Worried over the flow of savings for investment in gold, Finance Minister Pranab Mukherjee, on Saturday, said there was a need to spread financial literacy to encourage people to invest in market instruments.
Pointing out that India's gold import surged to $60-62 billion in last fiscal, the Minister regretted that people were investing in gold with the expectation that the value of their investment would appreciate.
Gold import
“The quantum of gold import ... is a clear indication (that) large section of community...want (to) investment in dead asset only with expectation that the value would appreciate,” he said while addressing an award function.
The Minister further said “time is ripe to motivate our educated upper middle-class to climb from saving mode to wealth generation mode.
“...My request to financial analysts and other experts and leaders in this field is to ensure than we can create confidence in market, spread financial literacy and merit of investment could be widely spread,” he said.
Keywords: investment in gold, gold import
Stating that investment in gold as speculative and in the same breath,saying investment in stocks and bonds is safe, by implication, is erroneous. Mr Yamaka can find out very easily how gold has performed over the long term, medium term and short term time frames. In a similar study, he can also find out how stocks have performed. Regulatory framework all over the world favours the corporate world, not the retail investors. At least investments in real estate or gold has a measure of safety while investments in stocks/bonds is not worth the paper on which it is printed. Yields from stocks are not related to the peformance of the Company but speculative and subject to constant manipulation.
I was told by 'n' number of financial advisors that LONG TERM INVESTORS in stocks are bound to gain minimum 12% increase per annum in asset value & should expect 35% gains actually. As per their advise to start with mutual funds with diversified portfolio I invested Rs 1 lakh with 3 years lock in period. Today thanks to their highly skilled wealth managers (IIM MBA's) my asset value is Rs 105496 i.e. 5% in 3 years??? Had I invested that amount in a plain vanila savings bank account my asset value would be Rs 110000 plus. Now these same advisors ask me to wait for 10-20 years to make handsome gains. I don't know what they teach in MBA? To cheat people???
Could Mr. FM explain what corrective measures he and his Govt has taken so that Indian middle-class come back and invest in stocks instead? 1. Satyam- have they punished the fraud even after Raju confessed clearly? 2. 2G- have any of the guilty people been punished? Why should educated middle-class should invest in stocks when there's no security of his/her money? Does it make any sense?
People need to understand the minister's point clearly - he wants educated middle class to move from saving for their life mode to wealth generator for all UPA ministers - sell your gold invest in funds that will be (mis) managed efficiently so you don't have any more saving - as insiders all the minister will see wealth generation for their generations
It is a common knowledge among investors in the world (both Stock and Bond holders) that gold is a speculative investment, like real estate in India...Risk averse people are totally ill-informed when they go into speculative markets like gold. Pranab Mukerjee is quite right in the NEED for educating the masses of India on this basic issue. Investors must diversify their holdings to smooth out volatility.. Does this mean anything to the writers above?
I invested Rs10,000/- in a mutual fund 5 years ago and the NAV of this investment today is 6500/-. Why can't the FM, the prospective President of India look into these aspects before asking people to resist investing in Gold.
How financially illiterate,he is!Gold is the REAL preserver of Wealth,but he and his party work for the primacy of the US dollar!
Ignorant save gold :) that is ridiculous.. How come central banks of the world are buying gold like crazy ? Are their managers ignorant? Until a system to replace a devalueing worthless banknotes is created ignorant are the smartest..We saw the smart JP Morgan, Citibank, AIG ...etc. professionals and know how they lost zillions of peoples money..
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