10 Rules for Silver Investment in India

10 Rules for Silver Investment in India

As per the World Silver Survey 2018 published by The Silver Institute and Thomson Reuters: India has jumped to 12th position (from 14th last year) among the Top 20 Silver Producing Countries. India’s contribution in the silver market has increased to 16.9 million ounces as compared to 14Moz in 2016. And, India continues to be one of the greatest markets for precious metals like silver and gold. We are one of the biggest contributors of silver in Asia, and any changes in the demand pattern influence the price of silver in the international markets.

If you find it difficult to put money on a full ounce of metals like gold, you can for a much affordable and reliable precious metal like silver. Today Silver rate in India makes it affordable options to invest money in silver bullions and ornaments. Apart from investment, silver is widely used in industrial applications like solar panels, computers, mobile phones, and so on. It has not been replaced by any other metal so far.

But gold, on the other hand, is for wealth accumulation. It is mostly found in the bank lockers or is safely stored in the world’s central bank.

If you are also planning to invest money in Silver, you can compare the rates from different suppliers and choose the best available option. Make sure that you check the silver price in major cities so that you will get some fair idea about its current price in the market. You can also get in touch with your financial advisor to know about more options suited for your investment plan.

For both the urban and rural population, it is a good investment asset and here are the 10 thumb rules before you plan to invest your money in silver -

1. Choose Silver Coins for Small Investments

If you are planning to invest only a few thousand rupees into silver, you can consider buying coins instead of other forms.

·         It is very easy to get them and you can even store them easily at home. However, you will be paying a slightly higher rate than silver bars as coins usually have some form of art or images and the labor charges and this is added to the final price.

·         On the other hand, it also has advantages in the sense that you can buy silver with very less money. It is a good option for salaried individuals and business people who want to save money on regular basis.

·         You can accumulate some coins every month according to your capacity and it is also possible to sell them at a later stage when you want to liquidate your investments.

·         Yet another advantage of buying silver coins is their availability with banks. And it is also possible to buy them from reputed jewelers in your neighborhood. You will even get a certificate about its purity and this will be useful when you have to sell them back into the market.

·         You need to remember that banks will only sell silver coins and will not buy them back at a later stage. You will have to approach jewelers to sell your silver coins if it is needed in future.

2. Choose Silver Bars for Huge Investments

You can invest bulk money on such silver bars and easily save money for your future. As the silver bars have good demand in the market, you will not have any problems when you want to sell them at a later stage.

·         Look for the best deals in the market from the reputed suppliers and you can select silver bars instead of coins.

·         You may not get them through banks as they are bulky and banks prefer to sell only packaged coins that are certified from reputed sources.

·         However, you can approach jewelers who will conduct tests on such silver bars and get them tested for their purity before buying them from the market.

3. Make Good Use of Online Commodity Market

If you are not the kind of person who will invest in physical silver, you can still invest in silver through the commodity market. The investment needed will be slightly higher as compared to regular silver and you will have to pay a certain percentage of the entire value of the contract.

·         Make sure that you have sufficient funds to pay for additional requirements due to fluctuations in silver price in the international market.

·         You can easily sell the contracts at a later stage before expiry whenever you are getting decent profits.

·         This is slightly speculative in nature and cannot be considered as a pure form of investment. However, you will be able to leverage your position when you invest wisely in the commodity market.

·         Make sure that you watch the price movements carefully as they will be different from the actual physical price of silver. You can also check the silver prices across the major hubs to get a comparison about price fluctuations in the market.

4. Always Buy From Reputed Suppliers

Even though you can buy silver coins and bars from any source, it is always a good idea to buy them from trusted sources. When it comes to coins, you can easily buy certified coins from banks even though they charge some extra premium.

·         On the other hand, when it comes to bars, you have to approach local jewelers and get the bars tested from reputed sources for purity.

·         In this way, you can be sure that they are pure and you will be able to get the best value for your money in future.

