Is this the Right time to buy Gold? | CA Rachana Ranade - YouTube

Hey folks!!! CA Rachana Ranade here and I welcome  you all to the women's day special!!! On this the  

right time to invest in gold? well before we  move on to timing the investment in gold let's  

move on and understand why am I talking about gold  I believe that we all Indians share a very special  

bond with gold in fact gold has been perceived as  god's money then it got perceived as a symbol of  

power and status then it started being used as  money and today it is perceived more as a store  

of value investing in gold has seen a dramatic  change from only one investment avenue like  

physical gold investing to various ways in which  we invest in gold through the e-ways basically now  

there are many other reasons why people prefer to  invest in gold what could be these other reasons  

they could be something like high liquidity or it  could be something like a hedge against invest,  

inflation diversification and downside protection  against equity markets but the big question is  

all these parameters that we  discussed do they really stand true?  

All these points we are going to discuss in  today's video. Let me remind you all one more  

time that all these creative people are spammers  that's how my account looks like also remember I  

never give my mobile number in any chat I neither  have an advisory nor do I give any stock tips. 

Now let's focus on the different ways through  which you can invest in gold. Possibility number  

one the traditional method investing in physical  world. Possibility number two investing through  

SGB's these are nothing but sovereign gold bonds.  Possibility number three investing in gold through  

ETF's are exchange traded funds and the last  possibility could be something like investing in  

gold through futures now all these are definitely  very precious no doubts on that but there is  

something which is a little bit more precious than  gold and what is that investing in knowledge in  

fact I have just launched Basics of stock market  2.0 version on the occasion of this women's day  

so I would surely request everyone that you  can go and check out this course you can also  

avail this offer which is a women's day special  offer and enjoy and learn in a fun-filled manner. 

Now let's try and understand each and every avenue  of investing in gold a little bit in detail the  

very first one is investing through SGB's by the  way I have made a separate video on investing  

through SGB's can surely have a look at that  so that we don't waste time again and again on  

the same topics right. Let's move on with the next  one instead and that is investing in gold via gold  

ETF's okay so what are ETF's as I mentioned these  are exchange traded funds in simple words it's it  

could be as good as investing in gold but in  an electronic way now before I tell you more  

and more details about this you know when I heard  about gold ETF' for the very first time I was like  

finally what am I getting? I am getting some units  in my Demat account but how do I ensure that these  

units are actually worth some gold or not who  guarantees that there is some gold against these  

units? so basically it is a mutual fund house  who is issuing these units that mutual fund house  

holds the gold in physical format and against this  physical gold they issue units and these units are  

traded over the exchange and that is why these are  called as gold ETF because they can be traded on  

the exchange right so with this basic information  let's go and understand few more details these  

gold ETF's aim to track the domestic physical gold  price so what is the aim of these gold details  

they are going to track what? gold physical prices  so ideally if the physical gold price goes up ETF  

price is also going to go up and in the reverse  way also same story. They represented by 99.5%  

pure physical gold bars and these physical gold  bars, gold coins the mutual fund house that was  

the same thing that I explained right now correct  now one gold ETF is equal to one gram of gold okay  

simple no explanation required but the most  important point is that this gold ETF gives  

us the simplicity of investing in gold and at the  same time it also gives us a great flexibility why  

because with the help of few clicks you can invest  in gold right so all these were the basic features  

of gold EFT, what can be a classic example of it?  Gold bees are the classic examples of gold ETF.  

Let's move ahead with investing in gold via gold  futures, now have a look at this specific contract  

which is the gold February 2023 contract this is  a contract on which is traded on the MCX which  

is the Multi Commodity Exchange, now here you  can see okay symbol gold and whatever whatever,  

here you can see what is the trading unit  trading unit is 1 kg if you remember in the  

gold ETF it was 1 gram. Your trading unit is  1 kg quotation base value is 10 grams now wait  

important whatever price is quoted that is X  Ahmedabad why are all these details given like  

even if you go a little bit uh downwards here you  can see okay delivery centers designated clearing  

housing facilities at Ahmedabad, additionally  delivery centers Chennai, Hyderabad. what is this?  

now please understand whenever you buy a gold  futures contract okay what happens first of all  

when will you buy a gold features contract when  you're bullish or bearish on gold obviously when  

you are bullish on gold you will buy a gold  features contract. Now assume at the end of  

the expiry period okay whatever you are bought  at X and right now at the expiry it is X+2%,  

okay in simple words the gold price has increased  by two percent will this entire contract be  

settled in cash? will be settled any directly  or bank account? answer is NO this will be a  

delivery based settlement okay means what at the  end of expiry if you hold this futures contract  

physical gold will be delivered to your place  something like this animation team control,  

all right so uh it was 1kg you know but  now that is the reason why you need to  

understand the delivery location and all  that the price was at Ahmadabad location if  

