Gold And Diwali

Buying gold on Diwali is a well established tradition in India.Have you ever wondered how well you would have done if you had bought gold every Diwali day for the last 10 years?Here are the stats:

In the past 10 years, gold has been a great investment. If you had bought some gold each Diwali over the past 10 years, then these are the gains you would have seen by the next Diwali in Rupee terms: 9.3 per cent, 11.7 per cent, 8.0 per cent, 26.6 per cent, 11.5 per cent, 32.7 per cent, 23.5 per cent, 22.8 per cent, 36.7 per cent, 16.5 per cent.Compounded, the total gains are 670 per cent.So you could say ‘Sona hee hai, koi fizool kharchee thodey naa hai.'(It’s gold, not a waste of money)and make a purchase this Diwali.

But before you go overboard  ask yourself how likely it is that this run of unprecedented returns in gold will continue.Or in concrete terms ,how likely is it that 10 grams of gold will cost Rs 2 lakh in 2022?

My answer is:Your guess us as good as mine.But if 2 lakhs per 10 grams sounds absurd do take a look at this chart compiled by the RBI.Way back in 1992 or in 1970 what would you have said about today’s prices?

Life is uncertain.Time,wealth and happiness are transient.If gold,especially ornaments, make you happy,go ahead and buy them.You might not become a billionaire from holding them .You might even lose money. But they will be a surer source of value than the newest Tab or TV.