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GOLD & SILVER, Options for Investment than only Consumption

GOLD & SILVER, Options for Investment than only Consumption

The history of gold in India is thousands of years old. Gold has always been a significant cultural, economic, and social value for the people. Even in ancient Indian history, gold was used for various purposes, including trade, jewellery, and religious ceremonies. It was always considered a symbol of wealth, power, and prestige.

After gaining independence in 1947, India’s gold industry faced various challenges, including government regulations and restrictions on gold imports. However, gold remained an integral part of Indian culture and traditions, with weddings and festivals often accompanied by gold jewellery and ornaments.

In recent years, India has become one of the largest consumers of gold globally. Gold is not only valued for its cultural significance but also seen as a safe investment and a hedge against inflation. Gold jewellery, bars, and coins continue to be popular among the Indian population.

Silver has held a significant place in the history of India for millennia, dating back to ancient times when it served as a cornerstone of currency, adornment, and religious offerings. Its extraction was prevalent in regions such as Rajasthan, Gujarat, and parts of southern India.

Today, India stands as one of the world’s largest consumers of silver and gold, employed not only for traditional purposes but also in cutting-edge industries, underscoring its enduring significance in the nation’s economic and cultural landscape.

The Evolution of Gold and Silver Trading in India (Interviewed Gold Trader AMAN GARG, from Panipat)

A group of jewellers who deals with local and international market were interviewed to gather information on the evolution of gold and silver trading in India.

The present scenario of gold and silver trading is markedly different from its historical counterpart, reflecting a confluence of factors that have reshaped the industry. In this summary of interview, we will delve into the key transformations that have defined the contemporary gold market in India.

One of the most palpable changes in gold and silver trading is the infusion of technology.

In the past, transactions predominantly occurred through physical exchanges or local jewellers. Today, the advent of online platforms and mobile applications has revolutionized the way gold is bought and sold. This digital transformation has not only made trading more accessible to a wider audience but has also enhanced transparency and efficiency in the process.

The regulatory landscape governing gold and silver trading in India has undergone a significant overhaul. Stricter compliance measures, licensing requirements, and the introduction of hallmarking standards have been pivotal in ensuring the authenticity and quality of gold traded. Additionally, the Goods and Services Tax (GST) regime, implemented in 2017, has streamlined taxation processes, reducing complexities for traders and consumers alike.

The present scenario offers a plethora of investment options, including gold and silver ETFs (Exchange-Traded Funds), sovereign gold bonds, and digital gold. These avenues provide investors with a range of choices tailored to their risk appetite and investment horizon, thereby diversifying the gold market and attracting a broader investor base.

The globalization of financial markets has had a profound impact on gold trading in India. With the advent of international exchanges and platforms, Indian traders now have access to a global market, allowing for seamless cross-border transactions.

Moreover, the price of gold in India is now more closely aligned with international benchmarks, reducing arbitrage opportunities and offering a more transparent pricing mechanism.

Shifts in consumer preferences and behaviour have also played a pivotal role in shaping the present silver market. While traditional jewellery remains a cornerstone of silver consumption, there is a growing trend towards investment-oriented purchases.

The present scenario of gold and silver trading in India represents a dynamic and evolving landscape, characterized by technological innovation, regulatory reforms, diverse investment options, global integration, and changing consumer behaviour.

As a trader, adapting to these transformations is not only essential for survival but also presents a wealth of opportunities. Embracing these changes with a forward-looking approach will undoubtedly pave the way for a prosperous future in the gold and silver trading industry.

Evolution of Gold and Silver Trading: A Comparative Analysis

Gold and silver have been traded for centuries, and their prices have fluctuated over time.

According to a report by MacroTrends, gold and silver prices have been fluctuating since 1915. The chart shows that gold prices have been consistently higher than silver prices over the years.

Investopedia suggests that the gold/silver ratio has been fluctuating over the years, with increased volatility beginning in the 20th century. Data also states that traders and investors trade the gold-silver ratio for hedging purposes as well as to realize profits.

