Freefalling Gold Rates – Boon or Bane?

Gold – it is one metal which has captured the attention of humanity for centuries, charming us with its allure and opening new doors. For long it has been considered as a symbol of wealth and power, with people waging wars in a bid to fill their coffers with this precious metal. While the number of wars over gold have reduced, its demand has not, with people still clamouring to own it.

Gold has always been in the news, this time on account of the plunging gold rates, which have been met with multiple views and opinions. So are these falling rates harbingers of good news or bad? Well, this would depend on the individual who receives it, with it signalling different things to different people. Gold has traditionally been viewed as a safe investment, offering protection during emergencies. Indians, are perhaps one of the largest consumers of gold in the world, with many of us believing it to be auspicious to own it.

Right time to buy?

Global Gold rates have fallen to a 5 year low, which have led to a considerable drop in gold rates in India too, owing to the fact that India imports a large quantity of gold. These new prices can open doors for first time buyers, who probably couldn’t afford the higher rates previously. This is perhaps the best opportunity for such individuals, offering them a chance to diversify their investments and utilise this scenario to the fullest.

India has close to 20,000 tonnes of non-monetised gold, and the government has come up with a gold investment scheme wherein owners can use their gold to earn interest, utilising the true potential of gold. New buyers could perhaps get the best bang for their buck by utilising this scheme, making optimal use of this “golden opportunity”.

Should u sell gold now?

The world is often considered as a “buyer’s market”, in most cases, with buyers getting good deals almost invariably. Traditional investors might see their initial investment crumbling, with their gold turning into dust, but selling their investments now would not make sense. If there is one thing we have learnt from history it is that gold knows how to bounce back, and the current indicator might not necessarily indicate future trends.

If you have an investment portfolio in gold it would make sense to hold onto it, as distress selling could hurt your finances a lot.

Demand and supply

The rate of any commodity is determined by demand and supply, and gold rates aren’t immune to this. China and India account for a major chunk of gold buyers, with India importing large quantities of gold annually. A decision by the Government of India to reduce the import duty on gold has further aided the drop in gold rates, signalling a bonanza for buyers. With demand from China reducing there is bound to be additional gold available in the international market, further stemming gold rates, bringing joy to buyers.

Conclusion

It is safe to assume that the global economy is on a roller coaster ride, which could reach great heights and then fall to new lows. Gold is viewed as a hedge against inflation, and the current trends might not necessarily dictate the future value of gold. It is possible for gold rates to skyrocket in the future, providing gold owners a great chance to cash in on their investment, giving gold a chance to shine bright again.