16-10-2023 02:13 PM | Source: Geojit Financial Services Ltd
Quote on Gold vs. Silver: Informed Investment Choices Amidst Geopolitical Risks by Hareesh V, Geojit Financial Services
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Below the Quote on Gold vs. Silver: Informed Investment Choices Amidst Geopolitical Risks by Hareesh V, Head of Commodities at Geojit Financial Services.
"Gold is traditionally seen as a safe haven asset. During periods of geopolitical uncertainty, investors tend to seek refuge in assets that are considered less risky than equities or currencies. Gold's inherent value and lack of counterparty risk make it an attractive option. Gold is not subject to the same economic and political risks as other assets, making it a reliable store of wealth during uncertain times. It also acts as a hedge against currency devaluation and inflation. Usually, geopolitical crises lead to worries about a nation’s currency, people may turn to gold to preserve their purchasing power. In addition, gold is used to diversify one’s portfolio, investors diversify their portfolios to reduce risk during periods of crisis.
Gold is more appealing when the opportunity cost of holding other assets with interest rates, as the yellow metal carries nil interest rates. Usually, in war-like situations, the interest rates may be low or even negative. Furthermore, gold is highly liquid even in times of crisis making it a trusted asset during extreme situations. As this metal performed well during crisis periods historically, influencing investor behaviour as well.
As for Silver, the recent spike in silver prices was due to rising geopolitical uncertainty. However, silver is currently more used in industrial areas from where the demand outlook is bleak. Hence major rallies are less likely in the near future. Jewelry or ornaments demand during festivals and weddings also have less impact on prices."
Above views are of the author and not of the website kindly read disclaimer
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