Perspective on Gold by Sanjit Singh Paul, Smallcase Manager and Managing Partner: Modulor Capital
Below the Perspective on Gold by Sanjit Singh Paul, Smallcase Manager and Managing Partner: Modulor Capital
Gold is in a dichotomy right now as the short-term and the long-term contradict each other. Over the short term, increasing U.S. interest rates and easing global crude prices are headwinds for gold. Large investors perceive the global conflict threat as lower than before. Meanwhile, a higher interest rate makes the USD a safer & better yielding investment than gold. These factors would push gold prices lower globally. For India, this would be a mixed bag, as a lower USD gold price but a stronger USD may mute the price decrease. In the long run, gold is expected to rise as a new world order is being set for sovereign reserves. As more sovereigns build gold reserves, prices will continue to rise in the long run. Gold may be down, but it is definitely not out of the portfolio. In fact, gold is an attractive buy right now, using the short-term dips to build a position for the long run. Investors can surely allocate some gold at these levels, even as sentiment is expecting gold to go much lower. Extreme sentiment calls rarely play out well, but for the long-term, allocation to gold right now makes sense.
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