Gold prices have surged over 12% this year, hitting record highs.
“The world’s sovereign debt stands at $76 trillion, with another $13 trillion to be added. Tariffs and inflation will steepen yield curves, making debt financing a major concern. Gold has always filled that gap, and I don’t see any alternative to prices going up,” Tait was quoted as saying in the Moneycontrol report.Tait sees strong potential for gold ETFs, particularly in India, China, and Japan. He noted that many institutions, asset managers, and mutual funds have not yet considered gold as an investment.
In Japan, younger generations inheriting wealth from their elders are more financially literate and may increase gold investments.
“In China, insurance firms have just been allowed to invest in gold. The market is worth $4.8 trillion, and while current investments are at just 1%, even a 5% allocation could be a game changer. Many will likely invest 10-15%,” he said.India’s gold demand will receive an additional boost from central bank purchases.
Tait pointed out that developing economies still have relatively low gold reserves and will continue accumulating amid economic and geopolitical uncertainties.
“In India, you have a massive young population. But what will drive demand further is central bank buying. Developing central banks still have low gold exposure, and they manage reserves much like individual investors. They will keep accumulating,” he was quoted as saying in the report.
Gold ETFs to replace Sovereign Gold Bonds
The Indian government recently discontinued the Sovereign Gold Bond (SGB) scheme, citing high borrowing costs. Introduced in 2015, SGBs allowed retail investors to buy paper gold as an alternative to physical holdings.
Tait believes that gold ETFs will now take center stage.
“SGBs were great for investors but not as beneficial for the government. Gold ETFs will take their place. They are fully gold-backed, listed, regulated, and a very safe way to invest,” he said.
First Published: Mar 7, 2025 4:12 pm IS
