The Golden Path to Financial Wellness

As we commemorate Akshaya Tritiya today, an interesting insight into the historical attraction for this precious metal, and how it helps us to achieve our financial wellness goals.

At Wellness Community India (WCI), we strongly believe that financial wellness is a core dimension of our overall wellness, as it directly impacts our economic stability, sense of security and quality of life. In today’s uncertain economic environment, discovering the golden path to financial wellness is more important than ever.  And one investment option that has withstood the melt(down) pot is gold. With its historical significance and cultural importance, gold has proven to be a reliable asset, offering stability and wealth preservation over a longer term. While traditionally, while most Indians have always been wise in curating gold as part of their investment portfolio, 2024 has further reinforced the economic significance of this yellow metal.

Yellow Metal in the Investment Arena

Gold’s unique ability to counterbalance market turmoil, and act as a tangible asset has earned it a revered status among investors. Historically, when equity markets falter, gold was a steadfast refuge, preserving wealth and mitigating overall portfolio risk.  As you will notice in the graph below, over the last 20 years, when compared to a prominent benchmark like the Nifty, gold has had an outstanding run during periods of crisis, outshining equities in terms of performance – GFC between 2008-2011, and again around the 2019 Covid pandemic.

Graph source: i-am-market.com

In YTD 2024, gold prices have risen despite relatively strong performance of the Nifty. Geopolitical tensions that spilled over from 2023, and the US Fed’s restrictive policy around interest rates are two big reasons for this rise. Another big contributor to the rise are the Central Banks, as they increase their gold reserve. Specifically, China diverting a meaningful part of their US Treasury holdings to buy gold has led to a sharp increase in a short period of time. Experts suggest that this trend will likely play out even more in 2024.

India’s Fascination with Gold

In India, gold represents our cultural heritage, tradition, and financial wisdom. Gold is seen as a timeless store of value, passed down through generations as a form of financial security. The surge in gold purchases during auspicious occasions isn’t merely about tradition, it reflects our age-old belief that gold is a tangible asset class. Further, gold provides a unique avenue for accessing liquidity during times of financial exigency, offering investors a safety net when needed most. Tactically using gold as an investment avenue can contribute significantly to one’s overall wellness, aligning closely with the multidimensional wellness approach advocated by WCI. Our message, especially to our younger generation, is that investments in gold should be a systematic component of your robust financial wellness strategy.

Did you know? Let’s check your gold quotient! 

• The purity of gold is measured in karats (carats), where 1 karat represents 1/24th part of pure gold by weight, with 24 karat gold being considered the purest form. As the karat value decreases, so does the gold content, with common variations including 18 karat (75% pure) and 14 karat (58.3% pure) gold. 
• The top 3 countries with the most gold reserves include the United States, Germany and Italy. As on Q4 2023, India ranked 9th. 
• France has the 4th largest gold reserves in the world, with a total of 2,436 tons. What is surprising is that there are no active gold mines in France! 
• If you ever visit New York City, don’t miss the chance to visit the Federal Reserve Bank’s gold vault which is the world’s largest gold depository. As of 2024, the vault housed approximately 507,000 gold bars, with a combined weight of 6,331 metric tons, making it the ultimate treasure trove for gold enthusiasts!
• Highest per capita gold holdings? Both Switzerland and Germany are recognized for their highest per capita gold holdings, with Switzerland’s long-standing tradition of storing and trading gold, contributing to its prominent status.
• India’s temples have circa 4,000 tonnes of gold reserves. This could surpass the reserves of many central banks worldwide, emphasizing the profound cultural and religious significance of gold in India
• Forget cash – in UAE, you can withdraw gold bars from ATMs! It’s like having your own personal treasure chest, right at your fingertips.
• Did you know that your smartphone is powered by gold? That’s right! Gold is an excellent conductor of electricity, making it an indispensable component in all those tech gadgets we can’t live without.
• Ever wondered about those Olympic gold medals? Well, here’s a secret: they’re not entirely made of gold! In fact, they’re mostly silver, with just a touch of gold to add that extra sparkle.
• Here’s a fun fact for your next dinner party: gold is actually edible! For centuries, people have used gold for decoration and even consumed it in small quantities. Just remember, a little bit of bling goes a long way!

We wish all our readers an auspicious Akshaya Tritiya and a WELLthy year ahead!

 

Disclaimer: Our team members are not registered as Research Analysts as per SEBI (Research Analyst) Regulations, 2014. The material presented on WCI’s website is for information purpose only.