Almost every body whom I meet asks me this question: “Should I buy gold?”. My answer is never straight (everybody around me says that!!). So I ask “Why?”
The answer always is : “Because it is going up.”
To me this answer is scary and completely stupid. If every body is buying an item because it is going up…what happens when it is coming down? Who will buy? If nobody buys how will you sell?
To me if everybody is buying because it is going up, it is perhaps time to sell! Sounds logical? Frankly I have no clue.
If I have bought shares of Mahindra Holiday resorts, Cholamandalam Investment, Areva, Oracle,….it is not because the share prices are going up. It is because there is an underlying business which is doing well, so THE EARNINGS will go up, it has decent management, AND THEREFORE either the p/e will increase (multi bagger) or the higher EARNINGs will ensure a higher price (growth rate higher than inflation)…so gold beats me.
I have as many reasons for selling gold as I have for buying it, but ‘my commodity broker says price will go up’ is too dicey a reason to buy gold.
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