Gold has shown tremendous growth in recent times. Last Friday, the gold rate on MCX crossed the level of Rs 1,32,000 per 10 grams, but on the day of Diwali, there was a decline in the price of gold. Silver had also touched a record level on Friday, but yesterday the rate of silver on MCX also declined. Experts have warned about the rise in the prices of these two metals in recent days. Kotak Mahindra Asset Management MD Nilesh Shah has given a big warning saying that if the prices have increased, then they will also come down.
Gold has no fundamental basis
According to Nilesh Shah, there is no fundamental basis for gold. The surge in gold purchases by central banks due to the Russia-Ukraine conflict is causing the current surge in precious metals, he said during a TV interview, adding that these purchases by central banks are something that is happening in the gold market more than before. Amidst this boom, he has warned investors to avoid excessive investment in yellow metal.
Price of gold and silver based on history
While advising gold investors, Shah has said that despite the strong rise Sleep And silver should be a limited part of your portfolio only. He said that we also do not know what is the underlying value of gold or silver? There are no dividends, no bonuses, no cash flows. There are no fundamental things to evaluate both these precious metals. However, due to their history spanning thousands of years, they remain stores of value. They are internationally tradable because everyone believes in that history, that is the unique feature of gold and silver.
Expert advice, keep two things in mind
The fund manager further extended his warning and advice by saying that Gold and Silver are assets which do not have any fundamental value or any way to determine it. Therefore, invest in gold and silver, but keep in mind that it should be a limited part of your portfolio only. Regarding the trend of their prices continuing to rise, Shah said, ‘I 100% believe that commodity prices keep fluctuating. If prices have gone up, they will definitely come down, and when there is such a sharp rise in prices, there is also a fall.
According to Shah, gold buyers will have to consider two things. First, central bank buying, because as long as global central banks continue to behave like Indian housewives and keep buying gold and not selling it, you can be sure that gold prices will keep rising. But secondly, does this mean that prices will increase every day? The answer is, absolutely not.
Effect of purchases by central banks on prices
Regarding the continuous rise in gold rates, Nilesh Shah has said that 60 to 70% of the foreign exchange reserves of the central banks of the western world, America, Germany and Switzerland, are in gold. Whereas the allocation of Eastern World Japan, India and China is about 10%. But now the central banks of this eastern world have to increase their allocation in gold and some have Silver I have started doubling my allocation. This is the reason why gold and silver prices have fluctuated so much in the last few years due to purchases by central banks.
—- End —-
