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Will gold’s shine wane by 2025: forbes india analysis answer: will gold’s shine wane by 2025: forbes india analysis?

The Debt Ceiling Conundrum

The US national debt has reached an unprecedented level, with the current debt standing at approximately $36.1 trillion. This staggering figure has raised concerns among economists and policymakers about the country’s long-term fiscal sustainability. The debt ceiling, which is the maximum amount of debt that the government is allowed to incur, has become a pressing issue for President-elect Donald Trump.

The Current State of the National Debt

The national debt has been steadily increasing over the years, with the total debt exceeding $20 trillion in 2015. The rapid growth of the national debt can be attributed to several factors, including:

  • Increased government spending: The government has been spending more than it has been taking in through taxes and other revenue sources, leading to a significant increase in the national debt. Decreased revenue: The decline in tax revenues due to the 2017 tax cuts and the COVID-19 pandemic has further contributed to the growth of the national debt. Entitlement programs: The increasing costs of entitlement programs such as Social Security, Medicare, and Medicaid have also played a significant role in the growth of the national debt. ### The Debt Ceiling Conundrum*

    • The Debt Ceiling Conundrum

    The debt ceiling has become a contentious issue, with some arguing that it should be raised to allow the government to continue borrowing to finance its activities.

    The US Federal Reserve has been actively involved in the gold market for decades, and its actions have a significant impact on gold prices.

    The Sovereign Gold Bond (SGB) Scheme

    The SGB scheme is a government-backed initiative aimed at promoting investments in gold. The scheme was launched in February 2024, and it has been met with both enthusiasm and skepticism from investors and experts alike.

    Gold ETFs Gain Popularity as Safe-Haven Asset and Low-Cost Alternative to Physical Gold.

    The Rise of Gold ETFs in India

    The gold ETF market in India has experienced a significant surge in recent years, with the industry assets under management (AUM) reaching ₹44,034 crore. This growth can be attributed to the increasing popularity of gold ETFs as a safe-haven asset and a low-cost alternative to physical gold.

    Key Factors Driving Growth

    Several factors have contributed to the growth of the gold ETF market in India. Some of the key factors include:

  • Increasing demand for safe-haven assets: The COVID-19 pandemic has led to a surge in demand for safe-haven assets, including gold. As a result, gold ETFs have become an attractive option for investors seeking to diversify their portfolios and hedge against market volatility. Low costs: Gold ETFs have lower expenses compared to traditional gold investments, such as buying physical gold. This makes them an attractive option for investors who want to invest in gold without incurring high costs. Convenience: Gold ETFs offer a convenient way to invest in gold, as they can be bought and sold through online platforms and mobile apps.

    However, he believes that gold will continue to be a safe-haven asset during economic downturns.

    The Gold Rush: Understanding the Asset Class

    Gold has long been considered a safe-haven asset, a store of value, and a hedge against inflation. Its allure has been a constant theme throughout history, from ancient civilizations to modern-day investors. But what makes gold so attractive, and how does it perform in different economic conditions?

    Economic Downturns and Gold

    During economic downturns, gold tends to perform well. This is because it is seen as a safe-haven asset, a place to hide one’s wealth during times of uncertainty. In such situations, investors often flock to gold, driving up its price. This phenomenon has been observed in various economic downturns throughout history, including the 2008 global financial crisis. Key characteristics of gold as a safe-haven asset: + Low correlation with other assets + Limited supply + High perceived value + Liquidity

    The Role of Central Banks and Gold Reserves

    Central banks and governments have historically played a significant role in shaping the gold market. They have been known to buy and sell gold, influencing its price.

    The Role of Gold in a Diversified Portfolio

    In today’s market, diversification is key to managing risk and maximizing returns. A diversified portfolio typically includes a mix of asset classes, sectors, and geographic regions.

    The Gold Market Outlook

    The gold market is expected to experience a moderate decline in demand in 2025, according to Chainwala, a prominent figure in the industry. This prediction is based on a combination of factors, including changes in consumer behavior, economic trends, and global events.

    Factors Influencing Gold Demand

    Several factors are contributing to the expected decline in gold demand. Some of the key influences include:

  • Shifts in consumer behavior: Consumers are increasingly opting for alternative investments, such as cryptocurrencies and stocks, which are perceived as more lucrative and less volatile than gold. Economic trends: The global economy is expected to experience a slowdown, leading to reduced demand for gold as a safe-haven asset. Global events: The ongoing conflict in Ukraine and other geopolitical tensions are also contributing to a decrease in gold demand. ### Impact on the Gold Market*

    • Impact on the Gold Market

    The decline in gold demand is expected to have a significant impact on the gold market. Some of the key effects include:

  • Price volatility: A decrease in demand will lead to a surplus of gold, causing prices to fluctuate wildly. Investment opportunities: The decline in demand presents opportunities for investors to buy gold at lower prices, potentially leading to long-term gains. Supply chain disruptions: The reduction in demand may also lead to supply chain disruptions, affecting the availability of gold. ### Conclusion*

    • Conclusion

    The gold market is expected to experience a moderate decline in demand in 2025, driven by changes in consumer behavior, economic trends, and global events.

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