Wednesday, November 16, 2011

Gold and Silver Prices and Returns: Basic Financial Analysis and Overview (till Nov-11)

Gold and Silver Prices and Returns of the last 5 years.

















Courtesy: Yahoo finance
If you observe the price carefully, the return from 2007 till date varies between approximately 15-20% yearly in the worst case scenarios(bad timings), this is close to what we get as risk free today in India, i.e. 9-10% yearly. Gold and Silver might see a correction if the volumes of the Gold ETF increase specially in countries like India where people donot understand the risks associated when these instruments.


Interesting to see is that today when the interest rate are high and making an FD(Fixed deposit) at 10% is a very unique feature here.


For exam please research on:
  • Gold is negatively correlated with Stock market
  • beta of Gold is negative
  • Gold etf are nice instruments
  • USD is not  Gold backed Gold
Conclusion: Gold is a alternative investment, but ETF are something which needs more evolution and an area of research.

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