Over the past decade gold has had a golden run, but nothing similar is going to happen again...
11-Jun-2013 •Research Desk
DSPBR World Gold fund been nosediving for some time. We have a SIP with the fund. Do you think staying invested is a right thing? What is the reason for such a downturn? Will it shoot up soon?
DSPBR World Gold fund invests globally in the equity securities of companies mining gold, other precious metal or mineral and base metal or mineral mining. The Fund does not hold physical gold or metal.
Gold prices fell sharply in April. This collapse was not an unanticipated disaster.
Over the past decade gold has had a golden run, but nothing similar is going to happen again. The commodity intrinsically is a useless asset because it does not produce anything or satisfy any tangible need. Its price rose so much because people thought that the price would keep on rising. Now that circular logic is broken.
Profits of mining companies are obviously linked to the commodity they produce, which reflects in returns of the DSPBR World Gold fund as it invests in such companies. It would be in your best interest to exit this fund and invest in diversified equity or debt funds as per your goals.