How to leverage precious metals as an asset?

How do you build a portfolio with crashing depository rates and unpredictable rising gold platinum, diamond and silver prices? A balanced portfolio is a salient strategy to minimize the risk and potentially increase gains. It is advisable to hold different types of assets classes that can give different types of returns, and as the proverb goes, do now no longer position all your eggs in single basket. Compared to various instruments and assets, the equity market has received a stiff competition from gold and precious diamonds.

Considering the gold asset, it final peaked in January 2023, and for the first time, broke to Rs 5700 per gram from simply Rs 3513 per gram, concurrently in 2019. The prices of different investments such as stocks and real estate losing sharply in 2021 noticed many mutual funds directing investors to invest in gold funds as a diversifying asset. Investment in gold has reckoned to have touched around Rs 18,000 crores as of November 2022.

With gold having risen above Rs 5700 per gram on increased demand and as safe-haven assets as investors investigate the geopolitical and economic outcome, the rate of gold is probable to shoot up further in 2023.

Although the value of gold moves higher, it is paramount to recognise that historically, it has proven to be a good hedge against weakened currency and inflation. Gold asset makes it an extremely safe investment with a good return, more so when we face living in unsure times.

Today with various asset classes available, there is a degree of scepticism in the young generations concerning the benefits of investment in all marketplace conditions. However, the better advantage with the youths is their age, time horizon and attention of lengthy-time period desires to select out the proper asset like making an investment in gold.

Gold was the investor's desire for storing the value for a long time, thinking about investment as important as our ancestors may have embedded them into our Indian culture.

Gold is known as the best precious metal of value in the world. Diamonds has adorned numerous roles, from large solitaires proving to be great acquisitions. Yet this appealing material remains an unparalleled asset even to a commoner, with various investment brackets or requirements. Silver has been performing well with positive returns over the long run, often outperforming major asset classes. So, let me throw some light on the different ways of how one could invest. Today, there are different ways an investor can gain exposure to the gold asset via:

1. Purchase of physical gold

2. Paper gold and paper silver

3. Gold rate protection plans

1) The most common way to invest is in its pure form 24 KT, bullion usually available in the form of gold coins or bars and regularly deposited in safe storage.

The other alternative to investing in gold is in the form of gold jewellery. Although, not the same as an investment in pure gold. This 22 KT gold is crafted like a jewel and included the cost of manufacturing, which are not related to the value of gold. This type of investment can be cherished rather than lying in a bank locker in solid form. Another prime fact is more the passing down the generation, the higher the value as an antique well made jewellery from the houses of fine jewellers, outside of its gold content.

2) Paper gold and paper silver: Another investment alternative of accumulating gold of 22 KT and sterling silver of 92.50 per cent without buying the physical assets, a plan with a variety of advantages as compared to other instruments such as sovereign gold bond by government of India or ETF/MFS of NSE & BSE.

The best plan for new investors who wish to include gold or silver into your portfolio with small capital. Begin investing as low as 5 grams for gold and 500 grams for silver with the convenience of booking available online at www.ckcjewellers.com or offline showrooms. To be transformed later into proudly owning gold or diamond jewellery at a lower or booking or billing rate within 11 months. If you opt to liquidate may be finished straight away with the prevailing days direct gold/silver purchase policy rate at C Krishniah Chetty Group of Jewellers.

3) Gold rate protection plans: Investing in another signature program – rate protection plans. The salient features are investing based on your financial requirements, or your investment horizon for owning a wardrobe of jewellery. Choose the lower: either the averaged rate or the current prevailing rate to benefit from the investment. The Plan is versatile allowing one to switch between gold, silver, diamonds or even platinum. There are none in the market that allows this flexibility. A look at their benefits show:

l The rate protection plans allows you to book gold, platinum, silver and diamond in all purities with respective rates.

l 9-12 per cent per annum benefits or value based plans. Allows maximum flexibility to clients. No tax on appreciation or on maturity of plans.

l Know Your Customer (KYC) declaration not required.

l Flexi-payment option on installments + no upper limit + one-time (one installment) payment or on monthly basis options possible. 11 month maturity.

l Payment by cash, debit card, credit card, bank transfers, cheque and post-dated cheque. PAN card required for amounts exceeding 2 lakhs.

l Redemption of multiple plans, in same name, may be made for a single ornament purchase on maturity.

The final goal of this article is to share our thoughts to have a balanced, well-diversified portfolio, wherein precious metals or diamond investments play a clear and specific role. With our experience we consider that one recommends an investment or allocation of around 9-12 per cent of their income to build a corpus in the long run.

(The author is Director &

Managing Director, C Krishniah Chetty Group of Jewellers)