Should I purchase GOLD or shares or silver?


I am writing the blogs for the last 2 months now. I have experienced that most of the people are interested in understanding the strategies for earning good amount of the returns in the share market. I feel very happy that common man is keen to know about shares and mutual fund. Even before the launch of the various financial instruments in the India, citizens are investing the money in the gold for many centuries. This has resulted into strong faith and demand for the gold.
Let’s look at the current prices of the Gold, Platinum and silver in the India for the last 10 days of the May 2020
Chart 1: Gold, Platinum and silver rate per gram
Date
Gold Rate per gram
Platinum rate per gram
Silver rate per gram
20-May-20
4,657.00
2,100.64
47.67
21-May-20
4,620.00
2,038.41
48.20
22-May-20
4,625.00
2,043.25
48.25
23-May-20
4,626.00
2,043.25
48.35
24-May-20
4,627.00
2,043.25
48.36
25-May-20
4,627.00
2,054.35
51.40
26-May-20
4,596.00
2,019.13
48.00
27-May-20
4,596.00
2,042.50
48.70
28-May-20
4,586.00
2,036.61
47.91
29-May-20
4,593.00
2,037.16
47.91
It is seen that demand for the gold is higher than platinum and silver, resulting into the higher price than platinum and silver.
Now let’s take a historical review of the gold prices for the last 5 decades
Chart 2: Gold rates for the last 55 years i.e. from 1964 to 2019





It is observed that gold rate per 10 grams has been increased at the higher rate after the year 2000. One may ask the question, why does the price of the product (Gold) rise? Even if you are not financial expert, you can answer the same with little bit common sense. When people start believing the usefulness of the product in the presence or for the future, they start buying the product resulting into the shortage in the market. This shortage leads to the price increase. One can say that, after 2000, people started the creating the demand for the gold. What could be the reason? Is the emergence of the strong share market equally responsible for the strong gold market?
There is need to get the answer by the actually downloading the database of the share prices and comparing the same with the gold rate. I have selected the NIFTY and Sensex data base for the maximum years from the website. Why is it necessary to extract the data of NIFTY and Sensex?
NIFTY index is the composition of the 50 top performing companies listed on the National stock exchange (NSE). Sensex is the Index of top 30 performing companies listed on the Bombay Stock exchange (BSE). Researchers considers the both the indexes as the growth measuring indicator of the country.
Let’s conduct the growth rate analysis for understanding the trends in the average gold rate and NIFTY, Sensex price over the previous year.





*Yearly Average of Gold rate, NIFTY50 and Sensex are taken from 2008 to 2019. Data for 2020 represents the prevailing prices of 29th May 2020 for showing the relation between 3 during the crisis.
It can be seen that Sensex and NIFTY50 are moving conjointly. Inverse relation is observed in growth in gold rate and NIFTY50-Sensex. In simple words, when the share market is on the decline mode, sharp growth has been seen in the gold rate (2008, 2011 and 2020). Reverse scenario can be comprehended in the years like 2013, 2014, 2017 and 2018.
It can be concluded that when the share market is showing the weakening signals, investors prefer the gold for investment or vice versa.  All the readers should note that your bag of investments should have variety of investment instruments for curtailing the risk and enhancing the returns.
(If you are good at “Marathi” the regional language of Maharashtra, India, you can read the “Marathi” version of this Blog by clicking the link

 https://managingrupaya.blogspot.com/2020/05/sone-gheu-chnadi-gheu-ki-shares-gheu.html)  

Comments

Post a Comment

Popular posts from this blog

Donation and Income tax Provision

Image
  Since the last week, we all are celebrating one of most favourite festivals “Ganeshsotsva”. Maharashtra state in India is well known for its big & informative pandals and eco-friendly decorations. This year due to pandemic situation, every group/Mandal/trust is celebrating the festival with utmost care and taking all the possible measures for avoiding the crowd. Few organisers have organised the festival through online platforms with the live daily “Pooja” & “Aarti” (Prayers). On this occasion first, I would like to appreciate all the members of the “Ganesh Mandal” not only for their caring behaviour but also the work they have done for lonely senior citizens, poor people during the lockdown. During this period, these people worked fearlessly to satisfy the daily needs of old people who are living alone or needy ones. In India “Dan” means act of donating has played a very crucial role in the daily life. “Act of donating” is considered as the kind and compassionate behav...
Read more

Work from Home and Company’s Profitability – FMCG Sector

Image
On last Sunday, we have analysed the IT sector and concluded that in spite of the turmoil situation in the external world, IT sector has performed very well due to proper planning and execution of strategies by techno savvy staff. We are aware that most of the manufacturing companies have recorded the losses for the July 2020 quarter. In this Blog, we are going to analyse a manufacturing sector which has not only earned profit but also recorded the growth in profit or sales. FMCG – Fast moving consumer goods sector has enjoyed the tide of growth and profitability. Affordable prices and less time requirement for sales are the main two features of FMCG due to constant demand from the common man satisfying the daily demand needs. FMCG includes the goods which people consumes on the daily basis such as biscuits, refreshments, beauty products, personal care products etc. In simple words, the products which are featured mostly in the commercial breaks are the FMCG products. NSE has created...
Read more

Goodbye “Year of Wisdom” & welcome “Year of Opportunities”

  Goodbye “ Year of Wisdom ” & welcome “ Year of Opportunities ” You are reading this blog in the first week of January 2021, the year of hope, possibilities and opportunities. 2020 has made us to accept that nature or the universe or whatever name you call, is the only best teacher on this earth. In the teacher's fraternity we claim that higher degrees, doctorates, experience help us to teach. On the other hand, divine nature teaches by letting the people experience the things in reality. You may say madam, you always write about finance, accounts or related subjects then why it's having the shades of divinity or philosophy. My readers, I also understand the limitations of person's knowledge and his/her potential to express the same. This year has really taught us the criteria of measuring growth. Growth cannot be measured with tools having only the economical or financial variables but it should be based on the 3 concepts   Financial or Economical variables ...
Read more