Expert view: Sachin Kothari, the director of Augmont - Gold For All, believes gold prices may be stable or under pressure for the next one to two months and might touch ₹70,000 odd levels on weakening fundamentals and technical factors. However, he finds the medium to long-term outlook positive. He expects a new record high in gold in the last quarter of 2024. In an interview with Mint, Kothari says in a balanced portfolio, one should invest 10-15 per cent in gold and 5-10 per cent in silver.
2024 started with gold prices around record high prices of ₹63000 per 10 gram.
In the first runup, gold surged 18 per cent between February 14 and April 12, rising around ₹12,000 and hitting new all-time highs of around ₹74,500 per 10 gram.
In the second runup, prices touched record high prices again on May 20.
The reasons for both the runups were escalating Middle East tensions, the Chinese gold rush, record purchases by central banks, concerns over sticky inflation, soaring US government debt, and the expectation of monetary easing globally.
Now, when the first half of 2024 has ended, gold prices have stabilised.
All positives are already discounted in the prices.
In fact, a few negative triggers have emerged as the Fed's stance has changed from hawkish to dovish.
Rate cuts have been postponed from March to June to September now – that too inflation dependent – from six rate cuts expected at the start of the year to only one rate cut hint given by the Fed now. The dollar index is strong, above 105.
So, it seems in the near term, gold prices will be stable or under pressure for the next one to two months and might touch ₹70,000 odd levels on weakening fundamentals and technical factors.
But, the medium to long-term view is still positive.
I am expecting a new record high in the last quarter of 2024.
We have the US election in November, which is going to bring a lot of uncertainty and volatility in gold prices.
Also Read: Gold beats Nifty 50 in the year’s first half; will the shine last? What should investors do?
Silver, like gold, is considered a safe-haven asset.
This indicates that silver prices tend to hold their value, if not rise, during moments of instability when fiat money and other assets decrease.
During economic crises, demand for silver and other precious metals increases, which can cause silver prices to surge.
The Silver Institute's 2023 World Silver Survey declared that demand for silver hit a record high of 1.24 billion ounces while supply remained unchanged.
This was among the greatest silver deficits ever recorded, and 2024 will again be the year of deficits.
Furthermore, advances in electronics and renewable energy (such as photovoltaic cells used in solar panels) have driven up industrial demand for silver in recent years.
Many investors base their silver investment decisions on the gold/silver ratio, purchasing or selling silver when it is costly or cheap compared to the price of gold.
In a balanced portfolio, one should invest 10-15 per cent in gold and 5-10 per cent in silver.
When considering investing in gold and silver, it is important to align your strategy with your time horizon, risk tolerance, and liquidity needs.
Physical coins and bars have traditionally been favoured in India, but digital gold options are getting increasingly popular.
Gold futures and options (F&O) provide flexibility for short-term investments of less than six months.
Digital gold is suitable for those with a horizon of six months to two years, offering convenience and accessibility.
Gold ETFs are viable for two to five years of investments, providing liquidity and diversification.
For longer-term investments of five to 10 years, gold sovereign bonds (SGBs) offer the dual benefit of capital appreciation and periodic interest income.
Each investment option offers unique advantages, so selecting the right one depends on your investment goals and timeframe.
Investing in commodities like gold and silver is crucial for portfolio diversification and risk management.
I recommend investing 15-20 per cent of the portfolio in gold and silver combined.
Historically, gold has provided over 11 per cent CAGR returns, while silver has offered approximately 9 per cent CAGR returns over the past two decades.
Although silver has recently lagged behind gold and remains 40 per cent below its peak prices, its long-term investment potential looks promising, given favourable market fundamentals.
A well-balanced portfolio typically includes around 20 per cent allocation to gold and silver combined, alongside 20 per cent in debt and 60 per cent in equities.
This diversified approach aims to enhance risk-adjusted returns by mitigating the volatility associated with equities alone.
Investors with high-risk appetites benefit from exposure to commodities like gold and silver, which are hedges against inflation and market uncertainties.
