Gold sizzles as world economy fizzles: Will 2020 be the year of yellow metal? - Economic Times | Canada News Media
Connect with us

Economy

Gold sizzles as world economy fizzles: Will 2020 be the year of yellow metal? – Economic Times

Published

 on


By Laskhmi Iyer

Gold was the ‘Student of the year’ for 2019 with a spectacular performance vis-a-vis financial asset classes. This came as a huge respite for gold lovers, especially Indians who have a a natural tendency to own gold – at times way beyond what may be needed. Hence the joy may be outflowing to gold investors as the winning streak continues well into 2020. In 2020, year to date, gold has returned ~21% annualised return!

So, what justifies this gold rush?

For starters, gold is an asset which has to be mined, and there is no other way to produce gold. This is unlike the currencies which can be printed to infuse liquidity into the financial markets. Here, gold assumes the role of the ‘last person standing’ as faith in fiat currencies falter.

The deadly coronavirus outbreak has led to a sharp decline in the world economic outlook. There are reports that suggest the worst-ever global outlook since the great depression of the 1930s. Even if that is exaggerated, the fact remains that over 40 central bankers have rushed to ease the monetary conditions to combat the medical crises the world is facing. Thus it is no surprise to see the solid innings gold continues to play in the current year as well.

India and China are among the largest gold consuming nations in the world. It is interesting to note that even central banks like Turkey, Russia, Mongolia etc. have been adding gold to their reserves.

So can the winning streak continue?

After a spectacular run in any asset class, it is natural to see some small breather, which holds true for gold too. However, given the uncertain medical situation we are in and the extended phase of global slowdown, gold is unlikely to stop its northward march so soon! Therefore, the “Bhag Milkha Bhag’ act may well be a trend for gold till some clarity emerges.

Investors, however, should be mindful of not chasing the momentum and get lop sided while investing in gold. Treat gold like an insurance cover on your portfolio. Have only so much as is required to offer a ‘cover’ to your financial assets. In some sense, it is akin to having a term insurance on your life. Hence, the predominant investments could still be tilted towards financial asset classes like equities and fixed income. I would say: Equities – the wealth creator; Fixed Income – the wealth stabiliser and Gold – the wealth protector.

Occasions are a great time to own gold traditionally in most Indian households. While I do not urge you to break away from this tradition, one can be more mindful of the way one can own it.

Gold ETFs, gold fund of funds, sovereign gold bonds are better alternatives to physical gold, and the hassle of storage etc is outsourced too. These are all backed by physical gold and hence this is a more hassle-free way of owning gold. As lifestyle undergoes a 360 degree change in the wake of Covid-19, I would urge you to make changes to your buying pattern and choose a more appropriate vehicle to own the yellow metal.

Wish you all a Happy Akshay Tritiya. Stay safe and take care. Make sure to stay healthy and also keep your portfolio well hydrated ?

(Lakshmi Iyer is Chief Investment Officer (Debt) & Head Products at Kotak Mahindra AMC. Views are her own)

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

 on

 

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

 on

 

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Statistics Canada says manufacturing sales fell 1.3% to $69.4B in August

Published

 on

 

OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.

The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.

The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.

Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.

Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.

Overall manufacturing sales in constant dollars fell 0.8 per cent in August.

This report by The Canadian Press was first published Oct. 16, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version