Never Been A Fan Of Gold, Says Marcellus Investment's Saurabh Mukherjea
Investing in gold has been a pattern specially among Indian investors. Despite this trend, the logic behind the safe-play investment may be a little murky, according to Mukherjea.
The Indian investor's obsession with gold beats Marcellus Investment's Saurabh Mukherjea. Investing in gold has been a pattern specially among Indian investors. Despite this trend, the logic behind the safe-play investment may be a little murky, according to him.
"Both in the context of Indian equities and American equities, I have never been a fan of gold investments. We're talking about the two best markets in terms of compounding in the past 20 years. Over the last 10 years, India's dollar compounding is 10%, while America is at 30%," said the founder.
Volatility Problem Of The Safe-Haven Commodity
With the option of investing in these two markets available, Mukherjea broke down how investing in gold instead may not make sense.
"These are literally the world's two large markets and 65% of the world stock market wealth comes from just these two markets. And yet the co-relation between these two markets are very low. So, you've got two markets giving you diversification and keeping your money safe, so why on earth would you want to invest in gold, I don't understand," he said.
Often held as a safe-haven investment, the traction toward the commodity has been evident among Indian investors for generations. Amid geo-political tensions and uncertainties, the commodity also sees a rise in prices. As conflicts escalate, the global demand for the commodity increases and the local market follows suit.
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Gold From An Investment Perspective
The commodity prices see fluctuations in the long term, as prices are driven by demand.
"This whole obsession with gold as a commodity is misplaced. It's lower returns and higher volatility. Why do people do it, it just beats me. One can buy gold or buy the largest jeweller in the country," he said. From an investment point of view, the odds are still against the commodity, according to Mukherjea.
What Instead?
Mukherjea recommends spreading investments to US equities along with the domestic holdings, instead.
"So what we've advocated is to diversify your portfolio to Indian and American markets as they have low correlation. Both can give you 11-12% returns with low volatility," he said.
The domestic prices of gold were soaring ahead of the festive season, going up to Rs 81,500 in October. Despite this, the post festive demand slip in prices has also been significant since Nov. 1.
