Economist Nagappan: 20 years ago, 1 gram of gold cost Rs 400; today, it is Rs 8,340. Gold is a rare natural resource. It is available in limited quantities.
Why is gold more expensive in world?
Therefore, there is always a shortage of it. These three things make gold important.
There are two things used for global trade transactions. One is the US dollar, and the other is gold.
Since there are some problems in transporting gold from one place to another, global trade transactions are largely done in dollars.
In order to devalue the dollar, the ‘BRICS’ group of countries, including India, China, Russia, and Brazil, started an effort to create a ‘BRICS currency’.
Enraged by this, Trump turned to cryptocurrency, saying, ‘What are you doing… I will devalue the dollar and let you down.’ The value of the cryptocurrency, which he posted, the Dollar Trump meme, went up like ‘jive’ within a few days.
Countries that are nervous about this have started buying and hoarding gold as an alternative to dollars. In particular, countries like China, Russia, and India have started buying in large quantities. As a result, there has been a sudden demand for gold in the international market. That is the basic reason for the current price increase.
A few years ago, factories started producing diamonds artificially. When those diamonds came to the market, the price of natural diamonds dropped by 25 percent.
Usually, the price of diamonds increases by 5 percent to 10 percent per year; that did not happen either. Those who had bought diamonds lost almost 50 percent.
If the price of gold is to come down, artificial gold must be created or countries and people must reduce their gold purchases. Right now, neither is likely to happen.
A business called ‘digital gold’ is booming on the Internet; the big question is who is supervising it.
There is a big ‘risk’ in this. Many people buy jewelry. If you have a reliable company, you can buy it freely.
Author: karthikkvk95
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