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Gold shines on the investment horizon

business Updated: Aug 24, 2008 20:31 IST

The dip in gold prices from all-time highs has revived the Indian investor’s interest in investing in the yellow metal. When the prices were high, there was a sharp dip in the demand for the metal in India but now, things are expected to change. When an individual goes out to look at this area they need to appraise the situation carefully.

Prices down
The price of gold has come down and this has led to the metal becoming a cheaper option for investors. There is a large link between the prices and the affordability for the investors. This happens because when prices climb higher it is not possible for everyone to keep buying the metal especially in the manner seen in India where the demand is quite high.

As soon as the prices start falling there is an increase in the demand for gold and this will be witnessed in the next several months because the festive season is also setting in. Many people make it a point to buy gold during this time period.

Sudden demand surge
Currently a lot of places are finding that there is not enough supply of gold in various forms to meet the sudden surge that has been witnessed. Due to low demand, the supply had also fallen in the last few months and everyone was keeping a lower amount of stock. Now, with a sudden surge there is a sharp rise in demand for gold and this is not being fully met.

Thus people are likely to face some shortages at several places and they need to use this factor while making a buying decision. The prices will also reflect the shortage and investors may have to pay a premium on the market price just to get hold of some gold.

Investor action
Investors can undertake different types of action to get the best out of their investment in gold. The first thing to do is to check out the route that they will use for investment. In case of a direct route like an exchange-traded fund there is not much to worry about but if it comes to physical purchases then the timeframe for waiting can also help.

Immediate requirement might come at a slight premium but if there is an ability to wait then the availability will be quite smooth and this should not pose any additional cost.