Is it good time to invest in Gold?
Gold is one of the alternate asset class that provides better returns during economic crisis. The easiest option available for investors to accumulate gold is ETF, since physical gold is not the obvious choice. Let’s do a short analysis on historical data of Gold Bees.
When Nifty and other global markets were tanking in 2008, Gold started its steady upward journey. GoldBees which is a gold ETF, moved from 10 to 30 in next 5 years, which is 200% increase in less than 5 years time. And from 2014 to 2019, Gold was trading in narrow range, by Jan 2020 it moved out of that range and started moving up.
When the economic outlook was weak during the 2008 period, Nifty continued to slide down and ended up with -52% that year. But Gold gained +24% by 2008, in next 5 years gained +200% where Nifty took more than 5 years to regain back its 2008 year high. Similarly now, in 2020 Nifty dropped around -30% so far and Gold appreciated +18.4% so far. Due to Corona virus impact global economy is in worst situation now than compared to 2008 financial crisis .If the current trend continues, then we can expect a huge bull run in Gold.
During 1970’s President Nixon closed the gold window in August of 1971, the price of gold has increased more than 2100%. From a price of $35.65 in 1971, gold has risen to $800 by 1980. That’s was biggest bull market period for Gold, where it gained more than any other asset class. As you can see in below chart clearly, whenever Stock market gets into bear phase, Gold gets into bull phase.
Let’s take US GOLD price chart and re-confirm our analysis. Gold price almost doubled in dollar terms when it broke all time high in 2008, currently it is trading at $1779 and all time high is $1912, many analysts strongly believe that this all time high is soon to be broken, when that happens, we could witness a huge up move in Gold price.
Just like any other stock, users can buy Gold ETF by adding GoldBees to their watch list in zerodha or any other broker terminal and buy it.
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