Gold’s Value Is Rising – Don’t Miss This Investment Opportunity
Gold’s Importance as an Asset Class Set to Rise: CEA Nageswaran
Gold’s Growing Relevance in Investment Portfolios
Gold will continue to be a crucial asset class for investors, with its significance expected to rise in the coming years, according to Chief Economic Advisor (CEA) V. Anantha Nageswaran. Speaking at the IGPC-IIMA Annual Gold and Gold Markets Conference 2025, he emphasized gold’s role not only as a store of value and cultural asset but also as an essential tool for portfolio diversification.
Why Gold Remains a Strong Investment Option
Nageswaran pointed out that gold’s relevance will persist “until such a time the world is able to arrive at an international monetary system from the current international monetary non-system.” While predicting such a shift remains uncertain, the importance of gold as a hedge against economic fluctuations remains undeniable.
Over the last three months alone, gold prices have surged by over $200 per ounce (an 8% increase), reaching $2,860 per ounce. In contrast, the Indian stock markets have witnessed an 8% decline during the same period. Historically, gold has demonstrated strong long-term growth, increasing nearly tenfold from $250-290 per ounce in 2002.
Gold as a Safe Haven in Uncertain Times
With global economies grappling with inflation, debt accumulation, and financial uncertainties, gold’s role as a safe-haven asset has only strengthened. The global debt-to-GDP ratio has reached alarming levels, requiring future earnings to be primarily allocated toward debt servicing rather than development.
“When such high levels of debt accumulate, debt becomes a deadweight because future earnings are required merely to service the debt,” Nageswaran explained. He also warned that countries might resort to inflation as a tool to reduce the real value of their debts, further reinforcing the case for gold.
India’s Gold Reserves and Monetization Efforts
In India, gold holds immense cultural, religious, and financial significance. Currently, the price of gold in the Indian market is around ₹85,000 per 10 grams, and India remains a net importer of the precious metal.
To optimize its gold reserves, India has attempted gold monetization through schemes like the Gold Monetization Scheme (GMS) of 2015, which allows individuals to deposit their gold with banks in exchange for interest. The aim was to reduce India’s dependency on gold imports. However, Nageswaran noted that past gold monetization efforts need better execution to make them attractive to the general public.
“People attach different significance to gold, and sometimes we tend to forget that in policy deliberation,” he remarked, hinting at the challenges in convincing people to part with their physical gold holdings.
Gold vs. Stock Markets: A Safe Bet for the Future?
Given recent market trends, gold has proven to be a resilient asset during economic downturns. Unlike stocks, which are prone to volatility and investor sentiment, gold provides stability and security, especially during inflationary periods and global economic crises.
“Gold symbolizes solidity and policy discipline. Investors need to remember that financial markets are a two-way street, and expecting continuous growth without downturns is unrealistic,” Nageswaran said.
Gold’s Future in the Global Economy
As inflation fears persist and countries continue to navigate economic uncertainty, gold’s role as a financial safeguard will remain prominent. Nageswaran believes that the long-term significance of gold will only increase as global economic policies evolve.
Under India’s Fiscal Responsibility and Budget Management Act (FRBM) of 2003, the country’s debt-to-GDP ratio is projected to decline to 56.1% in FY26 from 57.1% in FY25. Meanwhile, India’s GDP is expected to grow at 6.5% in FY25 and remain in the 6.3-6.8% range in the following fiscal years.
Despite this optimistic outlook, economic uncertainties reinforce gold’s appeal as a diversified asset. Whether as a hedge against inflation, a store of value, or a portfolio diversification tool, gold is expected to maintain its relevance in the years ahead.
