Is the Lockdown Period a Good Time to Invest in Gold or Silver?
The global economies, deeply affected by the ongoing Covid-19 pandemic, have entered a prolonged recession. In this economic chaos, gold has emerged as a safe bet for investors. As one of the most sought-after precious metals, it continues to captivate the attention of many who are looking for a stable investment option during turbulent times.
Economic Impact and Safe Haven
Gold has always been considered a safe investment during economic upheavals. The current restrictions and lockdowns have significantly reduced the demand for physical gold; however, many continue to opt for digital gold investments, which have become increasingly popular and accessible.
Digital Gold Investment
Digital gold offers several advantages over physical gold. Firstly, it is much more convenient to buy and sell digital gold via online platforms or exchanges. Secondly, it allows for micro-investments, making it accessible to a broader audience. Financial experts point out that the returns from gold investments, especially when managed over a long-term horizon, can be quite compelling. Some reports have indicated that digital gold has delivered returns of nearly 40% in the past year alone.
Investment Options in Gold and Silver
When considering investment in precious metals, there are several options available. Here are some of the most popular methods:
Gold ETFs
The easiest and most cost-effective way to invest in paper gold is through Gold ETFs (Exchange-Traded Funds). These financial instruments allow investors to hold a portfolio of gold without owning physical gold. The key benefits of investing in Gold ETFs include:
No high initial buying insurance or selling costs. A trading account with an online stockbroker and a demat account are essential for investing in ETFs.Gold Accumulation Plans (GAP)
For those in India, there are innovative investment plans like the Gold Rush plan offered by the Stock Holding Corporation of India (SHCI). This plan allows investors to purchase gold through mobile wallets such as Google Pay, Paytm, and PhonePe. This way, you can accumulate gold in small, manageable amounts without the need for physical storage.
Sovereign Gold Bonds (SGB)
The government’s issuance of SGB (Sovereign Gold Bonds) provides another avenue for long-term gold investment. These bonds are tax-free on redemption, which makes them an attractive option for long-term investors looking for a guaranteed return. While they usually require open intervals for purchase every few months, they remain a reliable choice for those with a long-term investment plan.
Gold Futures
Investing in gold futures involves more risk and speculation. This method involves predicting the future prices of gold and profiting from the fluctuation in gold prices. It can be both a lucrative but also potentially risky option, as profitability is highly dependent on accurate market predictions.
Conclusion
The uncertainty brought about by the pandemic has led many investors to look for alternative stocks and assets like gold, cryptocurrencies, and more. The liquidity, safety, and low correlation with other assets make gold a reliable investment choice. Regardless of whether you are considering a long-term or short-term investment, gold remains a safe harbor in uncertain economic times. Therefore, the lockdown period or any other uncertain economic times can indeed be a good time to invest in gold or silver.