Gold prices likely to benefit if Iraq crisis continues, rupee depreciates

Jul 01 2014, 08:27 IST
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SummaryAs long as the method and period of comparison is consistent, you can look at either point-to-point or compounded returns. For equity funds

income is taxed at marginal rates. Principal and returns are not guaranteed in any MF investment. However, since FMPs invest in hold-to-maturity portfolios of bonds, an estimate of the returns can be made based on the composition of the portfolio and the yields at the time of investment.

Since gold prices are volatile now due to the Iraq crisis, should I redeem some of my gold ETF units?

—Deepak Kumar

Gold prices are likely to benefit if the Iraq crisis continues — people tend to move towards safe haven assets like gold or dollar during periods of crisis.

Gold could also benefit if the rupee depreciates on account of any increase in oil prices. So, tactically, it would be better to hold on to gold ETFs in such times.

More importantly, it is crucial to look at gold as part of overall strategic asset allocation, and then decide on whether to book profits or add to your gold exposure.

Niranjan Risbood

The writer is director, Fund Research, Morningstar India

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