Market Commentary 29 Oct 2018
Will technology change the way you buy gold? Will it continue to be a precious asset? Should you invest in gold for your children’s future?
If you’re wondering how the gold market will evolve in the next 30 years, read on to know what experts have to say.
Market leaders around the world have weighed in with their opinions on the evolution of the gold market – from the way gold mining will evolve to the impact of climate change.
With the potential to become the fastest-growing economy in the world in the coming years, India is all set to witness a huge leap in its economic power. The rapid economic growth in the Indian economy will be a blessing for the gold market.
Since middle-class families will expand and the working-age population will increase, disposable income will continue to rise and the demand for gold is also expected to increase over the years.
India continues to be the second largest consumer of gold in the world, owing to its cultural affinity to the precious metal, which dates back centuries. The Indian middle-class will be a force to reckon with as it will be the biggest driver of economic, social, and political growth.
Over the last 30 years, gold production has almost doubled. However, the rate at which gold is discovered is declining despite the continuous increase in exploration budgets since the 2000s.
Gold mining will witness a paradigm shift in the near future, mainly due to technological advancements, including machine automation. Increased computing power and connectivity will alter the way in which mining is carried out over the next 30 years.
Underground mining will supersede open pit mining, and automation and solar energy will contribute to safer and sustainable mining and production techniques.
Needless to say, meteoric advancements in technology are transforming the way every sector works, and the gold market is no exception. It is now possible to invest and trade in digital gold and gold ETFs (Exchange-Traded Funds), and there are mobile apps that allow investors to buy, sell, invest, and gift gold in India.
Regulatory changes are leading to a migration from over-the-counter markets to more transparent trading venues like exchanges. The easy trading and investment of gold through mobile apps will appeal to younger generations too, increasing the customer base for investors and gold users.
Since gold is one of the safer options in times of economic downturn and during financial crises, investments in gold will continue to rise for stability and economic growth prospects.
Indians’ admiration for gold jewellery needs no introduction. Jewellery has been a prized possession for Indian families for centuries. However, unlike older generations, young families today look for more credible and reliable sources to make their purchases. Hence, more and more jewellers are moving towards selling only hallmarked gold jewellery to attract these consumers. This is only going to increase in the coming years.
As incomes and spending powers of rural India increases, the Indian gold jewellery demand is likely to increase significantly. That said, the Indian gold jewellery market will become a lot more organised and systematic. There is also tremendous potential in gold recycling – about 25,000 tons of existing gold.
Gold will continue to be recognised, valued and appreciated in the coming decades, just as it has been an integral part of our world for thousands of years. According to experts, gold investment products will become much more prevalent, but jewellery will still have its place in cultural ceremonies.
So, while the methods to procure gold, invest in it, and wear it might change over time, it will continue to shine in every Indian household.
Gold futures are instruments that are traded on the MCX. One can buy into these gold futures in order to invest in gold. These futures contracts tend to track gold prices. Moreover, the investors have to ensure that they settle these futures contracts by pre-determining a closing date.
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