Is Gold investment still worth the shine?

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I have always been fascinated with gold and to some extent to silver. Since medieval time, we have been using gold as a mode of currency. Hence, it is termed as god’s money. Gold is something that’s very precious and is also available in rare abundance. As per experts calculations, we got about 57,000 metric tons of gold underground. (We don’t know what quantity of gold is exactly available for extraction).

But, space mining and deep sea mining are in near future. Though the chances of finding metals can be in abundance in the near future, the cost of extraction will be high at initial stages. 

Physical gold is the ‘perfect hedge’ against the Paradigm shift such as the ones we had in the recent past (2008 – The Great Recession), the one we’ll have in the near future I.e 2020 and further. Demand for gold has skyrocketed in recent days for people have low trust on fiat currency monetary system (Now, that the US has printed trillions of dollars out of thin air!). At times of recession, the general public tends to seek for those investment opportunities that are not easily manipulated, they tend to search for something that can give safe haven rather than good return for a short span only to blow it off in days!

That’s where gold comes in,

Gold has this two important quality that is most preferred by investors;

  1. Gold has the capacity to beat inflation over the long term investment perspective. Since 1964 till date gold price per 10.grams has risen from 63.25 to ₹ 50,000 as of today (27th June 2020).
  2. Gold is highly liquid (people don’t recognize this aspect). You can sell gold literally anywhere and get the price as quoted by the current market price. Gold has a store of value that doesn’t diminish over time. The key is to hold gold for long.
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PC: Gold rate History in India, Since 1964 till 2019

With that said, we are staring at probably the worst market crash ever. We would get to see further unemployment and businesses shutting down. This pandemic is no less than WW3!

With all this, the end of fiat currency is near! (Fiat currency is nothing but the money printed by the governing body under government supervision. Like the Fed, RBI) Although there shouldn’t be government supervision, for the authority to print money is to be based on market conditions and economic impact it has to bear. But, that’s not going on around!

With the end of US Dollar based fiat currency (most probably) we’ll need some alternative. Something that’s real and has intrinsic value. A non-manipulative asset!

The only two alternative or the only two that can be shortlisted is:

  1. Cryptocurrency.

Cryptocurrency as a technology is the best thing that could happen in the 21st century. But, the coins such as Bitcoin, Ethereum, Ripple and others are not backed by the government or governing body. It was created out of thin air, chances are it might not be there by the coming decade! I mean, what gives Bitcoin to be so valuable (just because it was first of its kind?).

The Crypto based monetary system will be the future. But, unless and until the governing body recognizes the various coins (Bitcoin, and others) they are of nothing but mere speculation!

  1. Crypto based gold.
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Gold has been with us since 3000 BC. We have used all kinds of commodities as a medium of exchange. But, Gold stands out all of them for gold is unique, rare, measurable, non-perishable and most importantly they are trustworthy. If crypto currency is the future then, why not crypto based on gold? 

I see the future in this. And, if the government has to end the fiat based currency system. The most favorable option available is ‘CryptoGold’. And, if that happens we can see gold reaching over ₹ 10,000 per gram.

Gold qualifies for safety, store of value. It’s something that’s rare and usable and has demand that goes on forever! When investing in gold & silver. See to that you buy actual metal such as coins and bars. Invest in gold and silver as how you save your emergency fund. And allocate at-least 10% of your portfolio into precious metals.

Disclaimer: All the information on this website is published in good faith and for general information purpose only.


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Rakshith Pai
Rakshith is a CA aspirant with half a decade of investing experience. He manages a private fund management service, AUG Funds. Wherein, AU denotes Gold and AG denotes Silver, the two most precious metals on Earth.
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