I were to get that gold in Pune will that also  include higher charges answer is obviously yes  

so I hope you have understood that investing  in gold via futures is also possible but wait  

is this also also going to be a pretty expensive  deal expensive in terms of what in terms of money  

requirement why? if you remember delivery unit  was 1 kg so do you mean we need to buy minimum  

1 kg entire amount needs to be given? No for  this concept of margin money comes into play  

but then what is margin money and all that it's  a big concept I have already explained this in  

the in the futures and options course so whenever  time permits you can also go through that course. 

Well before we move on to analyzing the various  gold returns I would also like to tell you one  

thing because maybe many of you might be still  like why because 1 kg of gold? is there any other  

option where I can buy or sell gold futures  with a small unit of just one grams? Answer  

is Yes you can trade in gold petals on MCX where  in the trading unit is just one grams right so  

with that information I hope you are happy  but I am not happy why? Have a look at this  

only these many percentage of women have  subscribed to my channel so all these  

women who are watching out the channel please  ensure that you are subscribed to my channel  

and men watching this video please encourage the  women in your family to subscribe to the channel  

and also hit the bell icon with that let's move on  with analyzing the returns that we had discussed  

various gold investing options basically so let's  kick start with SGB June issue of 2020, okay  

so assume that we had bought the June SGB issue  uh and the price at which we had bought was 4627  

okay by the way I have bought it at 4627 in  fact if you remember I had also done a video  

on that wherein I explained why I am investing in  SGB. Going ahead uh for those who have seen that  

video I have also explained in that video that  a an interest of 2.5% was going to be paid out  

to the SGB holders on a semi-annual basis on the  face value of 4677 so that interest or the coupon  

amount comes to 175.39 so please understand how  much had I invested 4627 the purchase price how  

much interest did I get 175.39 so can I say  my effective cost price right now is 4451.61,  

simple what is the current market price as i  shoot the video 28 February 2022 the current  

market price is 4720 how much returns does this  translate to this translates to a return of  

6.03% okay let's move ahead with analyzing  the returns given by gold ETF's or Gold Bees  

for that have a look at this chart from trading  view which is about gold bees and if you check  

Nippon India MF what is that? that is  the gold ETF that we had discussed right  

so what am I comparing see the time period has to  be the same which time period price at the time  

period with uh during which I bought this versus  as on date which is the time common time frame  

June 2020 and Feb 2022, so here you can see the  average price in June 2020 was 41.79 will be like  

how is gold available at 41.79 remember the size  was just one gram ticket size was one gram then if  

we check for February 22 here you can see average  price is 44.15 now what are if if I just check  

this scenario and if I try to calculate selling  price if let's say I am talking about 44.15  

uh buying price 41.79 what are the percentage  returns they are 5.64 percentage returns  

simple till here. Let's move on with gold futures  in that case now if you have a look at this chart  

from trading view again you can see it's the same  contract that I showed from MCX multi-commodity  

exchange right what is the timeframe again  same June 2020 and current timeframe Feb 22,  

what is the cost price? June 20 again I have  jotted down high low points and average is  

47,123 what about the gold futures in Feb 22? The  price is 50,176 now if I compare these two dates  

what is the absolute return here it is 6.47%  right now moving ahead with physical gold now,  

there was a problem because you know physical gold  rates will differ from city to city and you know  

I am not a goldsmith right so I will not  have all the daily rates of gold written in  

my house or something like that so what I have  done, I am referred to a website the link of  

the website I have given in the description box  from that website gold spot prices Juneune 2020  

you can see the high price low price average is  4490, February 2022 again you can see high low  

prices and average is 4607 what are the returns  given by physical gold in this case it is 5.19%  

wait now let's do a summary have a look  at this summary SGB,EFT, gold futures  

okay so SGB you can see 6.03% returns, EFT  5.64% returns, futures 6.47% and spot 5.19%  

