This is a week-long festival of lights. People across the Hindu culture wait for a year to celebrate this wonderful week with friends and family. There is a specific day called “Dhanteras”. Dhan means money. People usually buy gold, and other precious things on this day. It is to attract more wealth to the house. It is traditionally considered a good day to make purchases in the Hindu society.
Last year during Diwali, my mom gave me Rs. 6000 and wanted me to buy a pair of shoes as mine were very old. I think it was Dhanteras, I can’t recall now, but I am sure it was the week of Diwali. Back then, I was looking at the global central banks, and my observation was that they were preparing to diversify their forex reserves by adding more weightage to gold. They had already started accumulating gold after the COVID-19 crash, but now I could sense something big might happen.
This gave me a sense that the big money is getting invested in gold. I could identify two major factors that surged the global demand for gold. Firstly, central banks vary on the dollar and the policies the US might undertake if it feels a country is going against its interests. Secondly, Central banks are preparing for economic turbulence. High inflation had reduced the purchasing power of most of the currencies. Therefore, adding gold to the reserves gave stability to their respective currencies.
The day she gave me money, she said and I quote, “Buy whatever you want”. In her heart she wanted me to buy the shoes and keep the excess with me. I asked, “Whatever I want?”, with an element of joy. She said yes and my next reaction was, okay I will buy some gold/silver. The argument started and she didn’t like my decision at all. I tried explaining the reason, but she was not ready to listen. She instead tried convincing me to buy something else and not just think about investing stuff. We argued a lot. Ultimately, she said, “I gave you the money, I believe you will never misuse that, do whatever you want with it”. But she was upset and I could see what was coming — the silence. After sitting quietly for some time, I finally decided to visit a jewelry shop and purchase a gram of gold. I had decided never to sell it unless an emergency arrived.
I bought a gram of gold, for Rs. 6000. It was one of the best things I ever did. Over the entire year, I had invested some portion of my pocket money into mutual funds, which had given me a great return. Again I thought of shifting to gold. So in January, I bought another gram of Gold, almost for the same price. I sold my mutual funds and reinvested that money in gold.
I have had almost a 25% return on that investment since January. Most of which came in March. That is when you can see, that the Turkish Central Bank and the Reserve Bank of India had started taking a position in the gold.
It was a quiet Diwali for my mother and me. Looking back, it taught me a valuable lesson. My teachers always used to say, "Profits are booked when you buy, not when you sell," but I never truly understood it until that day. I don't know if the price of gold will rise or fall (historically, it has risen by 10% year-on-year), but I feel content.
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