Akshaya Tritiya 2018: Allocate upto 15% of total portfolio on gold

Akshaya Tritiya, is considered an auspicious day for buying gold, silver and other metals. Gold prices are widely tracked in bullion market largely due to token purchases on the auspicious occasion of Akshaya Tritiya.

In an exclusive interview with Reema Sharma of Zee Media, Rajeev Kapoor, Vice President, Trustline, shared his views on impact on gold amidst heightened geo-political tension, investment and the prospects of returns in gold.

Excerpts...

1. Do you see good demand for gold this Akshaya Tritiya? How was the demand last year?

Physical demand is always good on Akshaya Tritiya, since it is an auspicious day and traditionally gold buying on Akshaya Tritiya in any manner i.e. ornaments, coins etc., is always considered to attract prosperity and abundance. Moreover, Indians always have lot of love for gold as it is considered as safe haven investment and traditionally gold requirement is always there for children marriage and special occasions. However, this year gold import figures are quite less than earlier year as last year demand was quite reasonable due to lower prices, around 10 percent lower than prevailing prices.

2. Will gold prices shoot up massively amidst heightened geo-political tensions in the Middle East?

See, gold is always preferred as safe haven investment, so no doubt in case of geo-political tensions in the Middle East escalates further, will boost gold demand and prices will also go northward.

3. Is physical buying of gold still a better option over ETF e-gold or future contracts?

It depends upon the situation, need and funds available for investment.

a. In case of jewelry requirement for marriage and festivals, physical is the only option left with us.

b. For the Long Term investment purpose, Gold Bond is best investment vehicle as investor will not only take the advantage of price movement but also earn yearly yield 2.50 percent on the invested money and this option is not available anywhere in the world except for Indians.

c. For short term investment, ETFs is also useful option as liquidity is very good in ETFs and it provides easy entry and exit to the investor.

4. What trend do you see in mid, short and long term investment?

As far as trend is concerned, Short and Medium Trend is still looking strong as long as it trades above Rs 29800 on MCX. For long term point of view, it is looking in sideways trend as it has been trading in a range between Rs 27000-Rs 32000 for last three years.

5. Given the current trend, how much should one invest in gold?

In my opinion, gold should always be a part of portfolio for everyone to the extent of 10 percent to 15 percent of the total portfolio size as it not only gives positive returns but also provides safety during economic or geo-political uncertainty kind of situations. Moreover, gold is considered as good hedging instrument against high inflation kind of scenario.

6. India's gold imports have shrunk 40 percent in March. How will it impact the Current Account Deficit (CAD)?

For India, significant drop in gold import is always helpful to bring down CAD as India imports good amount of gold which has been controlled to the some extent, by imposing higher gold import duties by the government.