- Silver gave only 50% return in 11 years
Mumbai: Whenever there is tension in the big countries of the world and the risk increases in the global economy, the luster of the precious metal gold increases. That is, a new era of boom in gold prices begins. This is the situation at present also. With the outbreak of the Russia-Ukraine War and increasing risks in the global economy, the precious yellow metal has gained momentum. Gold prices have jumped 12% in the last one month and the prices are now moving towards new highs. In London, gold has risen by about $185, or 10%, to $ 1973 an ounce. Whereas in Mumbai it has increased by Rs 5,550 i.e. 12% to Rs 53,800 per ten grams. The reason for the increase in the price by 2% in India is the weakening of the rupee by 2% against the US dollar. Due to the weakening of the Indian currency, the import cost of gold is also increasing.
Experts say that given the kind of situation prevailing at the global level, there is every possibility of gold prices reaching new highs this year. The all-time high in the global market is $2,063, which was formed on August 8, 2020. On that day gold was sold at a record high of Rs 57,400 in Mumbai. Now this year it is expected to reach Rs 60,000 to Rs 65,000. Along with gold, silver is also estimated to reach 75 to 80 thousand rupees per kg, which is currently Rs 69,200.
Earn more gold than silver
Along with gold, there is always a rise and fall in silver, the other precious metal, but gold has given more returns than silver. Its returns may be lower in some year, such as there was a negative return of 5% in 2021. But gold has always given good returns in the long run. If we look at the figures of the last 11 years, where gold has given a great return of 160%, silver has got only 53% return. In the last 11 years, gold has increased more than two and a half times from Rs 20,600 to Rs 53,800. Whereas 11 years ago silver was Rs 45,200 per kg, which is now Rs 69,200 per kg.
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Deposit competition in big central banks
The prediction of a long rise in gold is being expressed. One of the biggest reasons for this is that apart from investment and consumer demand, there is a continuous purchase of gold by many big countries of the world. Russia, China, and India are at the forefront of this. Central banks of these three big countries are increasing gold reserves by reducing US dollars in their forex reserves. Russia and China are buying the most gold. Russia has increased its reserves by a whopping 155% in a decade. 10 years ago the Russian central bank had 940 tonnes of gold, which increased to 2400 tonnes in 2021. Similarly, China’s central bank had 1,000 tonnes of gold 10 years ago, which has now increased to more than 1948 tonnes. It is said that China does not tell the world its correct figures. He has more gold than that. China also has enough gold mines. It is trying to do global trade in its currency (yuan) by reducing its dependence on the dollar. Therefore, there is no possibility of recession in gold going forward, but there are more chances of bullishness.
In the short term, the war is likely to cause huge volatility in gold prices, as seen in the past week. In London, gold jumped from $ 1885 to $ 1974, after touching the level of $ 1925 and then reached $ 1973, but the outlook for gold in the long term is ‘Bullish’. The escalating tension between Russia and America can become a cause of great concern. Due to the economic sanctions being imposed on Russia, there will also be a possibility of recession in the economy globally. In these circumstances, investment in gold will increase further. Due to currency war in big countries, central banks will also increase the purchase of gold. Gold jewelery demand is continuously increasing. I believe that this year there is every possibility of gold reaching Rs 60,000 per ten grams and in the next 3-4 years it should not be surprising if it reaches even Rs 1 crore per kg i.e. Rs 1 lakh per ten grams, which is 51 lakhs now. Rs.Kg. Hence investing in gold every fall would be beneficial.
Saurabh Gadgil, Director, India Bullion and Jewelers Association
Gold is one such investment, which has created wealth with always giving good returns in the long term. The biggest reason for this is that gold is the only thing in the world. Whose value increases in critical times and economic downturn and full value is also available immediately when needed. Property is considered the safest investment after gold, but it is difficult to get its full value immediately in a recession. For this reason, Indians have an attachment to gold for centuries. Now the Russo-Ukraine war has increased the risk in the global economy. Due to the role of America in this war, there will be a possibility of increasing tension between China and Taiwan. In that case gold will rise again. Apart from this, due to the continuous purchase of gold by big central banks in the last decade, gold has become an international currency in a way. Overall, the bullish phase of gold will continue and now gold will come in the new range of Rs 50 to 60 thousand, which was earlier in the range of Rs 47 to 55 thousand. If the situation worsens at the world level, then in the next one or two years it can reach 65 thousand rupees. Therefore, every investor must invest at least 20% of his portfolio in gold.
-Sanjay Shah, President, Jewelmakers Welfare Association