Gold will remain relevant for investors as a portfolio diversification mechanism with a likely ascending importance as an asset class in the coming years,” Chief Economic Advisor V. Anantha Nageswaran said on Monday (March 3, 2025).
Speaking at the IGPC-IIMA annual gold and gold markets conference 2025, he said gold will not only remain relevant as a store of value and as ornament for cultural and religious purposes but also as an important portfolio diversification mechanism until there is development of international monetary system from the current international monetary non-system.
“That day of reckoning is very difficult for any one of us to prophecy at this stage,” Mr. Nageswaran said.
The value of gold has increased by more than $200 per ounce or 8% over the last three months to $2,860 per ounce. At the same time, the Indian stock markets have fallen more than 8% over the past three months. Since 2002, gold’s value is up 10 times when it was about $250-290/ounce. Currently, the price of gold per 10 gm stands at around ₹85,000, as India is regarded as a net importer of gold.
Nageswaran emphasized the significance of gold for investment portfolios amid the rising importance of gold as economic conditions evolve.
He noted the need to balance the productive deployment of gold assets without diluting their significance as symbols of value and cultural relevance.
“It is imperative we reflect on the past gold monetization efforts, especially those aimed at reducing dependence on gold imports,” he added, reminding attendees of the 2015 Gold Monetisation Scheme introduced to allow citizens to deposit gold with banks and earn interest.
Nageswaran also urged policymakers to acknowledge the broader significance attached to gold by the public and to maintain policies respecting this sentiment.
“Currently, its value is indicative of solidity and policy discipline,” he stated. “There is also the need for investor discipline, especially against the backdrop of the high global debt to GDP ratio.”
He underscored the challenges posed by accumulated debt and warned against simply relying on inflation to reduce the debt burden.
Today, countries may be tempted to use inflation as method to manage their debt loads, but this approach can carry significant risks for economic stability moving forward. Understanding these dynamics is key to ensuring gold’s relevance remains high during turbulent economic times.
Gold appears poised to maintain its status as both investment hedging tool and cultural artifact, transcending the mere notion of monetary exchange. Policymakers ought to treat this asset with the significance and respect it warrants.
Under the Fiscal Responsibility and Budget Management Act, the Centre's debt-to-GDP ratio is projected to decline to 56.1% by FY26 from 57.1% FY25.
Meanwhile, India's GDP growth is expected to reach 6.5% for FY25, with projections of 6.3-6.8% growth for the subsequent fiscal year.