MUMBAI (Commodity Online): Most of Indian households are now expecting the Gold prices to come down so that they can start buying the yellow metals which they had shunned for sometime now due to the soaring prices.

But, if the World Gold Council’s opinion is anything to go by, the gold prices are unlikely to come down in 2010.

According to an interview given to the Economic Times by Ajay Mitra, managing director, World Gold Council (India), for investors, gold is as good as currency even in terms of returns. Also, gold has more stability. While it is also volatile, gold has never dropped in its value and you cannot substitute gold with anything else as it is finite. Moreover, production in the last decade has been declining by average eight per cent a year. Demand for gold is also rising in China, India and Russia. Last year India bought about 200 tonnes of the yellow metal in a bid to preserve our wealth as our reserves are in US dollars whose value is falling.

He added the equity markets globally are on a roller coaster ride. Real estate in many centres is in the dumps. Same is the case with hedge funds, derivatives etc. The only thing that investors are hedging in are in commodities. In that basket gold seems to be the most promising.

As ked whether he sees Gold prices falling, he said given the circumstances or the environment we are in, we do not see a drop in the price. At least not in 2010, may be in 2011. Given the recovery of the global economy, for it to come back to the pre-2006-2007 levels after a three-year run will take time. Most of the countries have also given stimulus packages which is nothing more than printing more money, leading to inflation as it happened in the past and consumers will hedge in gold. That’s why we see no reason for prices coming down.

About the proportion of jewellery and industrial demands and investment demand, he said in case of India it is 75 per cent jewellery and the rest is investment demand in the form of coins and bars.

The trend seems to be that in people in urban centres are opting for investment-led instruments like gold coins and ETFs (exchange traded funds). In 2010 we believe that we will be able to launch newer paper gold – gold traded on paper – and stored by a custodian, whoever is channelising that venture. For example, India Post. Right now the talks are on and things are being worked out and we could have these products by the beginning of June.

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