Gold – A very good buy

Jim Rogers the head of CLSA (a famous American investing company) is considered a Guru of investment in all asset classes. He is in India right now and a couple of days ago in an interview to a TV channel, Jim said, “Since 2002 I have been predicting that the price of gold will touch 3500 USD per ounce by 2014 – 2015”.

Today the international price of gold is 1700 USD per ounce. Independent data shows that since 2002 till date, the price of Gold has appreciated a whopping 800% over a 10 year period, meaning an annual return of a whopping 70%.

It is expected to do even better in the next 3 to 4 yrs.

Silver always follows Gold. So one could buy silver or gold depending on affordability in a systematic way (SIP).

There are some misnomers about Gold which I would like to clear. It is true that India is the largest importer of Gold because Indian women like gold jewelry.

But that hardly contributes to the rise in its prices.

What really makes it rise is buying of gold by Governments of countries from time to time. For example, last year Russian Government bought 400 tons of gold, while our own Government bought 200 tons, while China bought 800 tons, and Brazil about 300 tons.

These are just a few countries I have named. More gold is brought by Governments during times of uncertainty. Last year there was great economic uncertainty which explains the spike in gold prices YOY. These uncertainties are here to stay for some more years.

So Gold/Silver is a very good buy.