·         Never buy them from unknown traders in the market as you will have difficulty in ascertaining the purity of the bars on your own and there are chances that you may get cheated in such deals.

5. Secure Them Safely with Bank Lockers

Many people make the mistake of keeping the silver bars at home and this will become a huge burden when you have a large quantity of them. You should never compromise on the safety factor and always choose bank lockers to safeguard your silver investment.

·         It costs very less to take bank lockers and you will be completely relieved that your silver is safe in their custody.

·         As you have ready access to your silver at any point in time, you need not worry about anything and easily choose this option.

·         If you store them at home, there is a chance of theft or burglary and you may lose your entire investment. Even otherwise, you are sure to lose your peace of mind when you have a large quantity of precious metal at home due to security reasons.

6. Track Prices from Different Sources

Silver rates keep fluctuating on a daily basis. For this reason, you should always check silver prices prevailing in your city so that you will be able to get them at the best price in the market.

·         This is especially needed when you are buying silver bars from local traders as you will be able to get the best deal when you have a thorough idea about the current market rate of the metal.

·         There are many apps and other sources that will provide complete up to date information about the latest silver price in the market and you can use them on your mobile phone to get the exact details.

·         This will be handy during your purchase and you can expect to save some money during the transaction.

·         This is true even when you are selling silver and you will be able to get a good price for your investment.

7. Try Not to Buy Everything in One Go

You can never predict the future price of any commodity and you should always buy them in installments so that you will be able to get the average price over a period of time.

8. Do not hesitate to Sell When Prices Are High

Just because you have chosen it as a long-term investment does not mean that you should hold them for the entire duration.

·         Be practical and sell it off when you are getting good prices against it. Remember that you can always buy them back at a later stage when the prices fall down. This implies that you will keep making money due to the price fluctuation/variation in the market.

·         For this purpose, you need to compare the silver prices in different regions of the country and this will give you a fair idea about where you can get the best deal in the market.

9. Always Have Reserve Cash for Good Deals

If you plan to invest few lakhs into this commodity, make sure that you have at least 20 percent cash reserves for emergency deals. And you can use these reserves to get good returns on investments at a later stage.

10. Keep Track of Global Financial Markets

Always remember that global financial markets impact the price of silver in India. Depending on the market you will see a rise or downfall in other global markets as well. And this has a direct influence on the pricing of silver.

You need to be aware of such movements in the market and plan your investments accordingly.

Over to you!

You can follow the above mentioned guidelines to get some profit out of this commodity in the long run. You can also consult a reputed financial advisor when you plan to invest in silver for many years. They can explain the entire pros and cons of your investment plan and guide you to choose the right options suited for your risk profile. In this way, making good money out of your investment becomes an easy task and you will be happy to invest money in such commodities in the future.

 

Happy Investing

Rules for Silver investment in India

Rules for Silver investment in India

Ever since civilization started, it is known that Man has learned how to invest his hard earned money to get some interest in return. Many Investment plans are available nowadays where you can save your money on a long-term basis in the capital market and get a huge profit. Central and State Government issue long-term bonds like a Gold bond, Railway bonds, National Savings certificates etc where people can get a compounded interest on their savings. Investment in Government securities can allow you to enjoy tax rebates. You can also go for buying at a point and reselling when you see the price hikes.

Investment in precious metals like Gold and Silver is considered to be a wise decision in the financial market. If you are a small investor and you have a low capital for investment then instead of going for Gold bonds, you can go for Silver investment. You need to go through the rules and regulations, take advice from the finance experts, observe the market situations and then go for any kind of investment. There are certain points you need to consider before Silver investment.

Things you need to consider before Silver investment

• Initial investment should be small: At the initial stage, you might not have any experience about the investment, its risk, and its returns. So at the beginning take small steps. Go for pure Silver bars and coins in smaller quantities. You have to pay a less premium over the actual metal value. One should keep in mind that you should never go for the decorative Silver coins or jewelry for your investment. These items carry a large premium and their value degrades during resale. After gaining experience and building a strong connection in the market, you can opt for larger purchases and invest.

