Resultantly, gold demand in retail sector has plunged to a 26-year low. Gold import has also come down.
Many people think that it may not be prudent to buy gold at this this juncture, as it is overvalued. A few companies are, however, on gold buying spree as a hedge against inflation.
Remember, in 1991, the government had to pledge 67 tonnes of gold to the Bank of England for a loan of $600 million to tide over an economic crisis. But RBI quickly bought back the pledged gold in the same year and is buying gold every year with the present level of stock touching 653 tonnes.
Why so much reliance on gold as an investment option? Why is it considered as the safest bet?
Price of gold in India in 1925 was just Rs 18.75, which went upto Rs. 3200 in 1990 and Rs.7000 in 2005. Thereafter price has increased exponentially. It was Rs 31438 in 2018, and now within two years in the range of Rs 52000.
Experts believe that gold prices may quickly go up to Rs 60000, as most of the factors that pushed up gold prices still remain unchanged. Real estate is also weak and any crash of stock market will see a dramatic surge in gold demand and price.
Decline in gold production also supports this view. If we look at the average output from gold mines, it remains at 3477 tonnes during the last 5 years. The production may further dip in future.
It is estimated that only 30% i.e. 54000 tonnes gold has been left to be mined, and by 2035, all gold will be taken out of mines. Though new mines are being excavated, the same remains inconsequential.
Gold has always been treated as the safe heaven to fall back upon during the economic crisis. RBI has also increased the permisdible Loan to Value (LTV) Ratio from 75 to 90% on gold loan to enable borrowers to tide over the temporary liquidity mismatches in pandemic period.
Gold’s appreciation value always remains high, though it doesn’t carry any interest or dividend. The experts therefore, suggest that retail investors should allocate 10% of their savings for gold either in physical or digital form to diversify their risk.
–Kaushal Kishore
Kaushal Kishore 
I’ve been hearing lately that gold is where it’s at in the not to distant future. I’ve started buying bitcoins and it is showing promising returns. I found your article very insightful. Thank you for sharing it. Be well. Be safe.👌🏽
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Thanks for stopping by. Every time gold prices go up, we think it will not go up further. But it’s not so. It may remain stagnant for a year or two, but then upward trend continues. It’s stock is limited and depleting. I fully agree with you, Bitcoins are going to be future currency of the world. Thanks for your valuable inputs🙏
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It’s projected that after the US presidential election, bitcoin will be valued at over 20K USD. That would be a 9K increase. WOW 🤩
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Irrespective of who wins the election? In any case, it will go up in days to come.
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