Lord Dhanvantari was born on the day of Trayodashi of Kartik Krishna Paksha, hence this day is known as Dhanteras or Dhantrayodashi.
Dhanteras is also the day of celebrating wealth, as the word 'Dhan' means wealth and 'Tera' comes from the date 13th of the Krishna Paksha. It is believed that worshipping Goddess Lakshmi and buying new things on Dhanteras brings prosperity. Traditionally, Hindus buy gold and silver ornaments and utensils on this day.
The trend of gold over the last year was extremely positive and it gave around 20 percent returns. Gold prices are in an upward trend since the start of the year amid a trade war between the US and China, slower global growth, and geopolitical tensions. Global equity markets are under pressure, which has seen investors turn to gold. Gold prices closed at $1,312 last year and we have seen gains of around 20 percent in the international market as prices test highs of $1566 this September. Even in the domestic markets, we have seen a rally from Rs 31,391 per 10 gram to the highs of Rs 39,885 per 10 gram in September, this year.
We have seen a solid run-up in gold prices in the last nine months and we expect the prices to consolidate in the range of $1,480-1,510 per troy ounce in international markets.
Overall, the trend of gold for the long-term is still bullish and will deliver positive returns by next Dhanteras.
Gold as an asset class has been giving more than 6 percent (CAGR) in the last five years. We expect gold will cross Rs 40,000 by next Dhanteras.
The overall trend for gold is bullish amid weak global growth outlook, Brexit worries, US Federal Reserve interest rate cuts and an increase in reserves by major central banks will continue to support gold prices. Geopolitical tensions are also supportive of gold prices. We expect gold to remain firm in the next year and it could test $1,550-1,580 per troy ounce in Comex division. Even in the domestic market, prices are likely to sustain above Rs 38,500, which could extend the rally towards Rs 40,000 again. Rs 37,100 act as major support for gold for long-term buyers. Investors could use ‘Buy on dip’ strategy in gold for the next year which should deliver positive returns.
In India, investors have varied investment options. We have a gold futures market, a delivery form of gold in demat, buying gold ETF, buying gold mutual fund and government of India sovereign gold bond. For a long-term investment perspective, in my view, making an investment in the government of India gold bond is more attractive because it gives an additional 2.50 percent per annum interest over and above gains of gold prices. In the longer term, the yield of bond investment will be greater than any other form of investment. For small investors, they can also prefer MCX 1gm demat delivery option. As MCX starts delivering 1gm gold in demat form, a small investor can accumulate physical gold in a small denomination with very small storage demat holding cost.
The investors who want to gain from price fluctuations can invest in gold ETF as they can buy and sell any time between 9am to 3.30pm. In my view, buying physical gold for investment perspective is not at all a good option as it attracts making charges, storage cost and 3 percent GST. Buying gold in electronic form is always a better option than buying physical gold and I recommend buying sovereign gold bonds to long-term investors.