“Buying Gold Right Now Is Risky” Investment Banker Sheds Light On How Risk Is More Than Just Rising Prices

An investment banker Sarthak Ahuja has cautioned the people in a Linkedin post to not purchase gold this time because it is risky. Ahuja said that it is not just about the soaring prices. According to him, decreasing sales is another factor which he further elucidated by an example. The investment banker wrote that the sales of gold jewellery has dropped by over 60 per cent last month and it is the highest drop in the past 5 years. Adding further information about the demand crisis, Ahuja wrote that the jewellers are trying to sell jewellery by giving some discount on the making charges but the demand is still not picking up. 

The investment banker wrote that it is due to the gold price, which is Rs 1 Lakh per 10 grams. According to Ahuja, “The price has become so unsustainable at the moment that jewellers are cutting down production to half…If you go to sell your gold to a jeweller today, they will offer you a much lower price than the market rate because the market seems to have a lot of unsold inventory. 

The aftereffects of the falling gold demand 

Ahuja wrote that there have been 3 consequences of the decreasing gold demand. He added that there is a rise in the 14 karat jewellery with the jewellers requesting BIS to start hallmarking 9 karat jewellery to make it more affordable for customers. As per the investment banker, gold seems to have an over supply but the silver supply seems to have a supply deficit for the 5th consecutive year because of the industrial demand. Also, as Ahuja added that this will increase the demand for the artificial jewellery brands in D2C who could just use gold plating but differentiate their offerings on the design. The investment banker wrote that there is still a lot to be done in this category. 

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