Real gold prices have deviated significantly from the price forecast by the World Bank, raising concerns about the reliability of the World Bank's long-term gold price forecast. If the cost of producing gold is reduced due to technological advances, the supply of gold will increase. Since gold is also considered a very effective portfolio diversifier due to its low and negative correlation with major asset classes, it tends to rebound in times of uncertainty, so one of the factors to consider is the relationship between gold and other asset classes that feel pressure or pleasure in current financial circumstances. In the same way, gold and interest rates also contribute to moving the price of gold, since lower interest rates, which usually occur when there are times of financial uncertainty and governments want people to spend, mean that saving is more difficult.
Gold has proven to be an excellent long-term investment and gold prices have multiplied six times since 2000. The return on gold in Indian rupees is significantly greater than the return on the appreciation of the price of gold. There are too many good things happening for gold and, in the next decade, they could really give the yellow metal a boost: reckless government spending around the world, central banks are buying gold, the qualities of gold on the ground are declining, exploration spending falls and the list goes on. Investing in gold has never had a better time to start than right now, the price is about to skyrocket, but participating in the trading of such a product can be difficult due to its physical nature and the exclusivity of many gold brokers, who are not as open to new traders.
Gold has been shown to be an excellent tool for covering up geopolitical uncertainty, leading to an increase in gold prices. A multiple of the ratio between the price of gold and PE of 26 pence per 500 pence can be used to assess the valuation attractiveness of gold. There are numerous ways to adopt gold as an investment, from futures markets and “gold on paper” ETFs to investing in physical gold bars, coins and jewelry. Despite the fact that the price of gold is at its highest point, many people think that the market will maintain its upward trend and that the price of gold will only rise from now on.
An investor in gold in India has two sources of return: the price return derived from the appreciation of gold and the exchange rate return from the depreciation of Indian rupees. Since a gold investor does not receive any cash flow during the holding period, it is impossible to value gold using conventional valuation methods. In addition to the above-mentioned ways of investing in gold, an investor may consider buying shares in gold mining companies such as Barrick Gold Corp. For example, India consumes between 800 and 850 tons of gold annually, and rural areas in India account for 60 percent of the country's gold consumption.