I hope you have understood that the returns are  more or less similar but they are not the same so  

in the pre-bumper if you remember all four ladies  had invested in gold but everyone was getting the  

different returns and now I am sure you might not  be like Asa Kasa Kai!! now you know the reason  

for that and these are the returns so you can  decide for yourself which could be the investment  

route that you choose for investing in gold. Now that you have understood the perspective  

returns for all these four investment avenues in  gold now the big question is out of these four is  

this the right time to buy invest in any of these  or what I mean still few questions unanswered  

right if you remember in the beginning of the  video in fact I had said that there are four  

reasons why people in fact invest in gold we'll  go through them one by one the very first one was  

it gives a very nice diversification so if you  have not invested even like one percent in gold I  

think yes this is the right time to invest in gold  many people ask me how much percentage so ideally  

experts say that 10% of your total portfolio  could be invested in gold. Now if you ask me  

which out of these four if you are thinking only  from a perspective of diversification then I think  

gold futures is out why? because gold futures has  an expiry, so if you're taking just a one month  

expiry, if you are taking a two month expiry  contract, three months expiry contract,  

it will not be a long term diversification plan  for you right otherwise every single month you  

will keep on, you know buying futures again  selling and again buying makes no sense right  

so if you're only thinking from investing  in gold from a diversification perspective  

it could be physical gold, it could be gold bonds  because gold bonds SGB's they have a maturity of  

almost eight years right and third gold ETF's  also possible. Let's move on with the next one  

which is hedge against inflation now again just  look at all these four returns which we had  

discussed in the previous section is this clearly  beating inflation? and my answer is clearly NO  

why? Inflation in India is also around a  similar level now you might be like all right  

but generally uh gold returns beat inflation  right answer is correct but in the long term,  

in the short term it could be wavy sometimes gold  returns could be less sometimes they could be high  

and in this case it's typically going neck to neck  so if you're looking at gold investing just from  

a perspective of a hedge against inflation it may  or may not work in the short term but whatever we  

have analyzed since last so many years it will  surely act as a hedge against inflation in the  

long term right, then again out of these four  which could be acting as a hedge against inflation  

it could be either of the four no specific choice  as such here right moving on with the third one  

high liquidity we generally enter into gold  as an investment because it is assumed that  

yes liquidity is generally very high in gold now  let's have a look at SGB's now if you remember I  

told you that I invested in SGB, June series have  a look at daily average volume 451 units wow!!!  

if you look at July series 1065 units, August  series 1826 units, if you look at May series again  

going back now May series was having what 1031  units this is by the way May 29 expiry and even  

if you look at May 28 expiry it's just 621 units  now if you have understood that here the average  

daily volume is not that great so it may be  possible that you are wanting to sell it but you  

might not get the same rate that you are expecting  for that so if you're looking at investing in gold  

from only a liquidity perspective I believe  that gold bonds might not be a suitable option  

and in fact in my gold bonds video I have also  mentioned that eight years is the time frame  

after five years there is an exit so this is more  of a long-term perspective uh investment option  

not good from a short-term perspective now if  you see gold bees for February 2022 look at the  

trading volume it's into 100 plus millions so can  I say if I am talking about gold ETFs the volume  

is really amazing right so can this be taken into  consideration from a liquidity perspective? answer  

is Yes right what about physical gold wow I think  this is the most suitable option if I am talking  

about liquidity as a perspective not only in  India anywhere across the world you will get  

absolutely amazing liquidity right what about  gold futures in fact if you remember I told  

you that if you hold the future till expiry  you will have to take the physical delivery  

first and then send it off so if you're looking  from a liquidity perspective again gold futures  

also I think you should avoid okay so  I hope four scenarios for a different  

investment options based on liquidity I hope you  have understood. Now moving on to the last one  

what was the last one downside protection against  falling equity markets now here comes an important  

point generally it is said that gold and equity go  in a inverse relation right is it a right time to  

invest in gold right now? everyone knows about  the Russia, Ukraine war which is ongoing and  

people I mean no one has 100 clarity on what might  happen in the coming few days whenever there is  

uncertainty do equity markets like uncertainty  no and equity markets go down, if equity markets  

go down then gold generally goes up okay so can  you invest in gold from protecting your portfolio  

from a downside? answer is Yes but again wait if  you're talking about uh physical gold fair enough,  

futures gold futures fair enough, ETF's  again fair enough now problem is with SGB's  

now what is the problem because, because it's a  gold bond it gets impacted also because of the  

yields so it's not a very pure play especially in  the short term in the long term again finally SGB  

prices will somewhere converge with the underlying  gold price right but again in the short term  

if you're looking at investing in gold only with  the purpose of protection of downside risk against  

equity I believe that investing in SGB can be  avoided any out of the balance three options  

could be chosen wow I hope you have enjoyed  this detailed analysis of investing in gold and  

understanding the various scenarios which  can be considered while investing in gold.  

If you want to learn more about SGBs just have  a look at this video and if you want to know  

more about nifty bees just check out this video  till then take care, Jai Hind and bye, bye!!!