• Always take advice from the financial Expert: Take the assistance of a broker or an advisor rather running solo. These financial experts can guide you better about the market and when and where to invest.

• Go for bank lockers: You should consider the safety factor and safeguard your silver investment. Choose a bank and take a bank locker to keep your silver investments. Your investment will be under the bank’s custody and you can have a peaceful sleep at your home.

• Maintain an inventory: If you are not going for the bank locker then make sure you have a safe place to store your silver investment at your home. In an emergency, you can have access to them. You should not disclose about it to anybody.

• Online commodity market: If you don’t think it’s safe to store physical Silver at your home then you can go for the option like investing silver in the commodity market. You have to open an account with a reliable broker, buy silver contracts online and then sell when you see a profit before the expiry date.

• Buy from a reputed supplier: It is always advised to buy silver from a reputed source where you are assured to get a pure metal. By doing so you can get the best value for the money you have invested and you will not regret your decision.

• Research more about the current price of silver: Before investment and resale, carry out a proper research about the current price of silver in the market. Take the help of the experts, apps and go through different websites for the price analysis. This step is a must for every investor to follow. You will not suffer from a loss in your transactions by doing so.

• Don’t be greedy: When you think of investments, you might have planned to invest for a certain time period. But when you see a price hike in between that period then never hesitate to sell. Selling will prove to be a wise decision.

• Maintain a cash reserve: Don't invest all your money in one investment at a time. For emergency keep some amount of money. Silver and Gold are the international commodities, their value fluctuates according to the global market. Suddenly it can rise or fall. If the price falls, you can get a chance to buy more quantity. Thus, for this, you need to preserve some cash.

Before investing in silver, there are a certain types of questions that will come to every investor’s mind. Below is a quick guide to help you answer such questions.

How can people invest in silver in India?

Nowadays, people get options to invest in silver just as you used to do in equities. There are various forms of investment for silver. Some of the investment varieties are as written below.

• Jewellery – Silver jewellery gives you an advantage of owning silver in the form of jewellery or any kind of pure possession. You should be able to invest theses assets in the future.

• National spot exchange limited – NSEL gives its buyer the opportunity to trade in e-gold or e-silver. This investment attracts tax incidence in case of gain. Commodity – Many of the commodities can be traded in India. Silver is one of the commodities you can potentially take position by trading in future.

• Silver ETFs from trading accounts – Enables users to buy and sell selected securities from your trading account. The return you are going to get is more than what you would expect from any other investments nowadays.

 

Happy Investing

Which Is Better - Gold Investment Or Silver Investment

 Which Is Better - Gold Investment Or Silver Investment

If you are planning to invest in precious metals in India, gold and silver are the two obvious choices. But apart from the prices, what are the other significant differences between the two that an investor should know about? Read this post to know more.

Precious metals add much diversification to the portfolio and is also an excellent hedge against inflation. While gold is often the go-to precious metal in India, silver investing is also gaining popularity. However, if you are planning to invest in precious metals, which one should you select between the two? Let us have a look at some crucial points that can help you make the decision.

1. Price Volatility of Gold and Silver

While you might know that gold is significantly more expensive than silver; what you might not know is that the price of silver is also more volatile. Lower cost of silver means that it takes a comparatively lower amount of money to create a significant impact on silver prices. You can check the price of silver contracts on commodity markets like Multi Commodity Exchange (MCX) in India for a few days to know how volatile the price of silver can be. In gold versus silver comparison, the price of gold is not as volatile. This makes gold an ideal investment, even for shorter investment tenures.

2. Storage and Safe-Keeping

As compared to gold, silver is a less dense metal. As a matter of fact, if you are buying pure silver, its volume is around 80% more than that of gold. This means that investing in physical silver will also require you to have more storage space. Most people investing in gold and silver in India prefer storing them in bank lockers. If you are going with silver, you will need more locker space as compared to gold, which means higher locker charges.

