GOLD
Nowadays we saw that prices of gold are heading towards the north from around 30000 per ouns to some 40000 per ouns in the first five months of the calendar year 2020.
What is the significance of gold, why it is increasing when globally due to pandemic business & countries are in recession jobs are no more in the market?
Historically if we see gold & silver used to be the main currency in cross-border trading. Silver lost its shine post world war 1.
When there is was no single currency of any country, it was only cash which used in trading. The other was the barter system.
Means goods are given against good taken "goods against goods".
When businessmen from one continent to other used gold as currency as it was widely acknowledged.
Now in the present scenario when there is no hedge is available against risk. People are turning towards it.
Basically, all currencies are given weightage against the gold holding of govt. It must be proven, in the world, the US is the only country that has the highest quantum of gold i.e.6000 tons. So the US Dollar is a highly recognized currency in the world.
Few other points are there like it is 100% Convertible & US Govt. cannot control the price of it. It is 100% decided by the market. It is not pegged against any currency in the world by US Govt. IN normal conditions US $ is a hedge against risk.
Due to the pandemic, there is no clarity in the market.
Moreover, the US is majorly economy affected by it. Other economies of G8 or G20 all are in Red.
So major players in this market turned their eyes towards Gold as other commodity is not at their peak rather they are on their lowest side.
Contrary to this gold had given negative return in the last few years but held its prices around Rs. 25000/ ouns to Rs.30000/ ouns.
History is repeating itself. Now no currency is stable & secure, which economy will work nobody knows.
The only secure & liquid asset is gold. Even if it downgrades it will give price realization which will be good, right now prices will system sustain in the near future nobody knows. Once the market will open up & stabilizes gold will turn stable or negative.
Holding physical gold or gold ETF or gold bonds is your choice. But gold bonds (sovereign) is the best option as it will give secure returns.
What is the significance of gold, why it is increasing when globally due to pandemic business & countries are in recession jobs are no more in the market?
Historically if we see gold & silver used to be the main currency in cross-border trading. Silver lost its shine post world war 1.
When there is was no single currency of any country, it was only cash which used in trading. The other was the barter system.
Means goods are given against good taken "goods against goods".
When businessmen from one continent to other used gold as currency as it was widely acknowledged.
Now in the present scenario when there is no hedge is available against risk. People are turning towards it.
Basically, all currencies are given weightage against the gold holding of govt. It must be proven, in the world, the US is the only country that has the highest quantum of gold i.e.6000 tons. So the US Dollar is a highly recognized currency in the world.
Few other points are there like it is 100% Convertible & US Govt. cannot control the price of it. It is 100% decided by the market. It is not pegged against any currency in the world by US Govt. IN normal conditions US $ is a hedge against risk.
Due to the pandemic, there is no clarity in the market.
Moreover, the US is majorly economy affected by it. Other economies of G8 or G20 all are in Red.
So major players in this market turned their eyes towards Gold as other commodity is not at their peak rather they are on their lowest side.
Contrary to this gold had given negative return in the last few years but held its prices around Rs. 25000/ ouns to Rs.30000/ ouns.
History is repeating itself. Now no currency is stable & secure, which economy will work nobody knows.
The only secure & liquid asset is gold. Even if it downgrades it will give price realization which will be good, right now prices will system sustain in the near future nobody knows. Once the market will open up & stabilizes gold will turn stable or negative.
Holding physical gold or gold ETF or gold bonds is your choice. But gold bonds (sovereign) is the best option as it will give secure returns.
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