Gold as the New Reserve

While global trade adjusts to de-dollarisation and uncertainty, India’s vast household gold reserves are becoming both a safety net and an opportunity

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Blessed are those who have invested in gold, in one form or another, for now the yellow metal must yield an ROI of far more than a hundred per cent that no other product in the market can come close to.

Ironically, successive governments in the past had launched gold monetisation schemes to discourage investment in gold visa-vis other products in the money market, but with little success; today, with the tables turned, those who invested in gold seem to have the last laugh. On the eve of Diwali, gold prices hit an all-time high of around Rs 1,28,200 per 10 grams, marking a 63-66 per cent increase year-to-date, far outpacing major stock indexes and cryptocurrencies. Analysts predict continued upward momentum, with potential for Rs 1,50,000 per 10 grams by 2026. Central banks of China, India, and other BRICS nations aggressively accumulating gold to diversify away from US'Treasuries and the dollar is not the only reason behind the skyrocketing gold prices. According to experts, a combination of macroeconomic and geopolitical factors is responsible for a sudden surge in gold prices, such as rate-cut bets, robust inflows by exchange-traded funds (ETFs), and, more importantly, the tariff hikes by the Trump administration that led to supply chain disruptions.

It all seems to have originated in the US. Aggressive Federal Reserve rate cuts, increased U.S. deficit spending, M2 money supply (liquid assets like savings deposits, mutual funds, etc., plus M1—money in circulation) led to stagflation, eroding the value of fiat currency. The US dollar has plunged 11 per cent in the first half of 2025, the biggest drop in the last 50 years. The result was de-dollarisation. Global trade in energy and commodities has increasingly used gold instead of the dollar, leading to exponential appreciation in gold’s value.