A reader has asked whether I think the Gold stocks are a good buy here.
I have little experience in Gold stocks. I am willing to buy anything as long as it meets my EPS/sales or momentum criteria. Currently I do not see those stocks on my scan. I have no great fascination for Gold stock.
One thing I understand well is how to buy Gold. Every Indian is expert in this. I think the worlds largest buyers of Gold are Indians. No wedding in India is complete without large quantity of Gold being bought. Every major festival, every major event like birth of child is an excuse to buy gold. You will be astonished at the amount of Gold people in India have. They may be wearing torn clothes and have very simple house and lifestyle but may be having kilos of Gold at home. Go in to a small town and you will find at least couple of goldsmith shops.Rich or poor everyone has fascination for gold.
There are many housewives in India who buy Gold every month by forming kitty clubs called bhishi. So everyone will contribute every month say Rs 500 to 1000 and then one person will pick up the kitty and buy Gold next month next person will get the kitty. Some people buy just 2 grams or 3 grams per month. So when it comes to Gold they follow dollar cost averaging. It is a lifelong passion and everyone is an expert at buying it.
When I started my advertising career post my MBA, one of the clients I handled was Mehra Di-hatti one of the largest and the oldest jewellery shop in Delhi . I spent many days watching people buy gold in that shop. Everyday I used to be astonished by the amount of Gold people bought.