Yourmentor

[Gold Series]

Session 2: How is Gold Put to Use?


We are glad to have you with us for our 2nd Session on Gold – How is Gold Put to Use?

Alright so let’s get started…

As in the previous video we highlighted on how gold is a significant asset class, now let’s see the various uses of gold and how you as an individual can make the best use of their gold holdings.


Features of Gold
Why Invest in Equity?

  • Store of Value: As governments in the developed nations have ability to increase the circulation of their paper currency by printing more money, which in turn reduces its value; the circulation of gold can be increased only through mining which is not an easy task for any Government. And hence gold retains its value better as compared to paper currency.

  • Reserve Currency: The central banks across the globe use gold reserves as a guarantee to cash in their promises and pay their depositors and note holders.

  • Safe Haven during Crisis: Gold being a precious metal has ability to retain its value during financial and economic distress like inflation, deflation and currency devaluation and even during geopolitical crisis.
  • Uses of Gold

    Why Invest in Equity?

  • Industrial demand though not as high as silver, gold has some industrial demand too and is being used in thermal and electrical conductors.

  • Jewellery / Ornaments In terms of volume, India is one of the largest consumers of gold. Indians buy gold especially in the form of jewellery on auspicious occasion like marriage, festivals and social events.

  • Investment Conventionally for investment purpose, people prefer to buy gold bar and coins in physical form. Though gold bars and coins may not have social use, it can still be used as a long-term asset and also liquidated during any swift up move in gold prices

  • Portfolio Diversification Investors typically look at gold as a safe haven during times of economic and political uncertainty. In conditions where productive asset classes like equity, debt and real estate investment face the risk of losing value, due to fall in currency value, gold can come to rescue.

  • Pledging for Emergency Needs: Many banks and gold financing companies have started offering secured loans to individuals, who wish to pledge their gold at a reasonable interest rate, for a pre-specified tenure. The interest on such loans is lower as compared to personal loans. So, gold can be instead used for raising short-term finance upto 80% of the gold’s value, for a nominal rate. Individuals with gold lying ideal in their locker can pledge their gold to meet their short term financial needs. Thus it is not necessary to sell your gold to raise money in case of emergency.



So to end our today’s learning exercise we now invite you to test your learning by taking up this simple quiz

Just Click on the link below