3. Tackling Financial Emergencies

If you are creating an investment portfolio, there should at least be a few assets that could be sold instantly to tackle financial emergencies. Precious metals are an excellent example of such quick-selling assets. Gold is a better option for bigger expenses, such as purchasing a car or down payment of a new home. Silver, on the other hand, is excellent for smaller expenses such as buying a new mobile phone or a two-wheeler.

4. Investment Options

Both gold and silver are now available in multiple digital options apart from physical purchases. There are now Exchange Traded Funds (ETFs), precious metal contracts on exchanges, mutual funds and more through which you can invest in these metals without making a physical purchase.

But as compared to silver, there are more investment options for gold in India. Not just in numbers, the gold investment options in India are highly convenient and readily available too. For instance, banks now offer digital gold, which allows investors to start investing in gold with as little as Re 1. This gold can be kept in digital format or can also be changed to physical gold.

Gold or Silver: What Should You Select?

While silver investment is getting popular now, gold has and continues to be the beloved precious metal in India, not just for jewellery but investment too.

Products like digital gold have made gold investment more affordable and eliminated the need to worry about storage and safe-keeping. If you are planning to invest in precious metals, consider the points discussed in this post to make the right decision.

Happy Investing

Source: Icicidirect

How women can make a solid estate plan

 How women can make a solid estate plan

A Will is a must if you want to pass on your assets as per your wishes, but that comes into effect only after the testator passes on. A trust and a power of attorney takes care of people when they are alive. A solid estate plan includes all three.

In our last few post, we discussed the role and importance of an estate plan for women. It is essential that women do not surrender the responsibility of managing their financial affairs and devising their estate plan to their family, but take complete charge of this important duty. Usually, women are forced by life circumstances such as the demise of their spouse or a loved one, incapacitation of the breadwinner of the family, divorce, or terminal illness to look into their financial matters. However, managing these affairs in a timely manner safeguards not only your assets but also your wishes and choices.

Let’s us discuss the important aspects you should consider when designing your estate plan.

Last Will and Testament

A Will is a document that enables you to capture your wishes in terms of how you would like your wealth to be distributed after your lifetime. In the event you choose to not create this document, intestate succession laws will prevail whereby your assets may get inherited by individuals and in a manner not necessarily aligned to your wishes. Hence, putting a Will in place should be one of the first steps to safeguard your wishes as well as the interest of your intended beneficiaries.

As a mother with minor children ― married, divorced or widowed ― there is a greater responsibility to ensure you appoint a guardian in your Will who would manage the financial affairs of your children until they attain 18 years of age. Also, you need to ensure you have put a plan in place to ensure the child is brought up under the right supervision, guidance, caregiving, and set of value systems by entrusting the responsibility to the right set of individuals.

Further, as a married woman, it may be worthwhile to consider coordinating your estate plan with your spouse so that you both can be on the same page in terms of safeguarding each other’s interests as well as deciding on the subsequent manner of your inheritance.

As a single woman, you may not have dependents, such as children, and therefore, may not feel a compelling need to have a Will. However, do understand that in the absence of legal heirs, your hard-earned wealth may ultimately be taken over by the government. Hence, by writing your Will you hold a chance to decide whomsoever you wish to pass on your wealth to such as confidantes, friends, staff members, or perhaps even a charitable institute that supports the causes dear to you.

Power of Attorney

While a Will takes care of your affairs post your lifetime, a power of attorney is a document that can ensure your financial affairs are taken care of during your lifetime, for instance, in case of your incapacitation. In the event you are unable to manage your financial affairs due to any medical condition, you may consider appointing an individual, of course, someone trustworthy, to ensure your finances are not left in abeyance.

Private Family Trust

A Will may not suffice for large families where a complex mechanism of succession planning is warranted. A Trust is a structure that can be created during one’s lifetime whereby the beneficiaries are defined and the do’s and don’ts on the manner in which the Trust should be operated are mentioned by the creator/settlor of the Trust in the document known as the Trust Deed.

