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Can gold protect you against inflation?

By Finserv MARKETS - Aug 9,2019
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Can gold protect you against inflation?Can gold protect you against inflation

Gold is not only considered a symbol of wealth and prosperity but since time immemorial has been considered a safe haven, a source of financial protection during times of trouble. The fact that gold never loses value unlike currency (due to inflation) can be illustrated with a simple example.

Imagine you bought gold worth Rs. 1000 in 1971 and took currency worth Rs. 1000 and buried them under the ground. In 1971, you could buy 50 grams of 24 karat gold with Rs. 1000 as the gold price was Rs. 193 for 10 gram of gold. Assuming that the currency was not destroyed and was still valid today, you can buy only good worth Rs. 1000. At the same time, your gold treasure will be worth Rs. 1.8 lakh.

Many experts consider gold among safe investment options and a hedge against inflation. Meaning, it has the ability to protect you against rising prices in the market. Gold ETFs, sovereign gold bars and digital gold allows retail investors to invest in gold easily today. However, digital gold is the most convenient and safest way of investing in gold.

How gold protects against inflation?

Gold is used as a form of inflation hedge. An inflation hedge is something that maintains or increases in value when inflation increases. Oil, land and gold are considered excellent inflation hedges.

Gold is seen as excellent protection against inflation because, historically, gold prices have risen simultaneously with rising costs of living. During high inflation years, we have witnessed the stock market to plunge and gold prices to soar. When a currency loses its purchasing power the price of gold also increases along with everything else.

If you are considering gold as a protection against inflation and during uncertain times, now is the right time to start investing in gold. Gold is rallying at a 50-year high but high gold price shouldn’t discourage you from owning gold. Now you don’t have to invest a huge amount of money to buy gold; you can buy digital gold in small increments, with as low as Rs. 100. For instance, on Finserv MARKETS you can start your gold accumulation plan by purchasing digital gold in small as well as large increments ranging from Rs. 100 – Rs. 49,000.

The popularity of digital gold in India

It won’t be far-fetched to say that digital gold investment is reshaping India’s $34 billion gold market. In just around 6 years, 80 million Indians have trusted on digital gold as a safe investment option to protect themselves against inflation and other economic hazards.

The popularity of digital gold is also due to its simplicity of investment. In platforms such as Finserv MARKETS you can buy digital gold online with a few clicks. There are no long lists of documents to show or delays in processing to stress you. Customers can buy digital gold which is backed by real 24K, 99.5% pure gold and kept in secure vaults in their account. Also, gold prices are updated every 5 minutes according to live market prices to ensure transparency.

How to buy digital gold at Finserv MARKETS?

You can buy gold online at Finserv MARKETS in a few easy steps.

  • If you are an existing customer, you can log in using your existing mobile number.

  • Next, confirm your registered email address and pin code.

  • If you are a new customer, you need to sign up first with your email address and mobile number.

  • Once you are logged in, you can purchase digital gold in INR or grams as per convenience.

After purchase, you can also sell the gold to meet financial emergencies or redeem the digital gold into physical gold. Every unit of digital gold that you purchase is backed by real physical gold. To answer that question: Whether gold is a safe investment option to protect oneself against inflation? It definitely protects you against inflation and other economic and financial turmoil but in the long-term, not in the short-term. If you use gold as a trading tool for short term gains, there is definitely nothing much to gain.

Apart from gold being a potent commodity that protects against inflation, it is also a good investment instrument for portfolio diversification. Gold is easy to sell or liquidate during times of need and there is no lock-in period similar to mutual funds, ULIPs, PPF, fixed deposits and other fixed-income assets.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522