It is advisable to consider accumulating gold and silver during market dips to optimise portfolio allocations effectively.
After COVID, consumer preference in shopping has changed a lot.
Gen Z and the younger generation prefer to shop online in the comfort of their home anytime during the day- even at 2 am.
The same goes for shopping for gold jewellery and gold for investment.
As a market, India is one of the world's largest digital consumer and revolutionary markets.
Cheap data, smartphone usage, digital payments, the adaptation of new technologies, OTT platforms, etc., have spurred digital consumption and online shopping.
Digital gold is a cost-effective way of purchasing 24k gold online in small fractions with as low as ₹1. The advantages are secure storage and genuineness.
With digital gold, all traditional functions of physical gold—buying, selling, converting to jewellery, gifting, and using as collateral—are executed faster, more efficiently, and at significantly lower costs.
These transactions can be conducted entirely through your phone, eliminating the need to visit physical stores or lockers.
When investing in digital gold, select a reputable platform with a strong track record, positive reviews, and regulatory compliance.
Ensure the platform offers secure, insured vault storage for physical gold backing the digital holdings.
Verify that it provides easy liquidity options and the ability to redeem digital gold for physical gold if needed.
Understand all terms, conditions, fees, and storage details and ensure proper ownership documentation.
Regular third-party audits of gold reserves are essential to confirm they match the issued digital gold.
Augmont offers comprehensive safeguards. We conduct regular independent audits to ensure physical gold reserves match digital gold issued.
Investors can track their holdings in real time through our platform, which uses robust encryption to secure transactions and protect user data.
Our insured vaults protect against theft, damage, and natural disasters.
Augmont provides easy redemption of digital gold for physical gold, complies with regulatory guidelines, and offers responsive customer support.
We at Augmont, store gold in secure, insured vaults managed by reputed custodians to protect against theft and loss.
We use tamper-proof packaging for gold deliveries to ensure that the product has not been altered or tampered with.
We also conduct regular assaying and testing of gold by certified laboratories to verify its purity and authenticity.
Engage independent third-party auditors to regularly verify the gold reserves and ensure that the physical gold backing the digital gold is authentic and pure.
All physical gold is hallmarked according to international or national standards, such as BIS (Bureau of Indian Standards) in India.
Additionally, we offer robust customer support to assist investors with any concerns or verification needs. To ensure gold authenticity, investors should look for hallmark symbols and clear purity marks (e.g., 24K, 22K, 18K).
They should request a purity certificate from the seller detailing the gold's purity, weight, and assay results, inspect the packaging for tamper-proof seals, and take the gold to a reputable jeweller or assay laboratory for professional testing.
Jewellers use electronic gold testers for quick, accurate purity measurements.
We differentiate ourselves in the digital gold market through several key strategies.
By sourcing gold directly from its own refinery, Augmont offers competitive pricing and ensures its authenticity and purity.
This direct sourcing minimises intermediaries, reducing costs for customers.
Augmont has partnered with various financial institutions, fintech companies, jewellers, and digital wallets, expanding its reach and making digital gold accessible to a larger audience.
Customers can redeem their Augmont digital gold for cash or jewellery through partnered jewellers.
Additionally, Augmont invests in educating its customers about gold investment benefits, market trends, and best practices through its research, daily insights, weekly blogs, and knowledge series.
This commitment to education helps build a knowledgeable customer base that is confident in making informed investment decisions.
Due to its historical performance and unique characteristics, gold remains a valuable component of a diversified investment portfolio.
It acts as a hedge against inflation, low interest rates, economic uncertainty, market volatility, and currency fluctuations.
Inflation in the US appears persistent, with the Federal Reserve delaying monetary easing in response.
Initially, anticipated rate cuts were postponed from March to June and possibly September, contingent on inflation trends.
The evolving monetary policy stance has been factored into current gold prices.
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Disclaimer: The views and recommendations above are those of the expert, not Mint. We advise investors to consult certified experts before making any investment decisions.
