New Delhi: Gold will continue to play a crucial role in portfolio diversification with an increasing significance as an asset class, said Chief Economic Advisor V Anantha Nageswaran on Monday. Speaking at the IGPC-IIMA Annual Gold and Gold Markets Conference 2025, he emphasized gold’s enduring relevance—not just as a store of value or a symbol of cultural and religious significance but also as a hedge against economic uncertainty.

"Gold will remain relevant as an investment mechanism until the world reaches a structured international monetary system, replacing the current fragmented one," Nageswaran stated.
"That day of reckoning is very difficult for any one of us to prophecy at this stage."

Gold’s Performance vs. Stock Markets

The value of gold has surged over $200 per ounce (8%) in the last three months, reaching $2,860 per ounce. In contrast, Indian stock markets have fallen by more than 8% in the same period.

Gold’s Long-Term Growth:

• Since 2002, gold prices have risen nearly 10 times, from $250-$290 per ounce to current levels.
• In India, gold is trading at ₹85,000 per 10 grams, reflecting its strong demand.
• India remains a net importer of gold, making its price fluctuations crucial for the economy.

Nageswaran stressed that gold’s increasing importance in global financial stability should not be overlooked by policymakers and investors.

Gold Monetisation and Policy Challenges

Nageswaran acknowledged the need for India to find ways to productively deploy its vast gold reserves without undermining its cultural and financial significance.

"That is where the policy challenge lies," he said, adding that previous gold monetisation efforts have had limited success due to people's emotional attachment to physical gold.

Gold Monetisation Scheme (2015): A Recap

• Launched to reduce India’s reliance on gold imports by encouraging citizens to deposit their gold with banks in exchange for interest.
• However, public participation remained low, reflecting gold’s deeply ingrained cultural and psychological significance in Indian households.

Nageswaran pointed out that policy efforts often underestimate people's perception of gold, and a fresh approach may be needed to make monetisation schemes more attractive.

The Role of Gold in a High-Debt Global Economy

The Chief Economic Advisor also highlighted growing concerns over global debt levels, which now exceed multiple times the world’s GDP.

"When debt accumulates to such high levels, future earnings are used just to service the debt rather than for development," he explained.
"With such high debt, countries may be tempted to use inflation as a tool to reduce the real value of debt."

Key Economic Indicators:

• India’s Debt-to-GDP Ratio: Expected to fall to 56.1% in FY26 from 57.1% in FY25 under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
• India’s GDP Growth: Forecasted at 6.5% in FY25, with projections in the 6.3%-6.8% range for the next fiscal year.

Why Gold’s Importance Will Keep Rising

With fears of inflation and the aftereffects of decades-long policy discretion since 1973, Nageswaran believes that gold will remain a crucial hedge against economic instability.

“Gold not only symbolizes financial stability but also serves as a check against reckless monetary policies,” he added.

As global uncertainty continues, investors are likely to increase their reliance on gold, reinforcing its role as a safe-haven asset in the years ahead.