Typically, more often than not the men folk in the family set up the Trust for the benefit of their spouse, children and lineal descendants. A Trust is generally set up for a long tenure that may outlive the lifetime of the settlor, in which case the Trust is to be managed by the Trustees for the surviving beneficiaries. There is a certain struggle for the family members who outlive the creator of the Trust as they may not understand the exact mechanics and thought process for the Trust creation if not involved in the process of its creation. Hence, it is essential that women who are beneficiaries/Trustees of the Trust actively participate in the conception and structuring stage so that they can comfortably manage the affairs thereafter.

As you can understand each document has an important role to play as part of your estate plan, and you can choose one or a combination depending on your objectives. However, remember to review these documents on an ongoing basis to capture the changes in your life as well as laws. Further, ensure the individuals who will be responsible for carrying out your wishes, as per your estate plan, have quick and easy access to the requisite paperwork for your estate.

Therefore, as a woman do not overlook this important aspect of your life and wait for a life-changing event to take charge of your financial affairs, in which case it might be too late. The right time is now, as the saying goes, ‘Someone’s sitting in the shade today because someone planted a tree a long time ago’. So, ensure your loved ones enjoy the benefits of your hard-earned wealth by planning today.

Happy Investing

Source : Moneycontrol.com

Why women should have an estate plan

 Why women should have an estate plan

Women need to create an estate plan, so that they get to choose the beneficiaries of their wealth and are able to manage their financial affairs, in the event of incapacitation.

Estate planning is essential for every woman — whether she is single, married, divorced, a homemaker or doing business.

The common misconception is that if the major assets are held by the male members in the family, or if a woman is a homemaker, a woman does not need an estate plan.

While in our few last posts, we discussed the top reasons why a woman should actively participate in financial matters, let us now understand the role and importance of an estate plan for a woman.

 

Estate plan and intestate succession

An estate plan enables one to prepare for the management and disposal of one’s assets in the event of one’s death or incapacitation. If one does not prepare an estate plan, things are left to chance, more specifically to the laws of intestate succession.

Intestate succession means that upon the demise of an individual, his/her wealth will be distributed in a predefined manner to predefined individuals as defined under law in the absence of an estate plan.

Regrettably, there is no unified body of inheritance laws in India. The inheritance rights of men and women are defined separately and differently under various inheritance laws such as the Hindu Succession Act, 1956, that includes Jain, Sikhs, and Buddhists, the Indian Succession Act, 1925, that includes Parsis, Christians as well the Muslim Personal Law (Shariat) Application Act, 1936, for Muslims) determined predominantly by religion, marital status, and source of assets.

Learning it through Radha’s experience

Radha lived in Mumbai with her spouse Gaurang in a rented apartment. Her in-laws lived separately in their own apartment. Her mother and sibling lived in Delhi in the house of her father, who passed away intestate.

Unfortunately, Radha’s spouse had an untimely demise, and he, too, passed away without a Will. This resulted in intestate succession laws to prevail. Was this manner of distribution under intestate succession as per Gaurang’s wishes or did he want to leave the assets exclusively for Radha? Was Radha’s financial future secured?

Property and inheritance rights of women

Let us now understand Radha’s rights of inheritance in the estate of her spouse, in-laws, and father.

As Radha’s spouse passed away intestate, his assets were distributed equally between his mother and Radha. This means the ownership of all his financial assets and his one real estate in Jaipur was transferred equally between Radha and his mother.

As Radha lived in a rented apartment and was suddenly burdened with financial responsibilities, she left the rented apartment and wanted to stay with her in-laws. However, a daughter-in-law has no direct right over her in-law’s wealth, except to the extent inherited through her husband.

As Radha didn’t share a good equation with her in-laws, they refused her shelter in their Mumbai home, and, legally, Radha had no right to claim.

She then decided to go to her father’s home in Delhi. As Radha’s father, too, had passed away intestate, Radha had a right over her father’s property (comprising real estate, financial assets, and coparcenary rights in her father’s HuF) as his daughter.

