In olden days people had to buy gold because that is the alternative asset for currency. Today we have lot of other assets to buy right from real estate, shares etc instead of buying gold. Buffer is right, you can fondle with the gold but it won't give you back any thing.
Problem with gold in India is that they put Wastage [around 10 percent atleast] for any gold Chain or whatever bought,When you go and sell Gold the same wastage comes into act.So what happens is you lost around 20% of original gold value.You need to keep Gold in a Bank Locker for safety purpose and that is also money consuming,when you compare everything here, gold purchase [including Wastage] Gold maintainance [bank locker rent every year atleast 2K per year] Wastage at the time of selling = Gold value purchased equivalent profit got through gold.So it refers that when compared with inflation ,you wont get any gain while purchasing gold.If you are investing in Land it provides you a good return but imagine the registration cost of around 8% of land value. So keeping these two wont be a nice idea, instead if you can buy around 10 cents of land, go for joint venture with a builder and construct an apartment and sell it.i assure you will get atleast 30% profit in 1-2 yrs itself.Which one you think is better Gold or Land or Apartment construction ?
Re: Problem with Gold
by prem k on Apr 05, 2012 05:49 PM
what you are saying is true. but real estate business in most Indian cities is dangerous and risky. there are many land sharks and you cannot just be an investor. you have to be a goonda, a politician and an investor - all rolled into one to succeed in real-estate, unless you buy an apartment or land for your own use.
Re: Problem with Gold
by vassudev korgaonkar on Apr 06, 2012 11:52 AM
Kannan Sirji..The calcuations you are doing are correct , but it is for jewellery and not for gold. The pure investment in gold is in the form of ETFs. Here there will be no wastage as you mentioned.
Re: Problem with Gold
by Zuber Khan on Apr 06, 2012 12:41 AM
not entirely true Kannan. You can buy shares which will hold your gold (etf's) without additional costs (jwellery design/maintenance etc)
Re: In the last 20 years, Gold has gone up 6 times
by Hemant Waghela on Apr 05, 2012 05:04 PM
you are looking in the INR ( Indian Rupper terms) see from Global Currency which is USD perspective & you will know that in last 30 years gold is almost there !! in 1980's gold per ounce was roughly 600 USd & after the big crash in Wall street it went down continuously till 2000 & it was around 300 usd per ounce so it mean those who held the gold as a long term investment lost half of the value over the period of 30 years & considering inflation it was much more deeper cut !! so do not be in fools paradise !!
Last 1 decade it did well because of weak USD & Stock crises...war in Iraq ,Afg.so look at the overall return it is less then bonds !!
Re: In the last 20 years, Gold has gone up 6 times
by Maximus Meridius on Apr 06, 2012 06:06 AM
As Hemant Waghela below says, not when you adjust for inflation. In real terms, gold prices are lower than they were in 1978-1981, and has not reached anywhere near that point since. It is unlikely that it will, given that the world economy is recovering (slowly).
Re: Re: In the last 20 years, Gold has gone up 6 times
by vassudev korgaonkar on Apr 06, 2012 11:55 AM
If you take data of gold price for last 85years. Gold has not given return of more then 8% over a longer period (10years). Though there are sparks in the prices, over a longer period investment in gold goes into debt portfolio.
Unbelievable indeed is the audacity of people who explain how someone claims Buffet is wrong in some investing philosophy. Had I been the author, I would have added a disclaimer saying " An amateur investor's musings"
If the author had clearly understood Buffet's argument in favor of stocks as opposed to gold, it is very clear that he views good stocks as a better long term investing asset class because of the dividend generating power. A piece of gold may triple in value but will not earn the investor a dime in dividends. And no, he is not , and has never talked about dot com sticks. He is a business owner more than being an investor , meaning he likes to buy a piece of 'great ' businesses and not some fancy stock that is flying high for sometime. It is very simple to do the math. Consider available surplus assets of $100K. Would you buy a block of gold or put the $100K across Apple, IBM and say TATA ? I would imagine any one with a decent sense of business and economics will bet on the latter.
Re: Unbelievable
by Incredible India on Apr 05, 2012 03:19 PM
In India Gold is still 10 times better than any stock with less risk; Of course the management of keeping it is little overhead;
Re: Re: Unbelievable
by Hemant Waghela on Apr 05, 2012 05:06 PM
No you moron, there are quality stocks available likes of L&T ,Gloaxo, Tata group companies which are worth investing.
Re: Re: Unbelievable
by prem k on Apr 05, 2012 05:34 PM
Yes. But do remember one thing. The last page summarizes the risk well. Everyone sees gold as a tangible asset and if everyone indeed starts investing in gold, what would happen to the paper money? The way Indian govt is getting into more and more deficit budget every year, gold is certainly more attractive. However there is a word of caution. Even mighty democracies such as US have not shunned away from banning private holding of gold in the past. If the push comes to shove, I would be least surprised if the govt in India or even around the world make such an announcements and confiscates everyone's gold holdings or at least bar legal gold trade.
Anything is not a wise investment option if you don't want to en-cash it. Gold and Land are such commodities for any average Indian. Gold if not sold would be called as wealth but not investment.
Mr.Vivek is doing what harshad mehta did in 1994. He is trying to connect two things in a way which seem convincing .Before him many have had a laugh on Buffet and in the end they lose money , not Buffet.For authors very deep understanding , Gold has touched a high in 1980 which in dollar terms would be even higher. Utility will shape the demand and demand will determine the price . Value investing looks at real use and unlike you (along with many ) gold has been taken as benchamrk for currecny for decades.Sure hold ur gold till it drops !!
