Because gold has been considered a valuable asset for thousands of years, it has always been desired and demanded, but it is in the most recent history that the market has grown to what it is today, and what it is today is a fairly mature and stable market. Similarly, gold and interest rates also play their part in the gold price movement, since lower interest rates, which usually occur when there are times of financial uncertainty and governments want people to spend, means that saving is more difficult. Therefore, the monsoon plays an important role in gold consumption because if the harvest is good, farmers buy gold from their earnings to create assets. A gold investor in India has two sources of profitability, the price return on gold appreciation and the currency's return on the depreciation of Indian rupees.
If the cost of producing gold is reduced due to technological advances, the supply of gold will increase. Although gold has performed well relative to all other asset classes this year, new obstacles are expected for gold in the short term. The abrdn Physical Gold Shares ETF (SGOL A+) is designed to track the spot price of gold bars by holding gold bars in a secure vault in Switzerland that is audited twice a year. Too many good things are happening for gold and in the next decade they could give a boost to the yellow metal; reckless government spending around the world, central banks buy gold, gold grades on the ground fall, exploration spending falls, and the list goes on.
A multiple of the gold price to PE ratio of S%26P 500 can be used to assess the valuation attractiveness of gold. If the cost of mining is reduced, it will be feasible to operate more gold mining projects, leading to an increased supply of gold. Gold has been shown to be an excellent tool for covering geopolitical uncertainty, leading to higher gold prices. As a gold investor does not receive any cash flow during the holding period, it is impossible to value gold using conventional valuation methods.
We expect gold prices to rise in the future, although the World Bank predicted that gold prices would decline to 1500 in 2025 and 1600 in 2030. If producers do not start mining gold from deep depths, gold will soon run out and over the next 20 to 30 years gold prices will rise sharply. Because gold is also considered a highly effective portfolio diversifier due to its low to negative correlation with major asset classes, it is often picked up in times of uncertainty, and so one of the factors to consider is the relationship between gold and the other asset classes under pressure. pleasure in the current financial circumstances.
For example, India consumes 800 to 850 tons of gold annually and rural India accounts for 60 percent of the country's gold consumption.