Gold Silver Reports – To understand whether gold investment is a good idea in 2017, you need to take a step back and understand how gold prices rise or fall.
Simply put, the gold rate is determined by its supply, demand, and value as an investment in the current economic scenario. In India, they often fluctuate due to government policies and certain economic events such as the recent demonetisation. As a rule, investors rush to buy gold when there is an inherent weakness in the stock market or in the economy. The reasoning is that the precious metal will hold more value than stock or bonds when the markets tank.
Read More- Gold Price Report October 26, 2017
Experts suggest that the best time to invest in gold is when you are expecting an inflationary period. Experienced investors already know that inflation is unlikely when the local currency; i.e. Rupee is strong. However, increased currency printing by the Reserve Bank that will result in more cash in the economy (and will lead to increased prices) is a potentially good indicator to start investing in gold.
Media reports and opinions of experts suggest that inflation may see a mild increase in the near to mid-term. This is supported by EIU and IMF data that show inflation rising slightly in the next year or so.
Another good way to forecast gold investment prospects is to analyse the pertinent financial data of the previous years. For instance, between November 18, 2015 and November 17, 2016, gold ETFs returned 16% and outperformed the other asset classes. In the domestic market, gold rates in India moved from Rs. 25,000/10gm to Rs. 31,000/10gm in the same period. This rise was led by a variety of global factors such as fall in global equities, inflows in bullion funds, and concerns over economic growth. In addition, gold has seen a 28% drop in its value since 2013 and some gains were inevitable even with a small rise in prices. However, returns over three to five years have been negative. As of now, experts believe that gold prices will fall further in 2017 before they start climbing.
The question to ask then is on the holding period. With only marginal increase in Indian inflation numbers and prices likely to remain low for the next 1-3 years, the metal may not prove to be a good short-term investment, according to experts. The long-term prospects are however, definitely brighter. – Neal Bhai Reports