As gold and silver touched new highs on Friday on global cues, industry experts caution that while returns on the metals are attractive, investors should be cautious.
Gold scaled R21,320 per 10 grams in the Delhi market on Friday, while silver touched R59,250 per kg on frantic buying amid strong global cues.
“I feel there is a lot of speculation going around in gold and people seem to have forgotten about risks,” said Jamal Mecklai, CEO, Mecklai Financial Services. “There is a correction due in gold prices and retail investors should not look to buy too much at current levels.”
Others feel that even with rising prices and returns asset allocation should be kept in mind.
“The exposure to gold and silver put together should be in the range of 15% of the total investment portfolio, and gold and silver should be equal (7.5% each),” said Vishal Dhawan, certified financial planner, Plan Ahead Wealth Advisors.
Companies, investors and countries are hedging against rising crude prices that are expected to touch $130 (R5,727) per barrel due to the West Asia crisis. On Friday oil was in the $110 (R4,846) range.
Bullion has been rising for several other reasons — a weak US dollar, the financial crisis in Europe (Spain and Portugal) and a strengthening rupee.
“Now the prices have reached an all-time high, investment in gold and silver should not be made at one go... for gold, buy systematic investment plans (SIP) in gold exchange traded funds (ETFs),” said Dhawan.