The yellow metal is a hedge against inflation and can be redeemed easily
Gold and silver are not the only precious commodities known to us. While silver has been a favourite after gold for some time, diamond and platinum have also caught the fancy of individuals. This led Mumbai-based National Spot Exchange (NSE) to launch e-platinum, an investment product in platinum in demat form under NSE’s e-series banner last year.
In the past nine months of its launch, e-platinum boasts of 43,000 investors, says Anjani Sinha, managing director, NSE. Sinha goes on to call these investors 'intelligent'. The reason: “These investors want to look for scope of price appreciation beyond gold and at a time when we are looking forward to increased industrial demand, platinum is going to provide better returns than other metals,” he says.
With the global economy growing at 3.4 per cent in 2013 against 3.1 per cent last year, investors should look at silver as an alternative asset class, says Naveen Mathur, associate director – commodities and currencies at Angel Broking. Diamonds are not understood by many and so the demand is not much. At the same time, diamonds are expensive and not available for investment. Going forward, investment experts vouch for gold as the best bet among precious commodities. Gold prices are expected to stabilise in 2013 but in the long run, it is expected to do better than silver and platinum.
Over the past year, platinum has given the best returns at 10.5 per cent in dollar terms, while silver returned 3.5 per cent and gold earned 1.5 per cent, according to Bloomberg data. “For a long-term investor putting money in gold has been more fruitful,” says Mathur. In the past three years, silver is up 194 per cent, gold gained 105.5 per cent while platinum earned 77 per cent. Over five years, gold returned 166 per cent, silver is up 140.5 per cent and platinum gained 44.5 per cent. In rupee terms, gold earned 235.5 per cent while silver returned 202 per cent over five years. This apart, gold is a good hedge against inflation. Typically, gold price movement is inversely proportional to equities. As a result, when equities aren't performing, gold becomes a fall-back option. You won't find many investment instruments for silver and platinum except in the physical metal and e-series. Gold provides plenty of avenues to invest. Apart from coins or bars, gold exchange-traded funds and gold savings funds or feeder funds from mutual fund houses and e-gold are also good options. The feeder fund and e-gold options allow you to invest through the systematic route as well.
This helps you redeem your investments when you want to, making gold a liquid option. Even in jewellery, you know you will get that day's price after deducting the making charges and taxes the day you want to sell. Investors can track gold prices but not platinum prices. Prices vary for the same quantity/quality of platinum. Pricing policy for platinum also depends on the jeweller's tie-up with vendors, cost of sourcing the metal, demand-supply and retailer margins, which differ with some selling at the maximum retail price and some by a price break-up. An unorganised market for physical platinum means a tight buyback policy. You can sell platinum jewellery only in the store you purchased it from. Additionally, platinum is not available in smaller towns. Physical gold can be used to take a loan through a gold-loan scheme for immediate requirement of funds.
Anuja J, a 26-year-old Mumbai resident, started investing in a gold scheme offered by a leading jeweller in the city one and half years ago. The ...