have both equity and gold in their portfolio, but in certain proportions which is in line with their goal," he said.

"Ideally, gold or precious commodity should be between 5 to 10 percent of one's investment portfolio however it can vary depending on one's risk appetite and financial situation," said Rahul Agarwal, Director, Wealth Discovery, a financial services firm.

"A large-size portfolio should have at least 10-15 per cent allocation towards gold, and lower allocation if the portfolio is smaller," said Mr Rohira.

Investors can also consider buying gold through futures and options, exchange traded funds (ETFs) and via monthly schemes. "Gold future contracts can be bought as hedge existing (against) physical gold position, whereas buying physical gold is good for people who have some need of gold jewelry down the line. Buying gold through monthly schemes gives small investors the chance to invest a smaller portion of their amount, and is a systematic plan of investment," said Mr Agarwal.

"Gold ETF is one of the best options to buy gold for investment purposes as there are no making charges present in it and it is also easier and cheaper to liquidate," said Mr Angrish.

Gaurav Katariya, Research Head- Commodities - Arihant Capital Markets Ltd suggested an investment in gold with a mid-term outlook. “The strategy should be to acquire gold either in demat form or in the form of Gold coins if you are purchasing from physical market,” he said.

Ahead of Akshaya Tritiya, the government also issued Sovereign Gold Bond, 2018-19-Series-I scheme, which is open for subscription from April 16 to April 20, 2018. Sovereign Gold Bonds are issued by Reserve Bank of India (RBI) on behalf of the Government of India.

(Read: 10 Things To Know About Sovereign Gold Bond Scheme)

Sovereign gold bond scheme was first launched by the government in 2015 and allows investors to take exposure to gold, without taking physical possession of gold. Investors can also earn interest income on the same. (With PTI Inputs)