Gold as an Investment in Pakistan |Updated 2020

Gold has been one of the best investments for decades. Also investing in Gold can be a great addition to the portfolio. When starting any business, investors always consider first in ROI, ( Return on Investment) In that regards Gold has maintained its value and has the utmost importance. That’s the reason investors mostly prefer gold worldwide but our article is all about the investment of gold in Pakistan. Gold business has been a safe haven for investors in Pakistan. Owing to the fact that gold has been part of the tradition of the subcontinent. Talking about the tradition, Pakistani people have always chosen gold as an asset in dowery, While coming on Indian culture parents are bound to give 50-60 tolas of gold to their daughters.

photo showing goldd

Due to the outbreak of the global pandemic the market has changed, marketing strategies have changed, demands are now different, In short the market value is not like before. Big companies are facing loss but on the other hand, many companies have gained their value like zoom, Zoom has suddenly gained heavy profits and fame due to this situation, as well internet usage has been increasing, online platforms are gaining more value and adding more money into their bank accounts.

A safe investment in Gold Pakistan

Gold is seen as a safe store of value during times of uncertainty, it has always offered high returns when other assets offer low returns. The value of gold is going up by more than three percent both in the international and local markets. Peoples of Pakistan are selling currency to buy gold because when global growth weakens they invest in safe assets and that is GOLD generally. Even The Pakistani analysts say that gold prices will continue to climb toward $1,700 an ounce. (Arab news.pk). Many analysts have also predicted that the gold price in Pakistan will rise to $2,000 per ounce by the end of 2020.

Global concerns of an economic slowdown and damage from the outbreak of coronavirus have rattled commodity markets and pushed oil and metal prices down. But gold, traditionally seen as a safe store of value during times of uncertainty, has become more popular as other assets offer low returns. But due to current situation only rich investors are buying gold now because, at Rs 95,002 per tola, it is beyond the purchasing limit of small investors, that’s the reason, Gold Prices have risen even above the reach of average investors.

Causes of fluctuation in Gold prices

Prediction of gold price is not easy. In simple terms there are few things that affects badly to the price of gold. Supply, demand Political, as much as economics, changes can play a huge role in causing the gold price to fluctuate.

Supply: According to statistics data, if global demand for gold is more than the supply. With no new mining capacity coming through, most of the gold is recycled. Therefore, less supply is another factor for changes in gold rates. As with any good or service, increased demand with limited or low supply has a tendency to move prices higher. Consequently, good or service’s oversupply with inactive or low demand can push the prices lower.

Demand: The factors that lead to a decrease in demand are an increase in the prices of gold. If consumers expect a fall in the price of a commodity, they will not purchase gold. Even Any legislation (e.g. taxes) which increases the consumer price falls down the demand for goods.

In short, A decline in price can only come from a reduction of demand, an increase of supply, or a combination of both.

gold in pak
source- Pakobserver.net

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Economic and Political Changes: Some examples of factors that could drive gold prices to move are economic turmoil, political/regime change, industrial demand, monetary problems or change, economic surge leading to jewelry including Stopping Quantitative-easing by US Government also affect the gold price in Pakistan. So, any impact in the USA economy directly affects gold prices, the conflict between Iran & the USA is also the reason for the hike in the gold prices in the world including Pakistan. Gold and oil prices fluctuate according to the international market. The lower the value of our currency, the more we have to pay for Gold.

Considering high demand, weak mining activities, political and economic uncertainties in the world, people are likely to hedge their other assets in gold. This will probably make the price go higher.

Is it the right time to invest in Pakistan gold market?

According to experts even if other investments fail, gold can be a savior for you in bad times. All those people who prefer gold over other elements as an investment option can invest in gold. But investors try to not invest a lump sum amount in it. The best way to invest in gold is through a Systematic Investment Plan (SIPs). Buying gold in small quantities is a good option and will give returns on investments in the long run. What is a good option to get into gold? Gold ETFs are a good option for buying gold. People willing to invest in gold spots can opt for gold coins or gold bars. Pakistani peoples can also take benefit of the gold coins, Gold bullion, and vaulted Gold and one of the best options is Gold bars (discussed later).

Tips while investing in gold in Pakistan

If one is interested in investing in gold there are certain points one should ponder before investing.

1- Buying in grams rather than tolas, the measurement of tola varies from country to country as in Pakistan 1 tola is equal to 12 grams while in other countries 1 tola is equal to 11.5. Thus the best option is to buy in grams, Especially if one wants to target the international market.

2- Buying 24 carats, purity of gold is measured in carat, with 24 being the highest purity, Thus it is wise to invest for 24 carats of gold.

3- Buying gold biscuits rather than jewelry, buying pure gold in the form of biscuit or coins worth more, As jewelry also cover other expenditures like polishing and making which the buyers won’t pay as they are only interested in purity and its weightage.

4- Surveying the gold market is a very important part of investing strategy, keenly watching and observing the stats gold that it has achieved in the last month is a very crucial step of gold investment. Moreover one should also know the current price rate like gold biscuit price in Pakistan, 1 gram gold price in Pakistan, etc.

5- Reaching out to others, there are many companies in Pakistan that help you invest in gold like Ary gold investment, gold investments in Pakistan banks, and other trading gold programs like Pakistan mercantile exchange (PMEX trade). Reaching out to such programs can help you out to know the gold market in Pakistan.

Conclusion

One reason is that COVID-19 limits many countries’ capability to increase the share of gold in the total foreign exchange reserves, so not many try to drive the gold prices down in order to take profit of gold holding, that’s the reason the gold price is still high. Silver and Gold is real money and has always protected human wealth during the biggest debt bubble collapse in human history. In short, Gold might be not the best investment but it might be the best store of value.

That was all about “Investment of Gold in Pakistan”, Read more business blogs on Reaching World Live.

-Muzzamil khuwaja, Student of MBA at Paf-kiet.

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