By Kamal K Sharma
Yellow metal has always been very close to every Indian’s heart since ages, ever increasing price has added more glitter to Gold year after year. Below is last 100 years movement of gold prices from Rs. 18.75 in 1925 to present Rs. 1.20 lakh+ in 2025
Gold at 1.20 Lakh per 10 Grams is at all time high and remains a point of worry for many. Lets understand why there is sudden spike in gold prices in recent past.
The high price of gold is driven by a combination of global economic & geopolitical factors that increase its importance as a safe asset and as a hedge against inflation.
Below are few key factors that remain the reason behind this increasing Gold Prices at International level as well as in India
Conflicts & Tarrifs
Gold has a long-standing reputation as a safe store of value, which means investors flock to it during times of turbulence. Ongoing global conflicts like Russia – Ukraine war, political instability and trade disputes like tarrif uncertainity increase market fear hemce prompting Investors to seek the safety of Gold.
Slowdown & Recession Fears
Economic Uncertainty & Concerns over a global economic slowdown, potential recession, and a volatile stock market is encouraging Investors and Governments to shift capital from riskier assets into safe assets like gold.
Governments buying in Volumes
In recent times Central banks like RBI, Federal Reserve and many others around the world have been massive buyers of gold, which significantly consumes available stocks and boosts demand thats supports high prices. These banks have been consistently purchasing gold in high volumes to diversify their Reserves away from US Dollor.
Increased Demand
Supply and Demand Dynamics plays an important role in rising gold prices as well for a market like India, where Festive mania added with marriage season becomes reason for gold demand spike that has caused increase in local gold prices.
Limited Gold Mining
Gold mining is a finite process and has lot many restrictions., Mining can not match demand at many times and in such circumstances any slowdown in mining or increase in overall production costs can puts upward pressure on prices.
These multiple factors put together have become a very strong base case for Gold prices shooting up the sky and reaching to an unbelievable level.
What should Investors do at the moment.
Gold as an asset should be between 10-15% of your overall portfolio at any given point of time. Don’t rush overboard, have a re look at your Portfolio, sometimes temptations can be Risky as well. Study your Gold related goals in terms of Children Marriages and their timings. Even if gold has given 50% returns in past 1 year, putting all the eggs in one basket can be termed as a deadly stratgey. If you have already exceeded 20% range in your Portfolio, may be its time to book some profits by bringing it to 15% range. If your Portfolio does not have Gold at all, its high time add Gold to your Portfolio but in a Systematic way. You can start investing in Gold Funds / ETFs / Gold FOFs through SIP.
Given above chart of 100 Years movement in gold prices since 1925, its certain that some generation of ours will buy Gold at ₹5.0 lakh/10 Gram as well but Investing should never bring stress rather it should bring Hope, Joy and Satisfaction. I leave you here with 3 fold advice
- Diversify: Don’t put too much money into any single asset class. Use gold as part of a diversified portfolio that also includes stocks, bonds, mutual funds and other assets.
- ​Explore Other Metals: Some experts suggest diversifying into silver, which has strong industrial demand and is sometimes expected to outperform gold over the medium term.
- SIP Route: Go very Systematic at the times of uncertainty. Even if Investing in Gold, start Investing through SIP. At any given point of time, your SIP should be 30% of your take home Salary/Income with 10-15% (of Total 30%) in Gold.
May glitter of gold keep shining in your Portfolio always.
Kamal K Sharma is a Financial Professional and Founder at SaveFirst. He is an author to the bestseller The Piggy Bank Billionaire and visiting Faculty BSE (Bombay Stock Exchange) Institutes.
