The Gold price has been on the increase for the past several years and the demand for gold got an unprecedented boost since September2008when the financial crisis erupted in US.Gold became attractive as an investment avenue and storage medium from the angle of safety,liquidity and profitability.The Central banks of the world started purchasing Gold for Reserve purposes which resulted in steep increase of gold prices.Investors who speculate in commodities found an opportunity to make easy money and accummulation of wealth started purchasing gold ignoring the prices and gave a boost to gold market.Developing countries particularly India, where inflation is persisting at high level and black money circulation is very high,found gold as a best hedge against inflation and store of value.India alone imports gold on an average1000 tonnes per annum wasting the precious foreign exchange.Now the economic crisis is becoming a reality and US,Europe and other economies are finding it difficult to survive the crisis creating a panic situation.It is time for the leading institutions like world bank,IMF and central banks of advanced and developing nations to turn to Gold reserves and arrive at a solution to resolve the crisis.The World leaders have to cooperate and find some workable solution to convert gold into productive assets and rescue the badly affected economies.Globalisation integrates economies and Gold Reserves should facilitate it and resolve the economic crisis. Will it happen?
Dr.T.V.Gopalakrishnan
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