Why do Indians like buying gold? Should you invest this Dhanteras?

Dhanteras is just a day away and Diwali is fast-approaching. Tomorrow, many Indians are set to continue their long-held tradition of purchasing gold on Dhanteras. But why do Indians like buying gold? Should you invest in gold on Dhanteras? Let’s take a closer look: Why do Indians like buying gold? Indians absolutely love buying gold. As per Gold.org, gold has been exceedingly popular for decades in rural India given the lack of awareness and access to financial and banking services. The Indian middle class accounts for nearly 50 per cent of the country’s gold demand, while the South comprises 40 per cent of the country’s gold consumption.

Indians are by nature a traditional and conservative people.

Gold, much like fixed deposits, is considered a ‘safe investment’ – particularly in turbulent times. Gold has historically performed exceedingly well as an asset over the past couple of decades.

As per The Times of India, it has provided CAGR returns of more than 11 per cent over the past five, 10, and 20 years. Devanshee Dave from Ahmedabad told Moneycontrol he has been purchasing gold biscuits since 2017. “If I buy jewellery now, the designs may get outdated. Instead I can buy gold biscuits now and pay making charges later when I want to convert them into jewellery. Even otherwise, the gold biscuits will appreciate in value over time. For example, in 2005, 10 gm of 24 karat gold was priced at nearly Rs. 5,000. This has reached Rs. 60,000 plus now which implies a return of nearly 1,100 percent,” the 28-year-old said. Gold is also thought to be a hedge against factors such as inflation and currency depreciation. [caption id=“attachment_12489192” align=“alignnone” width=“640”] Many people purchase gold on Dhanteras as it is believed that it brings wealth and prosperity. News18[/caption] Experts also say it is important that investors diversify their portfolio. “When stocks (equity) are going down, gold prices are always up. If we invest in both, then something is always giving us returns,” Dr Akshata V Oswal, a Mumbai-based cataract & LASIK eye surgeon, told Moneycontrol. Surendra Mehta, national secretary, Indian Bullion and Jewellers Association told the newspaper_,_ “Historically, gold has always given good returns and hence it is the best hedge against other asset classes. “Fundamentally, equities and gold have different price drivers. Economic expansion and risk taking typically bode well for equities. Risk aversion and economic slowdowns or economic shocks divert flows to gold. This has historically made gold a good addition to an all-equity portfolio,”  Ghazal Jain, fund manager, alternative investments, Quantum AMC, told Moneycontrol.

Naveen KR, manager and senior director, investment products, windmill capital, added to CNBC, “The performance of gold will offset the poor performance of equities during unfavourable macro events or persistently high inflation.” As per LiveMint, buying gold particularly in jewellery is also a fashion statement and a status symbol. For others, an investment in gold is also a matter of sentiment and emotion as it brings memories of happy occasions such as weddings and festivals. Why do people buy gold on Dhanteras? Dhanteras is a Hindu festival also called called Dhanatrayodashi. As per LiveMint, it is marked on the thirteenth day of the Krishna Paksha in the Hindu calendar month of Kartik. The word dhan means ‘wealth’ and teras means 13th, as per Hindustan Times. As per The Times of India, Hindu mythology says that Goddess Lakshmi on Dhanteras emerged from the sea – which was churning –  holding a pot of  gold. The Goddess is said to visit her followers’ homes on this day and bless them with wealth and well-being.

Thus millions of people across the country do so as it is considered an auspicious day to buy gold.

Still others do this as part of maintaining their age-old traditions and heritage. As per The Times of India, Dhanteras is a good time to buy gold as jewellers often provide discounts to entice customers. [caption id=“attachment_12476622” align=“alignnone” width=“640”] Representational image.[/caption] Anyone buying gold on Dhaneteras should do so after the auspicious time of 12.35 pm. The ‘shubh mahurat’ draws to a close on 11 November at 1.57 pm. But should you invest in the precious metal? CNBC quoted a Motilal Oswal note as noting that the gold market had seen significant ups and downs this year owing to the global economy. “Gold prices soared to an all-time high of $2,070 at the start of the year, only to retreat to lows around $1,800, before rebounding to $2,000,” the note said. It noted that central bank policies, geopolitical uncertainties, and the flow of riskier asset interests have contributed to the volatility. Experts recommend that gold, as an asset class, make up no more than around 10 to 15 per cent of an investor’s portfolio. With inputs from agencies