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Gold and silver are safe havens for investing

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Rajan Ramakrishnan, who has worked for more than 30 years with an electricity company in the United Arab Emirates, settles in his hometown of Kerala. He renovated his house, bought an SUV, and opened a small bakery and cafe. He invested in Post Office Savings Scheme, put money in mutual funds, and bought health and retirement plans. However, Rajan and his wife, Parvathy, are worried about low yields on bank deposits. They are also concerned about the risks associated with mutual funds. Their two daughters, 19 and 21, study in Canada and England respectively. Their next dream is the girls’ big wedding. “Gold and jewelry will cost at least 20-30% more when they get married after three or four years,” says Rajan.

So when the second wave of Covid-19 was at its peak and the prices of gems and jewelry plummeted, he invested in a gold and diamond plan of a chain of gems and jewelry. leading. He will pay installments for three years and at maturity will be able to purchase jewelry and diamonds at the prices in effect at the time of registration. “It’s a good bet from a savings standpoint,” he says.

Like Rajan, many people in India view gemstones, jewelry, and other precious metals as a long-term investment option. With returns from traditional investment avenues such as mutual funds becoming riskier and fixed deposits earning little, the trend will intensify, experts say.

A haven of peace in uncertain times

“Gold jewelry has a double advantage. It is a beauty product as well as a reserve of wealth. Gold is seen as a strong hedge against inflation and has always been a very liquid asset. Covid-19 has, in fact, boosted consumer confidence in gold as a safe investment because, in difficult times, it can be easily exchanged for cash, ”said Colin Shah, chairman of Gem and Jewelery Export Promotion Council.

Data from the World Gold Council (WGC), which tracks global gold and jewelry sales at the wholesale level, confirms this. Despite the economic turmoil triggered by Covid-19, demand for jewelry in India has grown from 117.9 tons, valued at 45,580 crore in the first half of 2020 to 157.6 tons, valued at 66,850 crore, in the first six month of 2021, an increase of 34%. in volume and 47% in value. The demand for gold as an investment increased from 47.9 tons, valued at 18,600 crore, in the first six months of 2020, to 58.5 tons, valued at 24,840 crore, in the first half of 2021, ie an increase of 22% in volume and 36% in value.

Globally, personal investment in bullion and coins (1 kg and less in gold bars and bullion coins) increased by 4% to reach 899.5 tonnes in 2020, against 866.6 tonnes in 2019, despite the blockages. Gold exchange-traded funds (ETFs) and similar exchange-tradable products rose an unprecedented 114% from 407.9 tonnes to 873.8 tonnes in 2020. Over-the-counter exchanges and exchanges represent the most significant most gold trading volumes. In 2020, the average daily trading volume on spot and futures exchanges was $ 69.3 billion, while the average trading volume for gold ETFs was $ 3.3 billion. India’s contribution was only $ 1.2 billion and $ 3.4 million, respectively, as Indian investors have yet to enter this market in a significant way. However, India’s gold ETF holdings rose 30% to 35.1 tonnes in the third quarter of 2021, from 27 tonnes a year ago.