However, her brother and sister-in-law chose not to cooperate. Radha had a right to legal recourse but didn’t have the financial resources nor the mental bandwidth to get into a legal battle. In hindsight, had Radha claimed her right and done the requisite paperwork to transfer the title in her favour immediately upon the demise of her father, she might have been in a desirable situation.

Radha decided to sell Gaurang’s Jaipur property, which she inherited to create financial liquidity. However, as her mother-in-law, too, inherited 50 percent rights over the property, she decided not to cooperate.

Further, only 50 percent of the financial assets that belonged to Gaurang got inherited by Radha, leaving her in not a secured financial position.

Radha’s case clearly shows how one can safeguard the financial future of a loved one by devising an estate plan or lead one to live a life of great struggle in the absence of one.

On the other hand, if a woman passes away intestate, her assets at the first level get distributed equally between her husband, children, and grandchildren. In the absence of first-level heirs, her in-laws have the first right over her assets, followed by her father and mother.

However, the assets that the woman may have inherited from her in-laws/husband will devolve upon her husband’s heirs while assets inherited from her parents will devolve upon her father’s heirs.

Would Radha want intestate succession rules to prevail for her or would she prefer to pass on her wealth to her chosen recipients?

Through Radha’s case, you may have realised how the laws are too complicated that may not necessarily lead to a smooth and desired transition of wealth in the hands of a woman in the absence of a well-devised and documented estate plan.

Hence, to overcome the uncertainties of intestate succession laws, it is crucial that, firstly, an estate plan is put in place to secure the financial future of women.

Women need to create an estate plan, so that they get to choose the beneficiaries of their wealth and are able to manage their financial affairs, in the event of incapacitation.

Happy Investing

Source: Moneycontrol.com

Is gold losing its lustre as a hedge asset in Comparison to Bitcoin?

 Is Gold losing its lustre as a hedge asset in Comparison to Bitcoin?

The aim of a hedge asset is to protect your finances from risky situations. The higher the risk of loss, the greater the importance of protection against it. However, rarely does a hedge investment completely eliminate your potential loss.

Gold still holds the value of a hedging instrument simply because of the fact that it lacks credit or default risks. Gold prices go up when interest rate goes down; which is directly proportional to the strength of the economy. So, in a broad sense, gold is a hedge against a falling economy.

Gold is also extensively used as a hedge against inflation. Hard assets, such as natural resources including gold, silver and real estate hold intrinsic value because of their limited supply. It is interesting to note that when a crisis spooks financial markets, gold becomes a good asset for hedging to absorb the shocks in equity, bond and oil markets.

People see gold as a way to pass on and preserve their wealth from one generation to the next. When official currency loses its purchasing power to inflation, gold tends to be priced in the base currency (mostly US dollar) and, thus, has a tendency to rise in local currency terms. Moreover, gold is seen to store a good value than local currency.

Although the price of gold can be volatile in the short term, it has always maintained its value in the longer run.

However lately, critics are developing adverse feeling for bullion, and its capability to hedge against moves in other assets, such as stocks, as well as inflation. While it is a reasonable store of value over the long-term (decades) – it is less reliable across most smaller investment horizons. Bullion has lost ground in 2021 as the recovery from the pandemic gains more traction and Treasury yields surged. However, it was still demonstrating a strong inverse relationship with the US currencyIn the current scenario, gold should be thought of as a dollar hedge.

Economists feel stocks or Bitcoin are now better positioned to hedge against long-term inflation for investors. Carefully selected stocks can definitely help protect you against long-term inflation. Stocks have produced the highest inflation-adjusted return of any major asset class over the long term.

However, Bitcoin’s history is short to make any robust conclusions about its inflation-hedging capabilities.

Bitcoin has risen as an alternative anti-fiat asset. It has been popular because of the libertarian anti-government ideas that have accompanied the digital currency since its inception. Bitcoin can facilitate instant cross-border payments and remittances without restriction from central authorities.

