Let us look at the performance of the yellow metal, especially in the backdrop of war, rise in commodity prices and inflation.
Gold in the past year has returned ~5% prior to tax. This is intriguing as many new age banks and Small Finance Institutions offer Interest rates on the higher side of 5%
The graph shows the repo rate value of as put forth by RBI in 2022 in comparison to the past year. With More hikes on the way, the savings & fixed deposit interest for the retail investors is set to see an hike starting from June-July 2022.
Considering this, the following can be said with certainty
- Gold is a hedge and not an investment
- Gold (physical) returns have been at best abysmal over the years of data that includes recessions and wars
- Equities can be depressed in terms of returns for 1–2 years but provide better returns against inflation
- A rise in the yellow metal prices should be chosen as a way to exit the holding rather than consolidating the position
- Commodities (especially bullion) are best suited for trade and not for wealth creation
Hope this helps