Alternatives forms of Investment

GOLD
• Gold is one of the most valuable assets in any economy.
• It has been used in India primarily as a form of saving by
housewives.
• Gold may be called a hedge against inflation or a well or reservoir
for future use or substitute for the rupees which are used as a
means of transfer or exchange.
• Gold to the investor in recent years has been important mainly
because of rise in prices due to inflation.
• Gold may be invested into, either in the form of gold shares
which are banned in India, gold coins, gold bars and gold
jewellery.
 Gold Coins
• In India gold coins are not available now as a
means of transaction.
• There are old coins of 1800 to 1895 of the time of
King George and Queen Elizabeth and special
edition coins by banks on sale at current rates.
• In the United States, the United States Treasury
has a number of new gold coins.
• In South East and Middle East Countries gold
coins are issued.
• Gold coins can also be used as a form of jewellery.

• Some investors prefer to trade them in the form

of coins only.

• They use them for re-shaping and moulding to

form new jewelleries.

• Other investors use them in the form of lockets,

rings and earnings.
 Gold Bars
• Gold bars also are not considered legal
ownership in India.
• In the United States of America it has been
legal to hold and make gold bars.
• Gold bars are sold by Swiss banks in
denominations of 5 grams and up to 30 grams.
• Gold bars compensate for inflation but it is an
unproductive asset and is risky.
 Gold Jewellery
• Gold jewellery is a method of shaping pure gold into
ornaments.
• The standard used in India is usually 22 carats for jewellery.
• Diamonds and precious stones are set in 18 carat gold. The
price of gold has risen from Rs. 124 for 10 grams in 1960, in
1975 it was Rs. 565, in 1980 it was Rs. 1,765 and in 1984 it
touched Rs. 2,000. In 2008 it was Rs. 12,000 for 10 grams.
• In Rs. 2011, it is Rs. 21,000 for 10 grams in 24 carat gold. In
2012 it has surpassed Rs. 30,000 but many ups and downs
in 2017 it has again reached the point of Rs. 30,000.
• This shows that the price of gold has been increasing during
the last 51 years to a great extent.
• From this point of view, it has been a great
asset but it has been found that rate of return
of gold moves in the opposite direction with
the rate of return of equity stocks.
• This means that if the rate of return of equity
stocks is high the return of gold is low.
• The price of gold changes erratically,
sometimes sharply and also equally
dependent on the economic and
environmental conditions.
• It is also sensitive to the speculation of
international money markets and the demand
and supply conditions in a country.
 SILVER
• Silver is sold in form of weight by kilograms in
India.
• Silver may be owned in the form of coins, utensils,
glasses, bowls, plates, trays or jewellery.
• This, like gold, has been a hedge during inflation.
The price of silver although less than gold also
keeps on rising in the same way as gold.
• Silver utensils and trays, from the point of view of
use, are an excellent possession but it is difficult to
re-sell them and get the value of the investments.
• At the time of resale of these investments the silversmith
takes away the expenses of polish and non-silver which is
used in shaping these beautiful vessels.
• As a result, the investor is able to get only 60% of the
value of silver. In India, it is considered a good investment
to shape silver into coins and to buy them during Diwali.
• Silver key chains and jewellery are also kept for use for re-
sale purposes in future. Silver coins give a higher return in
the form of value.
• Silver bars are also legal and can be used for selling. The
sale price of silver bars is the price recorded for pure
silver. The price of silver and gold is quoted daily in the
stock exchange list.
 COINS AND STAMPS COLLECTION
• An investor may collect stamps and coins as an
investment.
• Old coins have antique value and can be sold for high
prices.
• Old stamps also increase in value. But from the
investor’s point of view coins and stamps should be
collected only after careful understanding of the
subject and by seeking professional guidance because
they are risky investments and the value increases
only after holding them for a large number of years.
 DIAMONDS
• Diamonds purchased in raw form and through a wholesaler
may be the best investment potential.
• The price of diamonds keep on increasing in the same way as
the price of gold, they have good investment value.
• The price of diamond increases as the diamond caret
becomes higher. In gold 10 grams is the measure, silver is
sold in kilograms, diamond is valued in carets.
• Diamond is to be judged in terms of weight, size, shape and
luster. In India, the investor must be cautious to buy
diamonds because each jeweller decides the value of the
diamond according to his own judgment.
• The investor must be careful that he is not cheated.
• It is an extremely risky form of investment because to
a large extent the value of diamond is based on
judgment.
• The marked up retail price is also very high. Investing
in diamonds should be done only through
professional advice and when an investor has money
to hold for a number of years.
• Immediate acquisition and sale of diamond will not
fetch price increase. Holding a diamond for some
years will give it an appreciation. It is used by money
speculators for earning profit.
 ANTIQUES
• For antiques demand is more and supply is very rare
as this increases its value.
• It has been found that the longer the time of holding
this investment the greater the value of this asset.
• Antique may be in the form of paintings, coins,
stamps, flower vases, watches or cars.
• The basic advantage of an antique is that the
investor can sell it at any price which he propounds
but it is very difficult to find these antiques and to
give a price for which it is worthy.
• A careful study of this subject and professional
advice can give the investor a good return.
• Antiques are very risky for long holding period
investment.
• There are many whole time antique dealers. For
them the sale of only one piece makes a fortune.
• This sale may, however, take a whole year before
it has left his collection.
• These risks must also be guarded against before
planning to invest in antiques.