The Indian rupee is down more than 25 per cent this year alone but gold is trading at a record price today in this currency. That’s what you call a safe haven investment. Perhaps that’s why demand for the yellow metal remains relatively high in India despite the price surge and an increase in government tax on gold to 10 per cent. Gold imported from Dubai is one of the reasons for the widening trade deficit, although blame the falling rupee first.
Muddled economy
Will gold continue to act as a protective shield for Indian savers against the muddled chaos of their economy? It’s a no brainer really. Gold prices were artificially manipulated down in April and are now bouncing back. The rupee is still on a downward path.
The clever investor will buy the rising asset class and sell the rupee. At a later stage when the rupee is on the floor and gold much higher it will be time to convert back again or acquire a solid asset like well located property in India.
Indian expatriates should not be jumping to invest straight back into India right now but accumulating gold and silver in Dubai. This is a once in a generation opportunity to boost their wealth by using precious metals as a shield against currency depreciation, and better than that to actually profit from it. By way of illustration, if the rupee price of a house falls and gold carries on rising then you are going to be able to buy more houses in the future with the money you have today than if you do it now.
20,000 tons
Still it hardly needs a Dubai financial website to teach Indians the benefit of owning gold. They have been doing this for centuries, and the estimated 20,000 tons of gold hoarded in private hands will be the saving of the country in the coming global economic crisis.
It will not only be in India that this highly valued asset will be useful for buying assets at discounted prices. The same thing is going to happen all over the world as paper currencies explode and investors turn back to the only money that cannot be printed.
Ask Indians is gold is a safe haven against a falling currency. Then again ask the ArabianMoney investment newsletter how to invest to best gain from the rising gold price.
Source: arabianmoney
Source:Bullion Bulletin