Below is the verbatim transcript of Mathpal's interview with CNBC-TV18.
Q: Should one still buy into gold or do you think gold has run its course and now its time to rethink its importance in one's portfolio?
A: Gold provides stability to the portfolio so it is good to have some allocation, for example 10-15 percent of your portfolio in gold. However, I will not advice to buy gold at this price in lump sum. If one has a long-term goal then invest through gold exchange traded fund ( ETF ) or gold fund of fund scheme in staggered manner.
If one invests in gold ETF then buy units of gold. Usually one unit of gold ETF represents one gram-24 karat gold and for that one need to have demat account and in case if do not have a demat account even then he can invest in gold ETF through gold mutual fund of fund scheme and basically that is a better choice.
If one wants to invest in gold then go through gold ETF or gold fund of fund scheme and therefore from tax planning perspective also it makes a better choice because holding period of one year in gold ETF or gold fund of fund schemes of mutual fund qualifies for long-term asset. So, in long-term capital asset when one sell these units after one year then one has to pay maximum 10 percent tax on the profit which is in case of physical gold only, after holding period of three years it qualifies for long-term.
In gold ETF or gold savings funds -- these schemes of mutual funds are free from value added tax (VAT) and that is one advantage compared to physical gold. Therefore, I will not recommend investing in lump sum at this price and if one want to invest in staggered manner then it is better to invest through gold ETF or gold fund of fund schemes of mutual funds.