Gold, Silver Rally: Experts See Long-Term Value Despite Highs
Overview
Precious metals have surged to record highs, prompting investor interest. Bandhan AMC has launched new Gold and Silver ETF Fund of Funds. Experts emphasize long-term portfolio allocation over tactical trades, citing factors like central bank reserves, rising global debt, and industrial demand for silver, which faces supply constraints and higher volatility.
Gold and Silver Markets: Experts Eye Long-Term Value Amidst Record Rally
Gold and silver prices are touching new peaks, capturing investor attention and raising questions about entry timing. Bandhan AMC has responded by launching a Gold ETF Fund of Fund and a Silver ETF Fund of Fund, open for subscription from January 12 to January 20.
New ETF Offerings
Gaurab Parija, Chief Business Officer at Bandhan AMC, stated that fund launches are guided by the sustainability of an investment theme rather than short-term price movements. He believes the current interest in gold and silver represents a lasting trend, making the launch timing incidental.
Parija advises viewing these metals as strategic, long-term portfolio allocations rather than short-term trades, acknowledging that minor price corrections post-rally are possible.
Gold's Shifting Role
The perception of gold is evolving beyond a traditional hedge against inflation or geopolitical risks. Parija highlighted that central banks globally are increasing their gold reserves, signaling a structural shift in its role as a store of value.
Sachin Jain, CEO of the World Gold Council, added that gold's strength over the past 18 months is supported by a confluence of global factors, including rising US debt levels, ongoing geopolitical tensions, and trade uncertainties. This environment provides a favorable backdrop for gold, which Jain believes will continue to support the metal in the medium to long term.
Silver's Dual Demand
Regarding silver, Parija noted its demand stems from both its precious metal appeal and significant industrial applications. Approximately 60% of silver consumption now comes from sectors like electric vehicles, electronics, and renewable energy. Simultaneously, supply remains constrained, creating a structural deficit. Investors should, however, prepare for higher volatility in silver compared to gold.
Strategic Allocation Advice
Both experts concur on the importance of diversification. They suggest a gradual accumulation of gold, building a position of around 10-15% of a portfolio through instruments like ETFs. Such an allocation can enhance overall portfolio stability in an increasingly uncertain global economic climate.