A recent research on India Today highlights that the gold market is valued at $24.5 trillion, as compared to silver’s $4.4 trillion. However, similar results can be observed in terms of susceptibility to price swings.

In conclusion, gold and silver trade has changed over time, but their prices continue to fluctuate. While the gold market is valued at a much higher price than silver, both are susceptible to price swings.

According to GoldPrice.org, the current price of gold in India is ₹5,268.67 per gram. The data also provides a interactive visualisation in the investors mind that shows the price of gold over different timeframes, ranging from 10-minute bars to charts that depict the last 30 years of price action.

A research by MacroTrends provides a historical chart of real (inflation-adjusted) silver prices per ounce back to 1915. The chart shows that silver prices have been fluctuating since 1915, with significant increases in the 1970s and 2000s. It shows that silver prices have been fluctuating since 1915 with significant increases in the 1970s and 2000s.

According to Economic Times, the current price of silver in India is ₹72,784 per kilogram. The data also suggests a interesting interactive visualisation that shows the price of silver over different timeframes.

A recent research on MSN highlights that the rise in silver prices was mainly due to fresh positions built up by participants on a positive domestic trend. Globally, silver was trading 1.28 per cent higher at USD 23.33 per ounce.

International Influence on Gold and Silver Jewellery in India

The COVID-19 pandemic has disrupted global supply chains, affecting the availability of raw materials for jewellery production, including gold and silver. Fluctuating prices and delays in shipments have been the challenges faced by jewellers in India.

There is a growing international focus on ethical and sustainable sourcing of precious metals. Initiatives like the Responsible Jewellery Council (RJC) and efforts to trace the origin of metals have influenced sourcing practices in the Indian jewellery industry.

International regulations, such as the Dodd-Frank Act in the United States, require companies to disclose information on the use of conflict minerals, which includes gold. This has implications for supply chain transparency and responsible sourcing practices. International certification standards, like the Kimberley Process for diamonds, have influenced the jewellery industry’s approach to responsible sourcing. While primarily focused on diamonds, such initiatives have prompted discussions about extending similar standards to other precious metals.

Increasing consumer awareness about the social and environmental impact of jewellery production has led to a demand for ethically sourced and sustainably produced jewellery. This trend is driven by international consumer preferences and has implications for the Indian jewellery market. Changes in international trade policies and tariffs can impact the export and import of jewellery, including gold and silver pieces.

Global design and technology trends have a significant influence on the jewellery industry. Innovations in design software, 3D printing, and production techniques are adopted by Indian jewellers to stay competitive in the international market.

Future of Gold and Silver Trade in India: Bright Outlook Ahead

India is the world’s second-largest consumer of gold and the largest consumer of silver. The country’s gold and silver market is worth billions of dollars and is expected to grow significantly in the coming years.

India is a rapidly growing economy with a rising middle class. As disposable incomes increase, Indians are expected to spend more on gold and silver, both for investment and consumption purposes.

Gold and silver are seen as safe investments in India, especially during times of economic uncertainty. This is because gold and silver have a long history of holding their value, even when other asset classes are performing poorly.

Overall, the future of gold and silver trade in India is very promising. With a growing economy, rising incomes, and a strong cultural affinity for precious metals, India is well-positioned to become a major global hub for gold and silver trade.

In continuation with this article, and our continued research work on investments, we would like to hear your opinion on Gold & Silver. For the same, we are releasing a survey form can be filled by clicking here that would allow you to become a part of our research work. We look forward to having your contributions. Thank you!

Dhruv Kumar Singla

Dhruv Kumar Singla is Graduation Student at Gokhale Institute of Politics and Economics with a keen interest in Finance and Investment. He has been working upon research projects in the same area.

Shreya Naik

Shreya Naik is pursuing her Graduation in Economics from Gokhale Institute of Politics and Economics. She has been researching upon Investment and economy.

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