Indian holds gold worth $ 950 billion. What do you have to say about gold as an investment?
We are quite wary of gold as an investment. The Indian fascination with gold is historical, and there are two aspects to it. One is the way you consume it, the way you are excited about it and the way it is treated as a family emergency fund, so to say. But if you are thinking of investing in gold, it is unwise to buy it in physical form. As an investment, it is dangerous to have.
The characteristics of gold have undergone a radical change over the past 5 years. It has gone into some kind of speculative grip. The global uncertainty about various asset prices -- house prices crumbling in USA, stock markets going down, fixed income rates coming down -- has given rise to the theory about gold being a friend for bad times and that is why we see this appetite for gold. But, the way you can hold gold today in a paper form and the way you can dump it, it becomes extremely volatile. And we are witnessing that volatility, which is unlikely to come down. Investors who are coming to gold with an expectation of chasing gold, they could be more surprised than they have been in recent times.