Gold and silver regain their sparkle as financial assets

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Gold and silver have managed to regain popularity as financial assets. Interest in stocks and bonds, however, appears to be waning, according to national accounts statistics, 2021, compiled by the Ministry of Statistics and Program Implementation.

Data shows that savings in the form of gold and silver ornaments reached over 43,130 crore at the end of FY20, up from 42,760 crore in 19. However, the amount is still far from the peak of 46. 670 crore reached in FY18. Meanwhile, investment in stocks and bonds fell to 77,420 crore yen in FY20 from 78,970 crore in FY19 ; they were ₹ 1.77-lakh crore in FY18, the nine-year high. All of these values ​​are based on current prices.

Dhirendra Kumar, CEO of Value Research, said most Indians are risk averse, which is probably why they prefer gold and silver. But that too has its own risks. “As soon as you walk out of a jewelry store after purchasing gold or silver ornaments, the value drops up to 15% instantly,” he said. Interest in physical assets is on the rise despite government incentives to invest in paper gold (sovereign gold bond) and the imposition of higher import duties.

Regarding investments in stocks and bonds, Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP, said that the share of these instruments in household savings has traditionally been lower, except for a few years when it has increased significantly. . It was when banks were inundated with liquidity in FY17 and FY18 due to demonetization that other forms of investment were considered.

Data shows that small economies have continued to grow since FY16, when assets created stood at 53,730 lakh crore, which by the end of FY20 had grown to over 2.68 lakh crore. . Kumar said that despite falling interest rates, people preferred small savings because it was a safe option.


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