Gold and silver regain glitter as monetary property

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Gold and silver have managed to regain popularity as financial assets. However, interest in stocks and bonds appears to be waning, according to National Accounts statistics for 2021 compiled by the Department of Statistics and Program Implementation.

Data shows that savings in gold and silver ornaments by the end of FY 20 rose from £ 42,760 billion in FY 19 to over £ 43,130 billion. However, the amount is still far from the high of £ 46,670 billion reached in fiscal year 18. Meanwhile, investments in stocks and bonds fell to £ 77,420 billion in FY 20 from £ 78,970 billion in FY 19; They were £ 1.77 billion in FY18, the highest in nine years. All of these values ​​are based on current prices.

Dhirendra Kumar, Chief Executive Officer of Value Research, said most Indians are risk averse, which is probably why they prefer gold and silver. But that too has its own risks. “As soon as you come out of a jewelry store after buying gold or silver ornaments, the value instantly drops by up to 15 percent,” he said. Interest in physical assets is growing despite government incentives to invest in paper gold (government gold bonds) and higher import duties.

Regarding investing in stocks and bonds, Divakar Vijayasarathy, founder and managing partner of DVS Advisors LLP, said that the share of these instruments in household savings has traditionally been smaller, with the exception of a few years when it increased significantly. When banks were flooded with cash in FY17 and FY18 as a result of the demonstration, other forms of investment were considered.

Data shows that the small savings have continued to increase since FY16 when assets created were 53,730 crore, which rose to over 2.68 lakh crore by the end of FY20. Kumar said despite falling interest rates, people preferred small savings as it was a safe option.