There is circumstantial evidence that some money has flowed directly from gold into Bitcoin. Institutions appear to be making a decision to allocate some money to Bitcoin as a hedge against a fiat collapse.

Bitcoin’s performance over the last year is directly aligned to the movement in bond yields. When yields rise, so does Bitcoin. This implies that the digital currency benefits directly from the ‘reflation trade’ — or the belief that inflation is coming.

Bitcoin and gold are both inflation-sensitive, but gold is happiest when the world faces a downward spiral. In contrast, Bitcoin prefers a stronger economy, when the yield is rising.

Gold is good for slightly higher inflation, but not necessarily much higher real interest rates. Gold, which is a hedge against uncertain economic conditions, is now less in favour owing to an increased risk appetite fuelled by fiscal stimulus programmes of central banks worldwide. Though the precious yellow metal can also have big drawdowns, but nothing like the epic losses that bitcoin periodically inflicts on its holders before rallying again.

As Bitcoin’s declines tend to be three-times bigger, risk can be equalised by holding three times as much gold as Bitcoin.

Demographic trends confirm that the tide is turning, with many younger investors preferring digital assets over metals. For example, only 7.5% of millennials aged 25-34 own gold and silver, while among affluent millennials, 25% own cryptocurrency (and 31% are interested in acquiring it). Bitcoin has many of the symptoms of a speculative mania; like gold, its value is in the eye of the beholder.

It has no intrinsic value. Bitcoin has nothing straightforward to fall back on. Official action might easily limit use of the digital asset if it grew big enough to challenge the government’s monopoly of currency issuance. An estimated 20% of all Bitcoins are stuck in wallets to which people have lost the keys. Most places won’t accept Bitcoin, and transactions are often slow and expensive, occasionally taking days or costing more than $25 each when the network is congested.

The computations required to maintain the Bitcoin blockchain alone consume as much electricity as a mid-sized country, making a significant impact on climate.

The supply of gold isn’t completely static, it rises at about 1.25% a year as more is mined. It can be expensive to store and tricky to transfer around the place in its physical form. It is easily confiscated and cannot be divided and distributed in a hurry. Bitcoin has none of these drawbacks.

The supply is inelastic and capped (only 21 million digital coins will ever exist out of which 18.638 million Bitcoins have been mined till February). You can send it around the place as easily as you would an email (as long as you don’t lose the codes that allow you to access it). It’s fungible, resilient, verifiable, independent of any government and crucially, easily divisible.

Analysts and crypto currency investors expect higher targets for Bitcoin over the long term if Bitcoin becomes a “gold disrupter”, and no upper limit at all if it ends up being commonly used as a payments network rather than just another asset to hold and pray over.

Demand for gold is driven by its perception as a superior ‘anti-fiat’ asset. If people are worried about the long-term buying power of government-issued currencies, they will be prepared to pay more for gold, with its perceived role as a store of value.

Large debt borrowed by the governments across the globe and by corporates also raises the spectre of stress on repayments, when again gold may come back in favour.
There are numerous advantages that, at this point, gold poses over cryptocurrencies as a store of value and medium of exchange. These benefits make it hard to believe that gold will ever lose its luster as a store of value and an inflation/currency hedge

·         * Long-term price stability.

·        *  Secure storage in vaults.

·        *  Custodian oversight of gold or silver individual retirement accounts.

·         * Real-world industrial utility.

·        *  Proven longevity over millennia.

Mature investors want a portfolio protector that has a multi-millennium record in the safe haven top spot.

Here is where gold scores well. With gold, volatility can be managed because production can accelerate or decelerate in response to demand, but you don’t have that for bitcoin. Relative to other assets, it might continue to be slightly more volatile, even after market structure has matured completely.

Going by the rising popularity of bitcoins, investors could keep buying them (like stocks) in good times and rising yield scenarios, while gold could continue to be the ultimate hedge against bad times, inflation and currency debasement.

#Gold

#Bitcoin

Happy Investing

Source : Economictimes.com