Interview/ Sachin Jain, regional CEO, India, World Gold Council
Q/ Gold prices have seen an unprecedented rise. What has been the overall sentiment in the market this Diwali?
A/ The consumer has been obsessed with gold and with the returns he has been getting. We have witnessed a nominal drop in the volume. But from value perspective, this Diwali was perhaps one of the best we have seen. Consumers have got a strong value for gold this year. From that perspective, it only reflects the confidence consumers have on this category.
We have also witnessed recycling going up. It has crossed about 50 per cent; it used to be between 30-35 per cent. We believe it is a good thing because consumers are still staying in the category.
Q/ Do you think gold is no longer a sleepy asset?
A/ What has happened in the past few decades is gold transformation. Now, there have been four or five different areas of consumption. Earlier central banks were net sellers. Now, central banks have been a very important trigger. That’s one segment. Of course, jewellery is a large one. But financial demand surpassed this. With the hedge funds, ETFs, with all of these areas, the consumption has crossed about 40 per cent. And lastly, gold is now getting used for technology. All the AI-led fast microchips are using gold. Those use cases are almost permanent and will continue to grow.
Q/ What is driving central banks’ appetite for gold?
A/ Geopolitics is a permanent shift right now. And most countries that were putting the reserves in the US treasury and the dollar are converting it into gold. The reserves which were in the dollar-based treasuries were about 73 per cent; it has come down to 55 per cent.
Q/ What are the evolving trends that you have picked up from the market?
A/ What we witnessed is that chain stores and bigger players are doing much better than small independent jewellers, which is a clear indication of the confidence that people want to have on transparency. ETF has seen a strong rise. Start of the year, we were at 57 tonnes. Right now, we have crossed 88 tonnes. The eventual number of bar and coin investment would have seen a significant uptick this year.
Q/ We have seen gold going through downturns or long flat periods.
A/ That is of course a scenario, but we think it’s a bleak possibility. Because to make that scenario happen, Donald Trump, Xi Jinping and Vladimir Putin and everybody else have to become best friends. And there should be no war. The current world scenario is strongly in favour of gold, and that’s not a short-term situation.