Page 35 - Bullion World Volume 03 Issue 07 July 2022

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The freezing of $300 billion in Russian reserves The new generation of investors—millennials and
in 2022 permanently altered central bank reserve Gen Z—are increasingly choosing digital platforms
management strategies. Many realised foreign assets to invest in bullion. Platforms such as Augmont allow
could be politically weaponised, accelerating the move investments from as little as ₹1, making gold and silver
toward gold. After foreign exchange, gold has emerged accessible to everyone. These products combine
as the second most significant reserve asset in the affordability, instant liquidity, and storage-free safety.
modern system.
Digital bullion is fully backed by physical 24K gold or
Developing nations—particularly China, India, and pure silver, securely stored and insured. With seamless
Turkey—are leading this shift, diversifying away from UPI integration and SIP options, it is transforming into a
dollar reserves to insulate against sanctions, currency mainstream asset class. For a generation accustomed
volatility, and geopolitical instability. At the same to mobile banking, 24/7 pricing, and instant
time, private investors see gold as an essential hedge redemptions, digital gold offers the perfect blend of
against inflation, rising U.S. debt, and depreciating tradition and technology.
currencies.

Comparing the Current Rally with the Past
Since September 27, 2022, gold prices have risen
109%. While this outpaces developed market
equities—the MSCI World Index gained 78% over the Outlook Ahead
same period—it still lags earlier rallies.
• With a U.S. slowdown, sticky inflation,
• During the 1970s stagflation, gold soared 721%. and persistent fiscal deficits, gold and
• After Nixon ended dollar-gold convertibility in silver bullish case remains strong. Central
1971, prices rose 352%.
bank buying, structural demand from
• Post-Dot Com Bubble, gold rallied 292%.
• After the Global Financial Crisis, it climbed 167%. digital gold, and ongoing geopolitical
risks suggest precious metals will remain
Given that previous bull markets lasted over 1,500 elevated.
days on average, the current rally—just 1,046
days old—may still have considerable room to run. • If macroeconomic risks remain elevated,
Importantly, institutional and retail participation remains gold prices could feasibly target $3700
relatively muted, suggesting the rally is far from (~Rs 1.10 lakh) in the next few weeks in
euphoric stages. September and $4000 (~Rs 1.20 lakh) in the
next few months before 2025 ends.
Strategic Portfolio Allocation

• Silver, after breaking $40 resistance, can
Gold and silver’s low correlation with equities and
bonds makes them an essential hedge. Suggested continue its northward journey towards
allocations include: $43 (~Rs 1.30 lakh) in the next few weeks
in September and $45 (~Rs 1.35 lakh) in the
• Aggressive equity investors: 10–15% coming few months before 2025 ends.
• Conservative investors: 15–20%
• Retirees/risk-averse investors: 20–25%

In India, ETFs and Digital Gold/Silver SIPs are
emerging as efficient, storage-free ways to gain
exposure.

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