Why you should [Buy] or [Not buy] Gold ?

Disclaimer:  (1) This post is not going to make everyone happy.  (2) I am not a market expert (3) my predictions are as good as predictions made by a cow inside Goregaon Aarey Milk Colony.

People who keep open mind and contemplate over different ideas do well in long term. Let’s talk about Gold today.  And my plan is to talk about 2 contradictory ideas. One makes a strong case of Gold price to go up, other one makes strong case of how buying gold is for suckers.

Idea number 1) why gold will go up and touch sky

Gold Price Chart for last 10 years in INR

Gold Price Chart for last 10 years in INR

Gold has gone up massively in last 10 years. Look at the chart showing gold price rise in last 10 years. If you bought gold few years back, you made a smart move.

Does that mean Gold will continue to rise? Yes! No! May be! No one really knows.

I have no idea how will gold price head further. No one really knows. Not sure if you know, but today, if some country like India, wants to buy Oil from some middle-east country, it needs to make payment in US dollars, inside oil exchange which is only in New York & London. There are chances that some middle east country  starts selling Oil in return of rice, wheat, sugar, Euro, Chinese Yuan. This will put US dollars in question. Once some country does this, may be other countries will follow. Ethically there is nothing wrong if some country decides to sell it’s resource in return of some currency it likes. I don’t see why this will not happen sometime in future, looking at the way facebook & twitter are changing governments in middle east.

When this happens – US dollar will go for toss. This might trigger Gold to amazing heights.

Idea number 2) Why buying Gold at wrong timing can screw you up big time

Here’s a catch – no one knows what will happen in future. Like anything else in this world, Gold has it’s own chances of going up or burst like a bubble.

Do not blindly believe in to some idea. I hear all the time – “Since Gold did well last 10 years, it will do good for next 10 years“. You should always look at an idea from all angle. And let me put forward one angle.

gold historic chart - if you bought gold in 1980 - it took 26 years to breakeven

gold historic chart - if you bought gold in 1980 - it took 26 years to breakeven

Look at the second chart. It’s historical price of gold. Let say your dad or uncle bought Gold in 1979 – 1980, since gold price was rising.

Believe it or not – it took them 2006 – 1980 = 26 years to break even. I am not saying this – charts never lie – chart says it.

Once again I am not saying that tomorrow morning Gold will go down or up . No one really knows. But all I am saying is -that – it’s a good idea to keep mind open.

History repeats itself. Nothing is new in market – everything that is happening today – has happened before.

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