Over the past few days, you might have come across many advertisements making indirect reminders that buying gold on the auspicious day of Akshaya Tritiya also known as Akti or Akha Teej will make you rich. What if I told you that there is a very strong argument as per Vedic scriptures stating that this is not a fact.
History suggests that the kings and rulers used to offer prayers, perform sacrifices and distribute their wealth in charity on this auspicious day, without expecting any returns. So yes, there is no doubt that the day of Akshaya Tritiya is considered to be one of the most auspicious days of the year in the Hindu Calendar. Because of that, many people launch new projects or also make purchase of gold which was one of the only medium of wealth storage in early days.
The literal translation of “Akshaya” means eternal or imperishable and so it is believed that the purchases or investments you make on this day will appreciate in value and always remain with you. There are many other reasons and stories which mark the significance of this day, one such being that of Lord Krishna’s friend Sudama who visited Dwarka on this day, and while he never asked for any financial help, he had taken a gift of a small bag of rice and in return of that Lord Krishna blessed him with unlimited prosperity. It is believed that the river Ganges descended to Earth on this day, during the Mahabharata Pandavas received Akshaya Patra, Kubera was blessed with the position as custodian of wealth, and many more.
Whether we believe in these stories and look to do charity or to make auspicious purchases of gold, moving from religious and auspicious reasons to the world of investing, gold is a very good tool for portfolio diversification. Just as it is important to have a well-balanced diet for good nutrition, we should consider having a well-diversified portfolio with some gold. It acts as a hedge against a standard ‘equity-debt portfolio’ due to its low correlation with equity and often a negative correlation with debt as an asset class.
Investments in gold have typically done well at a time when there is a weakness in the dollar. With factors such as a global slowdown, the post – covid jump in dollar and expected monetary easing, the dollar is expected to weaken going forward, which could start a multi – year bull market in gold. Gold demand for investments is coming back, with two biggest buyers India and China seeing pre-covid level demand. Globally many Central Banks are also looking to increase their gold holdings. All of this is likely to result in strong demand for gold.
Rather than taking a tactical view, you could seek guidance from your trusted advisor and consider holding Gold on an ongoing basis, as a strategic asset allocation, in the range of 5 to 10% of your portfolio. Depending on your preference, you could either buy physical bullion or in digital format. For physical format you can consider coins, bars or jewellery.
On the other hand, if you are not comfortable with the storage or physical gold or find it difficult to go to a physical store for making purchases and having doubts about purity and impact at the time of selling back, you can consider various modes of owning gold in paper or digital format. You can consider options like gold ETFs, sovereign gold bonds or SGBs, fund of funds which give exposure to shares of global gold mining companies, amongst others. May this Akshaya Tritiya bless you with opulence, prosperity and good health. Wishing a bright future ahead with a well balance investment portfolio.
Author: Anil Ghelani, CFA Head of Passive Investments & Products – DSP Asset Managers