Mr. Husaini Kanchwala,
Head - Product - Investments. NJ Group
Husaini Kanchwala is the Product Head for Investments, having been a part of sales earlier. With an experience of over 15+ years in the financial services industry, Husaini is responsible for investment product promotions and tie-ups with manufacturers.
Was your business closed due to the Corona Pandemic and you made huge losses? Have you got a salary cut? Are you facing financial trouble currently? Well, you need not worry anymore. One of your investments has generated ~50% return in the last one year. We always say, buy at low and sell at high, well now is the time to sell that investment at high levels and book your profits.
You probably don't realise that the profits made by you in this investment are far higher than the losses you have faced in the last 3 months. In fact, by selling your investment, you will get the much needed liquidity required at this point of time, which can not only give a kicker to your business, but also put you miles ahead of your competition.
Are you searching through your valuation report, looking for the fund which generated 50% return. Well, you won't find it there. It's actually your investment in Gold. Gold prices have rallied heavily in the last one year and have moved from 30,000 levels to 45,000 levels. So, for every 500gm of coins/jewellery at your home, your gold value has gone up by Rs 7.50 Lac!! Higher the holding, higher the profit.
We Indians are forever in awe of gold. The entire country put together, we hold around 25,000 tonnes of gold! That makes us the world's largest holders of the metal! This gold was valued at Rs. 75 lac Cr last year. This year due to rise in prices, the value has gone up to Rs. 112 lac Cr!!! Increase in our collective wealth by Rs. 37 Lac Cr!! In dollar terms, we hold gold worth $ 1.50 trillion, equal to 50% of our GDP!
Annually, we import around 800 tonnes of Gold in India, worth Rs. 3 Lac Cr. And what do we do with that Gold after importing. We make jewellery (mostly), buy it, wear it 4-5 times a year and for the remaining 360 days keep it parked in our locker. Bottomline, taking money out of circulation, increasing our import bill!!
RBI holds Gold reserve worth 653 tonnes! Worth Rs. 3 Lac crore. How is it useful for the economy, I don't really know. And it's not just the Indian public and government, even our Gods love Gold! The combined gold holdings of some of India's prominent temples is around 4,000 tonnes! At current prices, it translates into Rs 18 Lac Crore!! Why does God need so much gold? Much of this is 'idle' gold - locked in the vaults. Imagine if some of the temple wealth goes into eradicating poverty, building more schools, hospitals (need of the hour), old age homes, would the Gods be angry? It probably, can be the best way for Gods to answer their devotees' prayers.
The kind of wealth which we hold in the form of gold, if put to use in the right way, can change a lot of things in our country, for good. What other people, governments or temple trusts are going to do, is not in your control, but what you do with your own gold is definitely in your control. The gold in the house belongs to ladies, with men having limited control over it. What good is that gold if your family is in financial trouble right now? Gold is mostly given at the time of weddings or bought during festivals/occasions. The tradition to give gold at the time of wedding is to safeguard the future and for use in times emergency. If this is a financial emergency, why not use the emergency fund - Gold?
What if gold price rises in future? Will I not lose the opportunity to profit from the surge in prices? Well may be yes, may be no, Nobody Knows. Historically, gold has given returns only close to inflation, prices spike only once in a decade and then remain subdued for the remaining time. Remember, how gold prices stagnated at 30,000 levels from 2012 till the next 6-7 years. And even if it's going to rise in future, you still have made a handsome profit on it. The paradox is whether to manage the current financial crisis by selling our gold at a 50% profit, or to struggle currently and stay put in gold, hoping it's value will rise in the future. Once things normalise you can always go back and buy it again, if you need.
If all Indians, offload only 10% of our Gold, we might not have to import any of it for the coming 2-3 years, thus carving out much needed savings for the country. And if we invest that money in our business, we will not only have more money in circulation, but our businesses can be debt free and be back on track quickly. We can set aside the financial worries brought about by this pandemic through one smart decision.
And why only now, even in the future, we need to revisit, should we continue to buy so much gold? Wouldn't it be better, that we spend that money on better education of our children or set up some business/profession for them. Let's try to make their future secure by making them capable rather than by buying kilograms of gold for them. And, why buy gold jewellery for your wife, why not travel the world with her or may be help her in setting up her own venture. I will probably be happier, spending money in making my daughters financially independent, rather than loading them with gold when they grow up.
It's time we move on from Gold, book profits and infuse the much needed liquidity in the system. We were all so excited on announcement of Rs. 20 Lac Cr Financial package by Govt. Though, I am not sure how many of us will get what slice of that package, however the valuation rise of Rs. 37 Lac Cr in gold is for real and it is lying in our lockers. We only need to open our locker and encash it. Ladies in the house will be happier with financial success in the family rather than possessing pieces of jewellery.
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