Inflation-indexed bonds issued through post offices can dim the shimmer for gold

Abstract

Gold is preferred not for highest returns amongst other comparable investments but mainly as a hedge against uncertainty and inflation. The exchange rates had dared to peep at 60 and beyond. So, policy makers have responded — markets are not deep, markets are being watched, markets have to be disciplined, and markets can only operate in a permissible range-bound band. The finance minister has reiterated that gold imports, purported culprit in a rising current account deficit and depreciating exchange rate, need to be reined in. But having tasted the freedom beyond 60, markets may try again, until long-term solutions are presented. The latest tightening of the monetary policy would further raise interest rates, impacting investment, demand, growth, employment and income. Inflation rate can be expected to continue to be low, not because of efficient transmission mechanism but because of lower levels of growth, income and employment. This is clearly illustrated in negative growth of IIP and durable goods; data was released last Friday. The rise in interest rates, like a general multi-spectrum medicine will adversely impact the whole economy. Read more at: https://economictimes.indiatimes.com/opinion/et-commentary/inflation-indexed-bonds-issued-through-post-offices-can-dim-the-shimmer-for-gold/articleshow/21152982.cms