According to Sivaram, Indians collectively hold around 25,000 tonnes of gold, worth nearly 280 lakh crore, or around 80% of India’s gross domestic product (GDP). This massive holding, he explained, creates a strong wealth effect in the economy, visible in the booming gold loan sector. “It is not true that gold is inactive. Almost 10-12 lakh crore gold loans are active in the system,” he said.
For investors looking to participate in Gold’s rally, Sivaram believes exchange-traded funds (ETFs) are the smarter route, especially after the simplification of taxation in recent budgets. He said: “ETFs are the best option because they are cheap, easy to buy and now have long-term benefits from capital gains.”
Sivaram also highlighted how central banks are driving global demand for gold, purchasing almost 1,000 tonnes each year – almost 25% of total annual demand. With countries like China and India leading these purchases, he doesn’t see this trend slowing down anytime soon.
While many view gold as volatile, Sivaram’s 25-year analysis shows otherwise. Gold and the Sensex had five negative years, but gold’s declines were much smaller. “Gold has been a very stable asset class,” he said, adding that investors should not expect 50% annual gains but can reasonably aim for long-term returns of 9 to 10%.
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He warned that Indian investors should focus on the performance of rupee gold rather than dollar gold as currency movement plays a crucial role. Between 1980 and 2000, for example, while dollar gold fell 60%, rupee gold rose 230%, thanks to foreign exchange depreciation.
On the equity front, Sivaram acknowledged that gold has outperformed stocks in 2024, but he sees India’s recent market underperformance as cyclical and not structural. “Markets are slaves to income,” he said, expressing confidence that finances and consumption will drive a comeback in FY26.
Sivaram remains optimistic about the financial, power and travel sectors, which he believes will benefit from rising Capex, reforms and strong domestic demand.
Also read: Gold and silver prices could crash soon, says wealth manager
For the entire interview, watch the accompanying video
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