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Will gold remain valuable in 2100_ An analysis based on historical trends

By Finserv MARKETS - Aug 2,2019
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Will gold remain valuable in 2100? An analysis based on historical trends

Gold has been considered as one of the most valuable instruments of investment since time immemorial. People have hoarded gold during times of political and economic instability, leading to a rise in its prices. To invest in gold, one must understand that the price and value of gold in the market is driven by sentiment; rather than being government by the principles of demand and supply, like other commodities are.

Among all commodities, gold has the highest stock to flow ratio, which refers to the amount of a commodity held in inventories divided by the amount produced annually and is a measure of abundance. While determining the price of gold, it is important to take into consideration the reservation price of the commodity. Reservation price in the case of the buyer is the maximum price he is willing to pay to invest in gold, while for the seller, it is the lowest price at which he is willing to let go of the commodity. Since gold is frequently bought as a hedge against inflation, its price is bound to increase at times of economic inflation or during any other instability.

These days, you can also buy gold online and hold it securely in an online account, without worrying about the risks and dangers that are part and parcel of hoarding gold at home. Digital Gold, available on Finserv MARKETS, can be purchased and sold online at par with international market prices. Since the entire process can be conducted online, you can stay updated on market prices and take decisions on buying and selling instantaneously. If you want to invest in gold online, Digital Gold available on Finserv MARKETS is the best option for you since you can choose to redeem the physical gold whenever you want and whether you want to store the physical gold as coins or bars.

In India, if you observe the trend of prices over the years, gold prices have always increased despite fluctuations in the domestic and global economy. In 1991, when the country faced an economic crisis during which there was only enough foreign exchange reserves to finance three weeks’ worth of imports, the price of gold was Rs. 3,446 per 10 gms. This was an increase of Rs. 246 over the price of gold in 1990 which was Rs. 3,200 for 10 gms. In 1992, gold prices continued to grow and registered a high of Rs. 4,3334 per 10 gms.

In 2008, when the U.S. subprime mortgage crisis led to a financial crisis in almost every country in the world, gold prices in India continued to rise. In 2008, gold was priced at Rs. 12,500 per 10 gms which was an increase of Rs. 1,700 over its price in 2007. The price of gold rose by Rs. 2000 and touched Rs. 14,500 per 10 gms in 2009 as well, presumably unaffected by the financial crisis taking over all the world. This is partly the reason gold is considered a safe investment, since it acts as a hedge against inflation which does affect equity markets and even bank rates. For those looking to invest in gold, Digital Gold available on Finserv MARKETS serves as a commendable investment tool since you can keep an eye on international market prices as well and decide whether you want to buy or sell gold.

The price of gold has grown consistently over the years in India. If you compare on a 10-year basis since 1964, when the price was Rs. 63.25 per 10 gms of gold, you will note that growth has been considerable. In 1974, the price of gold was Rs. 506 per 10 gms. Of course, it is important to note that the prices mentioned here are average for the entire year, since the price of gold also fluctuates on a daily basis. In 1984, the price of gold rose to Rs. 1,970 per 10 gms and it continued its rise to hit a price of Rs. 4,598 per 10 gms in 1994. By 2004, 10gms of gold was valued at Rs. 5,850 while by 2014, prices had reached Rs. 28,006.

The rise of gold prices have been meteoric, owing to the fact that gold remains unaffected by outward economic conditions. By 2100, it is fair to estimate that gold prices will rise further and be of even greater value than they are today.

Looking at the trend of prices that gold was valued at over the years, it can be assumed that gold will remain a valuable asset in 2100 too. So if you invest in gold today, it will be valuable if you choose to maintain it as a family heirloom. Or you could buy Digital Gold online, through Finserv MARKETS, and choose to redeem it as physical gold many years later; and the gold would hold much greater value than what you paid for it today.

“Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment, and an exclusive EMI store, all under one roof – anytime, anywhere”!


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