The global financial landscape is seeing a remarkable shift toward gold, driven by growing concerns over currency sovereignty. Following the freezing of Russian assets, central banks worldwide have accelerated their gold purchases, with China emerging as a leading buyer. Industry experts suggest this trend signals a fundamental change in how nations view monetary reserves, potentially reshaping international finance dynamics. In India, gold prices continue to set new records, with growth accelerating over the past year, from ₹63,352 per 10 grams on January 1, 2024, to ₹84,672 on Thursday, February 6, 2025. Against this backdrop, deciding whether to buy, hold or sell your gold assets can be quite challenging. So, what should be your strategy? Says Anand K. Rathi, co-founder of MIRA Money, a tech-driven investment platform: “Gold tends to be seasonal. If you missed the price increase over the last 3-4 years, you might find future trends more favourable. Therefore, it is important to either invest for the long term or to be strategic about when to enter or exit the market, which can be quite challenging. “I don’t view gold primarily as a wealth-creation asset; instead, I see it more as a means of wealth preservation. At any given time, it’s reasonable to invest about 5% of your portfolio in gold and hold it for an extended period.” Rathi says investors have several options beyond Sovereign Gold Bonds (SGBs), mainly because SGB availability may decrease in the future and the secondary market for SGBs is limited. He says investing in gold is essential, and there are multiple ways to do so. Gold Rally Defies Market Trends Gold prices have reached unprecedented levels, surpassing traditional stock market performance metrics. Market data shows the precious metal outperforming major equity indices, driven by a perfect storm of global economic uncertainties, inflation concerns, and aggressive central bank acquisitions, as investors weigh their portfolio allocation strategies.
“The rise in gold prices can be traced back to Russia’s invasion of Ukraine. In response to this conflict, countries worldwide began imposing numerous restrictions on Russia, which led to the freezing of their foreign currency reserves,” says Rathi.
This situation, says Rathi, prompted many nations to reassess their vulnerabilities, including India, which realised that if such actions could be taken against Russia, they could happen to any country.
As a result, Rathi says, countries started buying gold in large quantities. For instance, China has been purchasing two to three tonnes of gold almost daily to bolster its reserves.
Similarly, India decided to repatriate its gold, which was primarily stored in the UK, fearing its reserves could also be blocked in the future. This move was made to ensure their gold reserves were secure in India. Gold has a strong track record of performing well in times of uncertainty, including periods of war, tariffs, and hyperinflation. A final point: While gold traders could be laughing all the way to the bank, customers who need it for ordinary use may be left stranded, waiting for the prices to cool. It may seem a zero-sum situation – when one’s gain becomes another’s pain.Original Article