PROSPECTS OF ONLINE GOLD INVESTMENT

Gold is considered to be one of the most precious metals and probably that is why investing in
Gold has now become a business having many dimensions. Generally, whenever it is taken as
an investment, it is probably because it is a good means of diversifying ones portfolio. The gold
market is indeed subject to everything that takes place in every other market such as
speculation, particularly with the help of various derivatives and future contracts. It Is seen
from a long time that the prices of gold show a positive co-relation with the prices of crude oil
however its a mere speculation.
Gold has shown a steady demand not only in Pakistan but all over the world making it a crucial
asset class. Its prices have recently out-performed every other asset class from a huge margin.
In the sub-continent Gold is brought for dual purposes i.e. for the purpose of jewellery as well
as an investment. As far as investment is concerned, it is considered to be important because of
three major reasons: 1. Hedge against inflation 2. Diversification of ones portfolio 3. Asset-
allocation Avenue
Now lets just discuss a few factors that influence the prices of Gold.
Inflation: Gold can be considered as a vital tool to fight against inflation. As we are well
aware of the fact that inflation rate is continuously increasing, we can very safely state
that betting on gold would be a very secure bet.
Supply of Gold: We are also very well aware of the fact that due to reasons such as cost
of mining, various legal formalities and geographical issues, gold mining has decreased
to a large extent resulting in the decline of the supply of gold and increase in the
demand of gold, which overall results in high prices of gold.
Interest Rates: Interest rates are highly co-related to the prices of gold as increase in
interest rates lead to a decrease in gold prices and so is the other way around.
Now lets discuss a few points on why to invest in Gold.
It has a high value and liquidity
Good Security
No income tax
Stable investment
Finally, lets just discuss as to why we should invest in Gold.
Leverage at no cost (13:1 for Oil, Silver and 22:1 for Gold)
Diversification ( it is source of Diversifying your investment, you know for sure that it will
not be worthless any time)
Exposure to Global Economy
No Local Manipulation (Online Stock Market where there are bulls and bears and
Market follows a trend due to speculation)
Safe Haven
Inflation Hedge (Average CPI stood 7.5% per annum and gold return over Annual 21%
during 10 year 2002)
Taxation (PMEX do not deduct taxes)
Long/Short Positions
Liquid Investment
Ongoing Demand never ends as it is used heavily in India for making jewelry around the
year and in China for Assets.
Currency Hedge (Average rupee depreciation stood at Annual 7.5% during 20 year
period ending 2009)
Gold can be sold to someone outside Pakistan
Locals losing faith in economic growth
Why Online Gold Investment
Solves the issue of dollar duration and convexity, used as a synthetic bond instead of
working capital
Issue of security concerns is also resolved as majority of the people fear keeping such
huge investment of gold in their homes
It will also keep them updated as to whether they need to short sell or long sell on a
daily basis as majority of the transactions are based on trust and not documentation.
Online banking is of great utility as majority of the transactions could be paid online and
wont require much time and effort.
It also helps one being updated about the market behavior and thus much of the
analysis is not required.
References
Source: http://www.arifhabibcommodities.com/downloads/Commodity-HowtoInvest.pdf